There’s a reason why retailers love the holidays. During the holiday season, many B2C brands experience peak sales volumes and a 16 percent increase in first-time customers. If brands aren’t prepared to scale to demand, however, an increase in orders can have long-term consequences for profitability and brand reputation.
A dramatic spike in sales volume requires fulfillment planning. When properly served, holiday shoppers can become long-term brand loyalists with increased lifetime value. However, if you disappoint customers during the holiday season, you aren’t likely to get their business again.
Growing brands -- especially those with limited holiday experience -- must think about the holidays well in advance. With the right fulfillment strategy, B2C brands can maximize revenue opportunities and achieve competitive advantage by improving customer satisfaction during holiday peaks.
Planning for the 2016 holiday shopping season.
At this point in the calendar year, most B2C brands have already created a holiday inventory plan, ordered inventory for peak season and developed a holiday shipping schedule. Now it’s time to consider how your brand will wow customers using a fulfillment strategy and processes that ensure on-time order delivery.
Whether you currently manage fulfillment in-house or work with an external third-party logistics company (3PL), several actions can help you better prepare for a successful (and profitable) holiday season:
1. Determine your peak day using a 360-degree data perspective.
Start by forecasting your company’s peak day. Brands with limited peak season experience can work with a 3PL partner to develop sales predictions and ensure maximum shipment needs do not outpace operational capabilities.
To calculate peak day, the best 3PLs combine past data with forward-looking predictions. Data analysis should include information like sales volume and customer behavior during past holiday seasons. For instance, if your peak day was on Black Friday in 2015, identify the reason for the increase and use the information to develop your strategy for the upcoming holiday season.
Peak day analysis should also impact your marketing strategy and promotions. Ideally, there should be a direct relationship between the amount of money you spend on promotions and the number of orders you expect to receive. The way customers react to specific holiday promotions will inevitably affect your ability to ship orders on time.
For example, if you sell swimwear, you can leverage previous purchase data to determine whether small tops always sell with small bottoms or if the ratios vary unexpectedly. Using these insights, you can mitigate peak-day stresses by organizing your warehouse to create a frictionless fulfillment process.
2. Plan fulfillment operations to scale to peak day needs.
In the world of fulfillment, receiving orders and then lacking the ability to ship them to customers on time is the worst-case scenario. If you normally ship 25,000 units a day and anticipate handling 100,000 units on your peak day, you must have the means to scale in order to not jeopardize your holiday sales.
It’s important to understand that peak day problems cannot be resolved by simply hiring additional labor. Instead, the identification of your peak day should serve as the centerpiece of a comprehensive plan to scale fulfillment to customer expectations -- even on the busiest day of the holiday shopping season.
Scaling issues can include things like converting existing packing stations to packing lines, predicting inbound volume levels or developing a better organizational system for boxes based on purchasing patterns. Share as much information as possible with your 3PL -- your partnership with your 3PL will help you identify opportunities for greater efficiency and improve customer satisfaction by securing your ability to process a large volume of orders in less time.
3. Determine which logistics strategies will boost sales and protect your customer experience.
Holiday fulfillment can be a minefield of challenges, from unique holiday packaging updates to shipping routes delayed by a sudden winter storm. To navigate unforeseen obstacles, your fulfillment team needs to ask and answer several key questions:
Do you change your service level agreements during peak seasons?
Do you offer a branded holiday experience like seasonal packaging, gift wrapping and gift messaging? How much time do these options add to the fulfillment process, and at what cost?
Do you have visibility into when a package is delivered, and can you offer that same level of transparency to your clients?
How do you manage last-mile shipping guarantee cutoffs during the holidays?
The answers to these questions will have a serious impact on your holiday success and fulfillment capabilities For example, if you don't have branded holiday packaging yet, you could consider investing in it to improve your customers’ unboxing experiences and enhance your brand’s reputation.
Holiday packaging is smart marketing spend. According to recent research, 40 percent of online shoppers say branded packaging makes them more likely to recommend a product to friends. Why does that matter? Because in the current online retail marketplace, shareability is a key factor in brand awareness, loyalty and even new customer acquisition. More than half of online shoppers report that they have been convinced to buy a product after viewing images and videos on social media.
Likewise, if your brand lacks clear service level agreements, you can work with your 3PL to make experience-driven recommendations on holiday cutoffs. A 3PL can also explain how to proactively monitor package delivery. Improvements like these during peak seasons will positively impact the customer experience and improve the likelihood that shoppers will purchase from you again.
4. Use holiday insights to make improvements throughout the year.
The 2016 holiday season is still months away, but it’s not too early to start planning for 2017. The way you document your successes and failures this year will determine your ability to forecast and make improvements in the future. When it comes to fulfillment, improvement is an iterative process that spans multiple sales seasons.
At Dotcom, we perform post-mortems with our clients after the holidays. We determine what went right, what went wrong and what we wish we could have done differently. Then we create an action plan and begin implementing smart changes as early as January. Although it’s possible to handle some reengineering on the fly, it’s best to take a methodical approach to documenting changes and implementing solutions.
As a best practice, diligently document any restructuring, reengineering or solutions created within your fulfillment processes as they happen or work with a 3PL that can. This is the best way to make sure you learn and improve going forward.
I remember when retailers first started offering online sales during the holidays. As a mother who dreaded going to a toy store at Christmastime, I was thrilled by the convenience that ecommerce offered. But even though companies made bold promises about on-time shipments, many couldn’t deliver on those promises by December 25.
The risks are even greater for today’s brands, with some companies relying heavily on their ecommerce sites to meet holiday revenue targets. The holiday retail season undoubtedly presents a significant opportunity for your brand. But success isn’t guaranteed. To boost sales and build a lifelong customer base, you need to dazzle customers by providing an exceptional experience after the sale -- and that starts by creating a fulfillment plan capable of effortlessly handling orders on your peak day and throughout the entire holiday season.