Blog postsApril 26, 2017
Season’s Greetings! (Fulfillment) Plans for the Holidays?
We know it’s only April, and we’ve only just started the second quarter of 2017, but for the supply chain, the planning has already begun. Q4 is just around the corner. Are you prepared to manage the demands of your busiest season?
‘Tis the season to start thinking about the holidays and your end-of-year strategy. Even though it’s only April, Q4 planning is upon us. Sure, there are peaks and valleys throughout the year, but everyone knows that Q4 has the major players. It’s when most of the shopping really happens.
It all starts in Q3 with Back to School, and then it’s straight into Halloween, Thanksgiving, and the holidays. Between those events, there’s a lot of consumer demand to manage. It is the biggest, most condensed season for retailers, and for the supply chain, the frenzy hits months before the general population is even thinking about summer barbeques.
Now’s the time to start planning how to better manage demand, fulfill orders, and keep your shoppers on your site checking things off their holiday lists.
Let’s take a look at 2016 Q3 and Q4:
2016 back-to-school season:
K-12 and college spending reached $75.8 billion in total spending—up from $68 billion in 2015
And, spending started earlier than previous years—especially for college students—with 26% starting two months before school started and 38% turning to online shopping to prepare for the school year.
All Hallow’s Eve in and of itself garnered $8.4 billion in total spend—66.1% of which happened all in October
2016 Thanksgiving weekend:
- Shopping started earlier this year with $1.9 billion being spent on Thanksgiving Day
- Black Friday brought in $3.3 billion
- Cyber Monday hit an all-time record (not surprising) at $3.45 billion
Despite Cyber Monday’s impressive results, Black Friday’s online sales were only $110 million below the spend on Monday—meaning Black Friday could still surpass its online counterpart in popularity as soon as this year.
Now, a closer look at the majors:
To date, we saw the most spend of any year for holiday shopping. Ever. According to Forbes, total spend for the 2016 holidays exceeded $1 trillion—almost 4% more than 2015 (a difference of $40 billion). For the U.S. alone, holiday spend increased 8% from 2015. And, 76% of Americans used their mobile device to do holiday shopping.
The biggest shopping day last year was December 17, Super Saturday, or the last Saturday before Christmas. An estimated 156 million shoppers participated—more than the total for the Thanksgiving weekend—but a new trend is afoot.
According to a National Retail Federation (NRF) survey, 12% of respondents planned to do shopping up until December 23 and 52% planned to do last-minute shopping online.
Great, but what does this all mean?
The holidays have always been a logistical nightmare— especially when you take post-holiday reverse logistics into account. But every year, holiday shopping and the months leading up to it get busier and busier.
The movement to online shopping isn’t making it any easier. Online sales continue to increase and the evolving buying behaviors are creating more chaos than ever before. With the ability to shop from your smartphone at any given hour, there’s now a continuous stream of outbound customer orders that you have to fulfill.
To keep your shoppers from turning to Amazon for faster, cheaper delivery, you need a way to compete with its brand promise while managing your intense Q4 demand.
Joy to the world! for new logistics solutions
For the supply chain industry, new technologies are making it easier to design, plan, and execute peak season strategies. Considering the supply chain industry hasn’t changed much in the last 20 years, that is something to be joyous about.
The key is figuring out how to use these new technologies to your advantage. Though there are smaller peaks throughout the year, there are still valleys, too. And nothing compares to the end-of-year scramble to meet demand.
If you could just add a few more facilities to manage the acute needs of Q4, would you?
On-demand warehousing and fulfillment services make it possible for eCommerce retailers to avoid relying on Amazon for fulfillment, reduce delivery times, and lower shipping costs. You can scale your distribution network by adding more fulfillment locations during busier seasons and closing them down when the demand decreases.
The benefits of an on-demand fulfillment network:
- A larger distribution network puts your products in more locations and closer to your customers
- By shortening the last leg of delivery, your shipping costs go down and delivery times get faster
- With more fulfillment centers, you get more dedicated resources fulfilling orders at faster rates
- An on-demand strategy eliminates traditional fixed costs, capital expenditures, and long-term commitments
- You’re not beholden to Amazon’s services and their branding when fulfilling products through your own network solution, instead you are using your own branding
- On-demand warehousing also offers a simple, easy solution for managing inventory overflow
When the holiday season alone—from Thanksgiving to New Year’s—can account for up to 30% of your annual sales, it’s critical to get your logistics right. Starting to plan now and test new, flexible solutions could make or break logistics strategy at the end of the year and save you time and money.
Want to know the savings?
Popping up fulfillment centers with an on-demand solution could help you execute on your best Q4 yet. But don’t just take our word for it.
If you want to find out what shipping would cost you, reach out for a full network analysis. See what you could save in shipping costs by adding more fulfillment centers to your distribution network using the FLEXE marketplace.
To do a full network analysis, we take into account four key considerations:
- Customer delivery promises
- Manufacturing locations
- How much you want shipping costs to be
- How much inventory you want to carry
Using that information, we can run different network scenarios that identify how many fulfillment nodes you need to reduce shipping costs and delivery times. Logistics are always a balancing act of time and cost. We can help you find the optimal scenario to do both.
Get ahead of the holidays starting … now!