[Updated post from November 2021]
The most wonderful time of the year is right around the corner – the holiday peak season.
Somehow, this time of increased buying activity seems to be creeping up on us earlier and earlier each year – and that’s no coincidence. In 2022, it’s a common occurrence for sales to begin prior to Black Friday and continue through the New Year. Unlike previous years, Amazon hosted an ‘early access’ two-day sale for Prime Members to kickstart the peak season just last week.
While peak season is certainly an exciting time for shoppers and brands alike, it’s also a time that needs some special attention in order for online stores to operate smoothly. Businesses looking to boost customer loyalty during the busiest time of the year will likely need to begin prepping now for some bound-to-happen ecommerce peak season challenges over the next few months.
Why does peak season matter in ecommerce?
The ‘peak’ is no longer confined just to just a few weeks of holiday shopping, and for e-commerce brands, peak season harnesses a huge amount of power. Why? Peak season brings with it an increase in sales and an opportunity to exceed consumer expectations, ultimately growing a base of loyal customers.
The customer experience is everything in today’s consumer culture – brands are expected to fulfill purchases seamlessly from check-out to delivery and returns management. The smoother and more personalized the experience, the more satisfied the customer. During peak, this is even more prevalent. The stakes are high with family members shopping for each other!
So, how can ecommerce businesses secure a positive peak experience that goes above and beyond customer expectations? They’ll need to get ahead of the many challenges that come with holiday order fulfillment.
Not sure where to start? We’re here to help. We’ve identified the biggest challenges of the 2022 peak season – and how e-commerce brands can be well-prepared for them for a successful holiday season.
5 e-commerce peak season challenges (and what brands can do to combat them)
1. Increased consumer demand
During peak season, inventory is everything… and it’s vital to let data drive your decisions when it comes to inventory management. What are your most popular SKUs? Do you have multiple warehouses? If so, what are the most sought-after SKUs in each location?
You should start asking yourself these questions and dive into the previous year’s sales data and consumer behavior far in advance of peak season to restock appropriately at each of your customer hubs. With the proper preparation, you’ll be ready for any influx of popular requests.
Oh, and something else to consider when it comes to prepping inventory;
it’s never a bad idea to make sure you’re on the same page with your marketing department. If there are any promotional items your brand is planning to use in holiday marketing campaigns, make sure you have them fully stocked!
Along with having your most popular purchases prepped and ready to go, it’s vital to take a step back and go through your shopping experience from end to end. Is it cohesive and consistent throughout? Are there any areas of friction that a customer might come across when shopping online?
With over 80% of shoppers abandoning carts due to long or complicated checkouts, now is the time to re-vamp your checkout process.
2. Shipping challenges and surcharges
One of the biggest challenges during peak season is shipping. From navigating surcharges to congested ports, it isn’t always smooth sailing (literally).
Ecommerce brands who want to stay ahead of the game and secure an effortless shipping experience will need to start understanding their supply chain options sooner rather than later. This means forecasting their volume, vetting their carriers, and ordering their inventory in advance of peak season.
With the rise of ecommerce, over 80% of consumers expect to do at least some of their holiday shopping online this year. This surge of online shopping has resulted in record-breaking Peak Season Surcharges (PSS) to cover operational costs during high demand.
To get ahead of these pesky surcharges that peak season brings forth, ecommerce brands should budget accordingly and keep up to date on additional charges while working with a 3PL to determine how to keep profit margins in place. Hint: surcharges are starting earlier than ever before!
While it may not be easy to predict the next supply chain disaster, ecommerce brands that are working directly with a 3PL to utilize their warehouse space in the most efficient way possible will ultimately be able to store more products. The results? A workaround for inevitable supply chain issues that could delay inventory from being received on time.
3. High return volumes
With the climb of ecommerce as a staple of holiday shopping, an increase in returns over peak season is inevitable. Online retailers face a 20% return rate – a rate 11% higher on average than their brick-and-mortar equivalents. For ecommerce brands, having a stellar returns process in place is a defining factor in providing a positive customer experience – especially during peak season.
With 67% of shoppers checking the returns policy before making a purchase, it’s no surprise that more than half of online consumers will avoid shopping with a brand that doesn’t have a hassle-free returns process. During peak season especially, it’s imperative for ecommerce brands to have a flexible and straightforward returns process in place.
Investing in a returns management tool and finding a 3PL that can provide a seamless integration with the software is an hassle-free way of securing a simplified returns process – making your customers happier and more likely to come back.
4. Labor shortages
With 2020’s stay-at-home orders due to COVID-19 and the resulting boom in ecommerce sales, the supply chain industry saw a colossal increase in parcel volumes that aligned with a major decrease in the workforce.
In 2022, this labor shortage is still apparent – according to a study by the Bureau of Labor Statistics, only 6.3 million hires were reported out of 10.1 million open positions this year. Additionally, the quit rate is still higher than pre-COVID times at 2.7%.
So, what does this mean for ecommerce brands? There’s an added element of difficulty in finding fulfillment partners who can guarantee the workforce needed to scale during peak season. To get ahead of these shortages, it’s important to look for 3PL partners who are fully prepared to handle this squeeze.
For a confident peak season, brands not only need to look for 3PLs who place a significant value on the culture and appreciation of their workforce, but who also invest in automation and seasonal labor to help negate labor shortages.
5. Excess inventory levels
With a generally volatile economy and ever-present supply chain issues, retailers are faced with difficulty in forecasting: knowing how many products to keep in stock to meet consumer demand.
Many brands began to adopt the “just in case” inventory method over the “just in time” method, which works well for some situations, but ultimately isn’t a sustainable inventory management method. Typically, ‘just in case’ leads to having too much inventory on hand and doesn’t take into account that what’s trending one month could be out the other month, leading to lots of dead stock.
Seasonal products are much more difficult to sell after their designated time period – so if brands are bringing in excess inventory, they should consider cutting back on the quantity brought into the warehouse in the first place.
It’s vital for brands to utilize fulfillment technology or partner with a third-party logistics company that can track inventory levels and optimize storage at all times of the year… especially during peak season.
The ‘perfect’ peak: exceeding consumer expectations
Does the perfect peak season exist? In all honesty, probably not.
Brands will likely face a plethora of challenges ranging from shipping costs to labor shortages to an unreliable supply chain. Not only this, but with the new post-pandemic normal of seamless omnichannel strategies, consumers are expecting brands to have five-star online shopping journeys – especially during the holidays.
With all of this said, there’s still hope for the humble e-commerce brand to make the best out of peak season. In fact, the holiday season could be the perfect time for companies to build a community of loyal customers who come back again and again, long after peak – as long as they can deliver a stellar customer experience.