Chapter 1 Automate and Optimize: How to Improve Your Fulfillment for the Holidays
Automate and Optimize: How to Improve Your Fulfillment for the Holidays
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The holidays are the busiest time of the year for direct-to-consumer brands, as gift givers continue to do more shopping online than ever before.
Since 2012, about a quarter of total annual retail ecommerce revenue has been generated during the holiday season.
Cyber Monday 2018 was the largest online shopping day in U.S. history, with total spending close to $7.9 billion. Additionally, 78% of ecommerce brands saw up to 30% growth in Cyber Weekend 2018 sales as compared to 2017, with an additional 11% of ecommerce brands seeing up to 50% growth in revenue.
The holidays present a huge opportunity for ecommerce brands to ramp up sales, but they must be prepared for an influx of orders and all that comes with it.
Holiday Fulfillment: Why it Matters
Not only do you need an amazing website, email marketing, social media, and other creative means to reach customers, but you need the back-end logistics to leave a lasting impression and make this holiday season your best ever.
This means alignment across every part of your business, especially between supply chain leaders and your marketing team.
Everyone must be on the same page leading up to and throughout the holidays to ensure your business is a well-oiled machine.
You can receive all of the orders in the world, but if you run out of stock, can’t ship packages out quickly, or fail to get gifts to recipients in time, you’ll risk losing these customers forever and damaging your reputation.
We’ll walk you through how to prepare your holiday fulfillment strategy so come Black Friday and Cyber Monday, your entire business — and your customers — will have a great experience.
How to Prepare Your Online Store for the Holidays
If you can’t provide shoppers with a best-in-class experience, it will be challenging to convert browsers into buyers.
Preparing your online store for the holiday rush can help keep your conversion rates high and your customers happy.
1. Speed and server tests.
Any influx of traffic to your website can be a burden on your servers, potentially causing your site to slow down or even crash during the busiest part of the shopping season. In fact, in 2018 23.85% of online merchants experienced downtime greater than five minutes, and 5.5% of merchants’ sites experienced unplanned downtime longer than 30 minutes.
Your ecommerce store must be able to handle the busiest time of year so that shoppers don’t lose patience. This applies to load speeds too.
When 47% of online shoppers expect a website to load in less than two seconds, shoppers will bounce before they ever browse, causing you to throw money down the drain.
Regular load testing is key to ensuring your website will be able to handle peak traffic. If there are issues, load testing will help you determine the cause of the slowdown or crash. In addition to site audits, there are different load testing tools available that can help keep your checkout and load times ready for the holiday rush.
2. Optimize your checkout.
Driving a lot of revenue is key to seeing success this holiday season. But what if you’re putting in a lot of time and money to get people to your site only to find that, after filling their carts, they leave before completing a purchase?
The holidays are one of the worst times to experience a high cart abandonment rate, and a bad checkout experience is your typical culprit.
As more people visit your site, how do you ensure fewer people abandon their carts?
You can optimize your customer experience to meet expectations by trying the following tactics:
- Reduce the number of steps it takes to check out. Baymard reports that 28% of shoppers have abandoned online carts due to too long or complicated of a checkout process. The average checkout contains about 15 form fields, and only 7 are needed to process and ship an order.
- Make sure that your website and checkout are optimized for mobile. As more people complete purchases on smartphones, be sure to test your own mobile checkout and walk through it firsthand.
- Provide detailed product descriptions so people are confident in what they are buying.
- Showcase security. According to Baymard, 20% of American shoppers have abandoned an order due to security concerns. Earn trust by presenting recognizable trust badges, having an SSL certificate, and offering trusted alternative payment methods (e.g., PayPal or Apple Pay).
- Offer free 2-day shipping. Forrester found that 44% of abandoned carts are from high shipping and handling costs. By offering free or low-cost 2-day shipping, ecommerce brands have seen as much as an 18% reduction in cart abandonment, and a 97% increase in average order value.
3. Align any promotions and sales.
Holiday promotions are the main way to generate a lot of revenue. You need coordinated campaigns, cohesive branding, and persuasive copy to get customers interested.
Here are some holidays to keep in mind for 2019 as you plan out your promotions:
- Thanksgiving: November 28.
- Black Friday: November 29.
- Small Business Saturday: November 30.
- Cyber Monday: December 2.
- Free Shipping Day: December 14 (offer free shipping on all orders, with promised delivery by Christmas Eve).
- Super Saturday: December 21 (the last Saturday before Christmas, typically a big shopping day for brick-and-mortar retailers).
- Christmas: December 25.
While different holidays and promotions will make sense for different businesses, it can be very beneficial to align your brand with some of these dates and help boost your store to be top of mind for eager shoppers — whether they’re looking for great deals throughout Black Friday and Cyber Monday, ways to support small businesses, or last-minute shopping opportunities.
Whatever you decide, make sure your entire online experience gets into the holiday spirit. Here are some ideas to make your marketing festive and maximize holiday conversions:
- Incorporate holiday-centric content, including product photography, blog posts, and user-generated content.
- Create a gift guide with curated collections of suggested items for different recipients.
- Highlight your holiday sales and promotions in banners and pop-ups on your site.
- Add a countdown to Black Friday, Cyber Monday, or whatever date your big promotion will center around.
- Communicate order cutoffs for guaranteed delivery before Christmas on product pages, shipping policies, and shipping options at checkout.
- Display the number of units of inventory that remain for hot-selling items, how many other shoppers are viewing a certain item, or recent purchases to create a sense of urgency.
- Change up advertising copy and images to reflect your holiday promotions.
- Collect email addresses from site visitors through a holiday-themed offer.
- Prominently feature seasonal products, gift sets, or bundles on your site.
Adestra found that 85% of people who subscribe to an email list chose to sign up because they would receive a discount. Make sure you’re collecting email addresses in advance of the holidays, so you can send them your best emails once the prime time comes around.
Here are some more ideas on how to engage new subscribers and prior customers alike:
- Let your email list know about Black Friday or Cyber Monday sales ahead of time with an announcement email hinting at certain deals to keep an eye out for.
- Send reminder emails the day before and/or the day of the sale.
- Consider offering a special discount, presale code, or free gift for new subscribers to build a sense of exclusivity and encourage customer loyalty.
- Post updates on social media to incentivize followers to share or like your posts on Facebook, Twitter, Instagram, etc.
- Offer referral bonuses and discount codes to encourage loyal customers to share information about your brand with their networks.
Once you figure out your promotion schedule, make sure your logistics and operations are also in sync well in advance of any big pushes.
When it comes down to the wire, it doesn’t matter how seamless your checkout is, how quickly your website loads, or how festive your products look if you don’t have enough inventory, can’t fulfill orders on time, or otherwise fail to deliver on customer expectations.
Tips for Managing Inventory for Peak Season
It can be challenging to plan for peak season, as your order volume is not representative of any past linear growth and no two businesses look the same. Even the best planning requires continuous oversight of inventory levels and order volume throughout the holiday season.
1. Stock up appropriately.
It’s critical to get demand forecasting as accurate as possible to ensure you have the correct stock levels on hand in time for the holiday season. This means having a deep understanding of sales velocity at the SKU level, as well as a breakdown of where you’re shipping your orders to optimize storage location.
Too much inventory, and it can take some time to see a return on investment or cause you to pay high warehousing fees. On the flip side, stockouts can lead to unhappy shoppers and less revenue for you.
Here are some tips to optimize your inventory planning:
- Look at sales data from previous holiday seasons to help predict sales this year, also accounting for any new products you’ve introduced, new channels you’re selling on, changes in ad spend, and the general growth you’ve seen month-to-month.
- Determine the number of days of inventory you have until you are expected to run out and establish timely reorder points that account for lead times, inventory receiving timelines, safety stock, and any other potential delays that can be common during the holidays.
- If you’re using multiple fulfillment centers, understand where your customers reside to strategically store inventory near common shipping destinations to reduce shipping costs and transit times. Remember, carriers not only apply surcharges and higher rates during peak seasons, but also experience delays due to the holidays — so do anything you can to keep deliveries speedy and affordable.
- Communicate early and often with your supplier or manufacturer about the status of inventory and any potential delays on their end. Share specific figures around predicted order volume so that you can make sure to produce and order enough product well before the holiday shopping season is underway.
- Use inventory management software or inventory forecasting tools to help you analyze your historical inventory and sales data.
- Evaluate your existing inventory levels. If you have some SKUs that haven’t sold as much as expected, use Black Friday or Cyber Monday to discount those items and diminish excess stock.
- If you work with a third-party logistics (3PL) provider, proactively communicate any major spikes in demand to them so they can plan for the increase and better support your business.
2. Track inventory levels accurately.
You can use the best inventory planning tools and methodologies in the world, but forecasts can be wrong and the unexpected can occur. For example, your product could get featured in a few major gift guides, receive an organic celebrity endorsement, or suddenly became the must-have gift for a certain age group.
That’s why you need to continuously review inventory turnover, stock counts, and daily order performance. To do so, you need accurate, timely data. Real-time inventory tracking lets you monitor actual stock levels to see how you’re trending against your estimates.
Here are some tips for what to keep an eye on:
- If your estimates were off, examine the root cause and readjust your forecast for the remaining period.
- If sales are ahead of projections, reorder more inventory or slow down promotions.
- If you’re behind your projections, think through what more you can do to ramp up sales.
- Increase your reorder notification point for the holidays. If you’re selling through inventory even more quickly than you thought, consider adjusting your reorder points or safety stock even more.
- Monitor if any orders get held up and which items are driving a backlog so you can prioritize the replenishment of stock that is affecting sales.
- If you sell on multiple stores or use multiple fulfillment centers, keep an eye on stock levels for each, and transfer inventory or ship from your backup warehouse if needed.
Fulfilling Orders Fast
Once you have your inventory ready to go, it’s time to fulfill your customers’ orders. But holiday fulfillment is much more complex than non-seasonal months.
1. Consider outsourcing fulfillment.
Many companies experience the majority of their order volume for the year in Q4 alone. If you handle order fulfillment on your own or with a small team, you will need to call up all of your friends or hire temps or full-time employees — only to let them go as soon as the holidays slow down.
That’s why many brands outsource fulfillment to an established 3PL rather than spending time and resources to pack and ship an unprecedented volume of orders. The ability to scale up or down without having to lease your own warehouse, purchase land, or run a distribution network makes a 3PL a very appealing option.
Here are a few considerations for finding a 3PL:
- Having multiple fulfillment centers, letting you store inventory near your customers.
- Providing best-in-class technology that integrates with your store(s) and powers their fulfillment network.
- Partnering with someone that helps you deliver on customer expectations.
- Having inventory management tools and advanced analytics.
- Working with the other tools and partners you already work with.
- Getting a dedicated account manager and the support you need.
Just make sure you have a 3PL lined up as soon as possible, share any forecasting data you have with them, and understand their ecommerce fulfillment processes, timelines, and cutoffs for the holidays.
2. Choose the right shipping options.
With the standards set by Amazon and other retail giants, it can seem daunting or impossible for smaller businesses to offer the same speed (without eating high costs) — especially when Amazon offers free holiday shipping even to non-Prime members.
You’d hate to see your customers go elsewhere because you don’t offer that same level of service. Here are some ideas to consider:
- Leverage ground shipping, which is a fraction of the cost of air shipping.
- Distribute inventory across several fulfillment center locations to save time and money by shipping from the fulfillment center closest to your customer.
- Experiment with offering free shipping by using minimum spend thresholds to increase your average order value.
- Be clear (and conservative) about order cutoffs for guaranteed delivery before Christmas.
- Expedite or upgrade shipping if needed.
Handling Holiday Returns
As the holidays wrap up and you think you can finally breathe, you may start seeing the returns pile in. Between recipients who don’t want their gift, items that don’t fit, products that were damaged in transit, or a variety of other reasons, there is an inevitable influx of returns immediately following the holidays.
1. Be prepared for returns.
The more you sell over the holiday shopping season, the more returns you can expect if your return policy allows for it. More than five million packages are returned to retailers in the first week of January alone. This doesn’t even account for procrastinators.
Create a straightforward returns process that is clearly communicated across your website. If you work with your 3PL, make sure you understand your options for product returns. And aim to automate the returns process in a quick and cost-effective way, including providing your customers with a shipping label and order tracking information once their return is shipped.
2. Monitor returns.
Between December 26–January 31, 45% of Americans will return at least one gift. As the returns come in, you should collect the reason for the return and even encourage customers to purchase something else from you by offering discount codes to turn them into a year-round repeat purchaser.
You should also monitor your return rate and revisit your return policy to see if you should make customers responsible for covering return shipping costs. You may find that people who bought the most during a sale or free shipping promotion are the ones who end up returning the most. Keep an eye on how this impacts your margins.
Executive Summary: How to Prepare for the Unexpected
The holidays can be a stressful time for ecommerce brands. There are so many moving pieces that require precision, execution, and a little bit of luck.
With online sales expected to break records again this holiday season, your business can’t afford to be unprepared. Be sure to plan and monitor anything that is within your control so that you can maximize your holiday traffic and create brand loyalty by delivering on customer expectations.
There will always be unexpected challenges that arise — especially in the busiest time of the year. But the best way to finish 2019 strong is to start preparing for the holidays now and making sure every part of your business is aligned with your supply chain.
Working with a 3PL can help make the holiday season a little less chaotic. To learn more about how a 3PL can help you manage inventory, streamline order fulfillment, and create a great customer experience throughout the holidays and beyond, check out ShipBob.
We all know that holiday retail is growing increasingly digital. Ecommerce holiday revenue last year alone reached $123 billion, and this year we can expect this trend to continue. But as more online retailers fight for a slice of this lucrative pie, it’s going to take more effort to stand out from the crowd. For the 2019 season, offering a holiday-themed packaging design is a fantastic way to add value to your offerings.
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