E-tailer Tips for Surviving Peak Season and Beyond
Lee Spratt, DHL eCommerce Solutions
From large to small-sized online retailers, the holiday peak season is a time that can be challenging given that e-tailers are vying for customers’ attention in a sea of promotions and ads. The ability to ensure the visit to their website results in a purchase without the possibility of a return is also at the top of most online retailers’ minds. A recent survey found that a 25 percent average year-on-year growth is expected for Black Friday, rising to a 28 percent increase for the holiday season as a whole. This expected increase can be music to many e-tailers’ ears, but not so soon. E-tailers need to prepare by heeding some tips to help them navigate successfully the busiest season of the year.
Pace your promotions
One of the worst situations an e-tailer can find itself in is having a rush to its website and running out of inventory. To avoid this situation and to smooth out the peak season, it is important merchandising and marketing planning includes extending promotions throughout the year, in particular a few months ahead leading up to the busy holiday season. Determine early on what are the top items you want to push this season and start your promotions well ahead of Black Friday and the big sales rush, so as to maintain a steady flow of promotions throughout the last quarter of the year and during the holiday shopping season.
Forecasting and trends
To avoid order backlogs, it is important for online retailers to give their logistics provider the clearest picture of their expected demand. By providing general volume guidance, the logistics provider can ensure they have sufficient capacity and can fulfill the volume to be processed coming into their distribution or fulfillment centers. With an established long-term relationship in place with a logistics provider, e-tailers can be sure they have a partner who is working on their behalf managing and negotiating the best prices with carriers. Additionally, logistics operators ramp up their seasonal hiring for their distribution centers and warehouse facilities in the summer and fall months in order to meet e-tailers’ demands, but nonetheless it is important to be on a logistics providers’ radar as early as possible in order to become an established customer with all documentation in order before volumes spike.
Avoid unexpected surcharges
To manage peak season volumes and to ensure they have the labor capacity to manage the influx of volume in their facilities, some logistics providers charge peak surcharges. Peak surcharges are additional charges, usually for oversized shipments that necessitate additional handling. Given that larger packages do not move through automated systems and slow down efficiency, an additional price tag is placed on these bulky items that can add up fast. There are some logistics providers that do not charge peak surcharges, but as a result, they do not accept new customers past certain dates, ensuring they are working with only established customers. Be aware and inquire ahead of time if your logistics provider customarily charges these additional fees during the holiday rush.
With peak season behind them, online apparel and other retailers know they cannot breathe a sigh of relief past December 25 because the dreaded return season often creeps in like an unwanted visitor. The facts are that at least 30 percent of all products ordered online are returned as compared to 8.89 percent purchased in brick-and-mortar stores. Unlike the brick-and-mortar model, e-commerce customers do not have a chance to touch and feel the product before the purchase, although some online fashion retailers are using augmented reality, virtual reality, and connected fitting rooms to provide shoppers the right size and improved accuracy. For those online retailers who have not ventured to try this new technology, returns represent pure cost that contain both direct and indirect cost. Direct costs include shipping, refurbishment and restocking or disposal, and indirect costs are comprised of value loss and inventory carrying costs.
To reduce return rates, the online apparel industry should:
·Provide more product transparency: This can be achieved e.g. via adding high-resolution images of items on the web site and providing a clearer and more structured product description.
·Use data analytics. Returns driven by quality defects or certain product characteristics, which don’t resonate with consumer needs, can be spotted early on using data analytics. The item then can be either improved or temporarily removed from sales until the defect is fixed.
·Review returns policy. While generally having a favorable hassle-free returns policy is a necessity in e-commerce business, returns terms and time windows for certain low-margin items, sales promotions or transaction types can be made stricter. The key is to clearly communicate that to customers at the check-out to avoid mismatched expectations.
Planning for peak season can represent a large portion of time invested throughout the year for many online retailers, but to ensure it’s as successful as possible, it is important to incorporate some of these tips and establish a partnership with a logistics operator as early in the year as possible.
Lee Spratt has been Chief Executive Officer of DHL eCommerce Solutions, Americas since 2008. He has extensive experience working in the e-commerce and technology industries. Lee has a bachelor’s degree in Business Administration from Florida Atlantic University.