Ecommerce retailers look forward to the holiday shopping season all year: on average, it accounts for 19% of annual sales. But with this opportunity comes peak fulfillment season, when warehouses, fulfillment centers, and shipping carriers are inundated by excessive demand. Warehouse preparation is paramount to overcoming these logistics challenges.
To keep fulfillment running smoothly through the end of the year, you’ll need a plan for both your internal team and your warehouse—whether you run it yourself or outsource to a 3PL or 4PL. Read on to learn how to prepare for holiday demand in your fulfillment center, including tips like:
During the year, you probably have your pick and pack operations down to a science. Let’s say it takes, on average, 1.5 minutes to pick, pack, and label a standard order for the carrier. If you usually have three employees at your pick/pack station, you’re churning out 120 orders per hour—impressive!
But during peak season, demand spikes. If 20% of your annual sales occur in November and December—per the national average—you can expect a 25% increase in orders during the last two months of the year. Following our earlier example of 120 orders per hour, that’d equate to an additional 30 orders per hour—meaning you need an additional set of hands at your pick/pack station if those orders are going to get out on time.
Not hiring seasonal employees will put undue strain on your existing staff, leading to high overtime costs and burnout. With burnout comes employee churn and costly mistakes, like mispicks. It’s a much safer and more cost-effective solution to hire seasonal employees during the peak fulfillment season, which runs from October through January, sometimes even into February.
More orders mean more inventory, and more inventory means you’re probably playing a very big game of Tetris inside your warehouse or fulfillment center. Efficiency is key, especially during the holidays, so you’ll want to give careful consideration to where you store excess inventory. This might mean supplementing your usual storage with additional containers and shelves, or creating a simple hand-off procedure in which a fresh pallet is brought closer to the pick/pack station once the existing one reaches a certain threshold.
You may need to revisit your standard floor plan during peak season, too. When every minute counts, even something as simple as employees having to walk around extra pallets to reach certain SKUs can affect operations. If you anticipate some items will be top-sellers, you may want to store them front-and-center or near your pick/pack station. Similarly, take care to store items frequently sold together or via virtual bundles close to one another to maximize efficiency. If you sell apparel or something else with a lot of SKUs, you may want to organize the items based on size, color, or some other notable difference so they’re easy to find.
You know your products and your customers better than anyone, and no one strategy fits every brand. The key is to design your warehouse’s floor plan in such a way that items are easy to find and access so there’s no delay in getting orders packed and out the door.
There are a lot of ways to lose customers: a poor delivery experience, unhelpful customer service, inaccurate orders. But the most painful has to be losing an order because you just don’t have the stock to fulfill it. McKinsey found that 39% of shoppers will switch brands if the item they want is on backorder, while 32% will go to another retailer. Only 13% of consumers will wait for an item to be back in stock.
Don’t fall into this trap! Perform an inventory audit well before the holiday season to account for any damaged or outdated product, then use historical data to forecast how much new stock you’ll need to get through the holidays. We recommend ordering enough to see you through the start of the new year, since many warehouses and fulfillment centers will still be processing holiday orders or returns and may not be able to accept new shipments until February.
If you don’t already have real-time insight into your inventory, consider finding a new software provider with this capability. Warehouses that still use manual processes to track stock and inventory are prone to human error, but that’s of little comfort to dissatisfied customers. New-age logistics software systems give operators a live look into the status of each SKU count and order status at any given time, so you can monitor operations as they occur and adjust as needed.
Maintenance is a necessary part of maintaining your infrastructure, but performing warehouse maintenance between late October and January is like remodeling your kitchen on Thanksgiving. Don’t put it off, either—following Murphy’s Law, you can rest assured that the forklift that’s been a little slow to start will die on Black Friday. Brace for peak season like a nervous traveler arrives at the airport: way too early and a little over-prepared.
Consider training your trusted staff to keep an eye out for potential hiccups like faulty machinery and have regular check-ins. After all, they’re on site every day and are far more likely to notice these issues before they wreak havoc on your operations.
Every operations manager wants—and expects—their warehouse to run like a well-oiled machine; but to achieve optimal productivity, you need to lay the groundwork that will allow your staff to execute.
This will look different for every warehouse, depending on the products, order volume, staff, and floor plan. That said, there are a few tactics that are fairly versatile:
Peak season is a stressful time in fulfillment, but if you tackle warehouse preparation early, you’ll put yourself in the best position to make the most of holiday sales.
