Holiday Shipping: Plan Now for Last-Minute Shoppers By strategizing this summer, you can be prepared for December's rush deliveries.
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After studying its sales data, online home products retailer Wayfair noticed that items that took longer to ship weren't moving off its virtual shelves. Since the Boston-based company didn't offer two-day shipping, potential customers often turned to competitors who did to order their last-minute holiday gifts. For the 2012 season, the firm's leadership decided it would spend the summer months planning for its procrastinators to avoid any complications. "Customers were increasingly valuing fast shipping," says Niraj Shah, CEO of Wayfair.com. "We wanted to capitalize on the trend."
When it comes to meeting last-minute demand, Wayfair is not alone. Procrastination is becoming the rule, not the exception, according to the National Retail Federation, with an increasing number of shoppers taking longer to complete their holiday shopping. In 2012, 44% planned to wait until the week of Christmas or later, and online shopping on Christmas Day has doubled since 2009. To avoid disappointing customers, companies can strategize now, saving money, time and hassle.
Check out these four tips to help you prep for this year's holiday rush.
1. Plan logistics carefully. To support its new two-day shipping option, Wayfair needed strategically located warehouses. The summer before the 2012 holiday season, it researched warehouses and asked its manufacturers to ship items it knew would be popular to centrally-located spots in Utah and Kentucky. This enabled the company to guarantee Christmas delivery for orders placed by Dec. 22 that year. Most of these orders could also ship by ground delivery, keeping costs low both on shipping to the warehouses and for the customer, says Shah. In 2012, the company could offer two-day shipping throughout the holiday season, including Cyber Monday, one of the largest online shopping days of the year. The company saw a 60 percent increase in Cyber Monday sales, which it largely attributes to the two-day option.
2. Determine lead times. Contact all of your suppliers during the summer months to determine the lead time they need from the time you place the order until the products can be shipped. Mario O. Moreno, international trade expert and economist at the Journal of Commerce, says planning ahead is essential since items from Asia could take more than two weeks to arrive by ship to the West Coast, and still need to be moved across the U.S. by truck or rail. Ask suppliers if they've experienced any holiday delays or backorders in recent seasons. Find out what caused the slowdowns if suppliers foresee any problems this year.
3. Know your backup plan. As a business, you are exposed to any risks that your vendors are exposed to for natural disasters and other mishaps. After the March 2011 earthquake and tsunami in Japan, suppliers of semiconductors for computers, cellphones and other gadgets were either short or out of supplies, creating massive delays for companies such as Hewlett Packard and Sony. "Ask your suppliers about their business continuity plans and if they don't have one, then ask yourself is this is a business relationship you want to continue," says Ken Katz, risk control property director at Travelers, an insurance company. He also recommends having a backup vendor for each supplier so you can quickly move to your Plan B when problems arise.
4. Order early to negotiate. By placing orders for your products throughout the summer months, you can often increase your revenue margins by negotiating. Wayfair.com also finds that by ordering early it can avoid peak shipping charges often added to orders placed closer to the holiday season. The company says that controlling when items are shipped to the warehouses saves it about 15 percent on shipping charges each year.
