For ecommerce businesses, peak season always feels right around the corner. Drumming in sales to the tune of $211.7 billion in November and December last year, U.S. shoppers are preparing to open up their wallets. However, you can only capitalize on this shopping season if you’re prepared to handle a dramatic influx of orders. Whether it’s complications in fulfillment, restocking, or something entirely different that causes hiccups in your logistics, we’ve got you covered with these nine tips to prepare your ecommerce business for the holiday season.
Let’s face it, peak season is a challenge even for the most efficient fulfillment centers. To make matters worse, 38% of shoppers say they will never shop with a retailer again if they had a poor delivery experience. However, with any risk comes high reward. So, if you’re going to capture your share of the holiday market, preparation really boils down to three key strategies:
Easy, right? If you’re thinking, “not so fast,” then keep reading—we’ve got you covered.
Telling yourself that you’re going to create a plan and prepare early is more easily said than done. After all, is there really a slow time in the land of operations?
Here are the nine actionable tips we think will help you prepare:
Let’s break these down.
During peak season, the global supply chain is strained, to say the least—an issue that’s only been compounded by the effects of COVID over the past three years. In response, you must plan far in advance to guarantee that your inventory arrives at your warehouse in time to be properly stocked. Most warehouses will set holiday cutoff dates for receiving inventory, either explicitly or implicitly. Deliveries that arrive after this date may be turned away or received but not stocked. And damaged or lost shipments will only spell disaster for your holiday business plans.
Another thing to note is that international freight delays should be expected too. If your products are manufactured overseas, then you must account for COVID restrictions and the regular duties and customs processes that will be inundated with higher volume. Carrier disruptions are all but guaranteed.
When it comes to projecting inventory, there are a few things you need to consider. To start, it’s important to use historical, year-over-year growth data, last year’s holiday volume, and consumer trends to predict how much inventory you’ll need to get through the holiday season. Believe it or not, of shoppers who couldn’t buy what they wanted, 39% say they switched brands, while 32% went to another retailer. Only 13% say they waited for the item to be back in stock. It might be a tough pill to swallow, but brand loyalty isn’t always as high as you might hope—order too little and you may miss out on sales.
While the holiday season is often considered October through December, you’ll want to have enough inventory to last through the first few months of the new year. Most obviously because fulfillment delays that linger into the new year will have a major impact on restocking. But other holidays, like Chinese New Year, will impact logistics through January—especially if you manufacture in China.
Pro-tip: Some warehouses increase storage fees during the holiday season. Be sure to factor this into your expenses.
One final thing to consider is bundles, discounts, and other holiday promotions when projecting demand for each SKU. Virtual bundles—where items are sold as a single SKU online but read as two or more picks at the warehouse—offer an opportunity to upsell customers, but likely mean you’ll need additional stock. The same goes for other discounts and promotions. If you’re selling items at a discount, they may sell faster than average.
As peak season ramps up, warehouses will issue cutoff dates for a variety of services, including receiving inventory, making changes to shipping options, kitting, and other special projects. These deadlines typically fall anywhere between October 1 and November 15.
Confirm these holiday cutoffs with your warehouse:
Projects and services: It’s common to create special SKUs during peak season. Whether you have limited-time SKUs that require kitting, want to use holiday-themed packaging, or need to include holiday inserts in your packages, know that these services are typically suspended during peak season and you’ll need to coordinate these efforts with your warehouse further in advance than usual.
In 2022, for direct-to-consumer (DTC) orders, we saw an average of 1-3 days processing delay between Black Friday/Cyber Monday (BFCM) through Christmas Day. And we expect this trend will continue this year. To ensure delivery by Christmas, use the following holiday cutoffs as a guideline:
We at Airhouse often receive pushback on these dates. While the carriers will have later deadlines, these timeframes have baked in buffer room for delays. We recommend using these dates for orders that you’ve guaranteed will arrive before the Christmas holiday, but you can certainly ship later.
Economy shipping options can be affordable for businesses and customers alike, but they often require handoffs between carriers which isn’t ideal during the holiday season. These handoffs can cause delays, and worse, unreliable tracking information for the customer. With such potential for customer dissatisfaction (remember that 38% figure!), many companies opt to remove or upgrade economy methods during the holidays altogether (if their pricing model permits). At the least, you should offer an expedited shipping option for customers in addition to economy.
Pro-tip: Offer at minimum two shipping options: a standard (often free) option and an expedited option. Be sure these options will be communicated with your 3PL on each order to ensure orders are shipped within the customer’s expected timeframe.
Another thing to remember is that carriers often implement additional surcharges during peak season. To offset this, facilitate larger orders through incentives—like offering free shipping on orders that meet a monetary threshold.
Another thing to remember is that carriers often implement additional surcharges during peak season. To offset this, facilitate larger orders through incentives—like offering free shipping on orders that meet a monetary threshold.
During peak season, the old adage reigns true: underpromise, overdeliver. This means you should set realistic expectations based on expected delays across the supply chain. Customers are way more forgiving if your communications are clear and honest about any delays that might occur.
To combat this, we recommend highlighting messaging about delays in as many places as possible so customers can’t miss it, including:
Not only will regular notifications keep customers informed about their orders, but it will also greatly reduce the amount of customer support inquiries your team will need to field.
The concept here is simple: the earlier you can get your customer to place their holiday orders, the more likely you’ll be able to fulfill them on time. Like we’ve said several times, you really can’t be ready for the holiday season too soon—and the holiday shopping season just keeps getting longer. In 2021, 45% of consumers reported they would start their holiday shopping by October. By 2022, that number had risen to 56%. Take advantage of this and you’re sure to have a smoother holiday shopping experience.
It’s not a question of whether you’ll need to handle a claim or lost shipment, but how many. And because lost orders are typically beyond the liability and control of both your warehouse and the carrier—even insured packages aren’t covered once they’ve been delivered.
In response, we recommend that you publish your plan for how you’ll handle claims and reshipments on your website. And for businesses that have a high average order value, we strongly recommend using a supplementary service like Route that offers buyer protection against theft. Not only will this protect your company from financial losses, but it’ll also provide peace of mind for your customers—reducing cart abandonment.
Pro-tip: 81% of retailers refunded lost or stolen packages. If you opt not to use a supplementary service to protect orders, be sure to account for this expense financially.
Returns are a common part of any shopping experience, but return rates can be as high as 30% for ecommerce retailers. In 2021, CBRE projected that $66.7 billion in ecommerce holiday purchases would be returned. As consumer spend increases as it did in 2022 and is expected to in 2023, so will the number of returns. To mitigate returns, ensure your product descriptions are accurate and work with a reliable fulfillment partner to ensure your orders are picked and packed correctly and delivered on time as much as possible.
You may also want to consider extending your return policy by a couple of weeks around the holidays so customers have enough time to give and return gifts. Be a hero: do your part to stop regifting!
As you can see, preparing for the holiday season is not a walk in the park. However, following these tips will certainly set you on the right path. If you’re doing this alone, or with a lean team, now’s the time to consider onboarding (or switching) your fulfillment partner.
