It’s almost an understatement to say that 2020 has been an eventful year, and surprisingly, we are more than halfway through it. The coronavirus pandemic has caused peak level volumes for many businesses already, exposing problems in supply chains when it comes to lack of flexibility and scalability. As peak season begins to approach, it’s hard to know what it will bring, but one thing we know for certain is that it’s important to start preparing now. We have put together some tips on how to prepare for what’s sure to be a chaotic peak season.
Diversifying supply chains is key
The pandemic introduced atypical market conditions and consumer buying patterns, drastically increasing demand for ecommerce and consumer deliveries, and bringing a near halt to traditional brick and mortar commerce. Ecommerce spending grew 93 percent in May YOY, creating peak season level demand for some companies. The rapid ecommerce growth has put a massive amount of stress across the entire network of fulfillment centers, shippers, carriers and customers. This has been a problem for some companies that have run into an issue of carriers capping volumes, which has been particularly problematic for shippers who were unable to diversify their carriers during this supply chain disruption. To remedy this as we move into peak, shippers should look to regional carriers to supplement their larger national carrier. Regional carriers and networks are built for better business-to-consumer operations while national networks lack flexibility in case of any disruptions.
Diversification is especially important for Amazon sellers. Amazon learned earlier this year what demand spikes can do to its industry-leading supply chain and is already taking steps to avoid similar issues by restricting warehouse space for sellers based on inventory. Sellers who use Fulfilled by Amazon (FBA) services, now have an inventory threshold. This can be a problem for sellers that solely use Amazon for their warehousing needs, but by diversifying their supply chains and having multiple ways of fulfilling orders, they can be much better prepared for the upcoming peak season.
Look for places to save money
Peak season always means surcharges. This year we expect these fees to impact primarily the largest shippers and those who are seeing dramatic growth in volume compared to pre-pandemic times. Start negotiating surcharge reductions now to make sure you have the best rate possible going into peak. Flexibility can also help you save money and increase efficiency. If you have operational flexibility, bringing on a weekend shift to offer carriers another pickup window or shifting overflow volume to two or three-day shipping can help.
Another place to look to save money is your shipping costs. It might seem as though companies like Amazon have forced everyone to offer free two-day shipping, but the free price tag is really what people are looking for. A survey by Convey revealed that customers seem to be more flexible when it comes to delivery speed as long as the shipping is free. Expedited shipping costs can be extremely expensive, so by continuing to offer your customers free shipping with a slightly slower delivery, you have the opportunity for increased cost savings, depending on the scale.
It might seem as though companies like Amazon have forced everyone to offer free two-day shipping, but the free price tag is really what people are looking for. Customers seem to be more flexible when it comes to delivery speed as long as the shipping is free.
Don’t forget about the customer experience
The customer is always right, and they sure have a lot of demands during peak season—especially if you’re an ecommerce business. Because people tend to be so impatient, but free shipping is more costly for you, consider other fulfillment options to help customers get their products faster. A few options include buy online, pick up in-store (BOPIS), expanding carrier networks, and ship-from-store fulfillment.
- BOPIS, or curbside pickup, allows people to pick their orders up at your storefront, usually the same day as ordered at no extra cost to them. This is a great alternative that can save you money on shipping costs while getting items to your customers quickly.
- Expanding your carrier networks to include regional services and carriers with more efficient local networks and higher on-time delivery percentages will help circumvent shipping delays, allowing your customers to get items on time.
- Ship-from-store fulfillment can be another great option, as it allows you to move fulfillment hubs closer to the end customer, reducing costs and speeding up delivery.
Don’t forget that it’s always very important to keep your customers in the loop on their delivery status, especially if they’re worried about things like package theft or tight delivery windows. By providing your customers with frequently updated delivery information, they can rest easy and plan ahead. Don’t forget the importance of the customer experience this peak season and be sure to implement strategies that will help keep them happy, too.
Be prepared for the fact that Q4 2020 may be crazy
2020 has brought a rollercoaster of supply and demand issues that no one could have predicted. Although we are still seeing the effects of global supply chain issues, as well as chaotic customer purchasing behavior that happened earlier in the year, it may seem like things have mellowed out a bit. However, it’s become painfully obvious that we will continue to see disruptions amid the ongoing uncertainty. As you prepare for peak season 2020, you can’t have the attitude that it won’t be as bad as what we’ve already seen this year. Even the experts don’t agree on what peak season will look like this year, so it’s important to prepare for as many scenarios as possible. Make sure that you learn from what you haven’t done well or weren’t prepared for during the initial supply chain disruption and incorporate that into your planning process. Implement supply chain redundancy and flexibility where possible and be sure to have a contingency plan in case volume is beyond anything we could possibly imagine. Good luck, and if you need any help in your peak season planning, give us a call today!