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Effective Shipping is the Key to Holiday Fulfillment

Derrick Weiss

Achieving revenue goals and an optimal amount of inventory means a successful holiday season was had across all points of sale. This is the ultimate goal of any retailer during holiday - when everything goes just right đź‘Ś.

Hitting forecasts from customers buying online, in stores, or any number of different ways, while operating a perfect omnichannel operation is nirvana for many merchants.

That is, until shipping costs begin to creep into revenue and create losses where there should be neutrality or gains.

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With Amazon making two-day shipping a common reality for consumers, retailers are wondering how to compete with this new norm, without sacrificing their bottom line.

Tight shipping deadlines and peak order times can spell disaster for overhead and productivity - and shipping costs can vary depending on many factors. Everything from weather delays to rising costs of private shippers can impact the year-over-year costs of getting items to the customer.

So, what can you do about it?

  • Arm yourself with the facts
  • Automate shipping decisions
  • Make a stand on free shipping
  • Set the right expectations with customers
  • Use the best platform possible
  • Look back after the holiday season is over

Higher Shipping Costs = More Abandoned Carts

According to Neil Patel, 28% of shoppers will abandon their shopping cart if presented with unexpected shipping costs. This number quickly begins to eat into revenue when the exit rate of potential customers increases.

But what about you?

As the retailer, finding the balance between charging enough for shipping to protect your bottom line, not overloading the warehouse with rush orders, and ensuring customers finish their order can feel like throwing darts at a tiny dartboard, trying to hit the bullseye.

Essential Holiday Fulfillment Statistics:

These aren’t the most mind-boggling of stats - they are an indication of what consumers expect, and how things will end up going in the next few months. How do you stack up against these?

  • 8 in 10 internet users think buy online, pickup in store is appealing, eMarketer.
  • Amazon hired 20% more seasonal staff for their holiday season 2016, Time.
  • Only 21% of US retail IT executives said they had up-to-date technology in place for in-store pickup or return of web goods, eMarketer.

This means that:

  • More customers will expect to buy online and pick up in store.
  • Your fulfillment needs to be more efficient or you need to hire more (both have pros and cons).
  • Omnichannel fulfillment and returns are a place to create a great customer experience.

Shipping Automation

In the 2016 Global Logistics Report, research firm Colliers International reports that the rise in ecommerce and online retail has pushed warehouses to adopt more sophisticated facilities that include high-level picking and sortation systems. The investment in efficient facilities is rising, as well as the size and number of these facilities.

However, any inefficiencies stemming from getting an order out the door can be multiplied by the volume of orders received - making this crucial to the holiday season.

A shipping management system that price compares shipping costs for each order eliminates lost revenue from overpaying on shipping costs, and doesn’t incur excess overhead from paying a warehouse manager to manually calculate the best time vs. cost shipping method.

If your current warehouse management system does not incorporate methods to customize shipping parameters like weight, dimensions and specialty packaging of every order and syncs source and destination information of the shipment, you’re missing out.

During the final months of the year, with orders flying in and packages flying out - the costs can really add up.

Free Shipping or Not?

Aberdeen Group reports in that 87% of today’s customers are willing to wait two or more days to receive free shipping.

With services like Amazon Prime and many major retailers offering free shipping thresholds, the norm is set to become customers expecting a free shipping promotion every time they shop online.

Growing retailers struggle with the margins of providing constant shipping promotions. When the other warehouse operations are running with less overhead, it is possible to discount shipping for ROI and increased sales.

Marketshare is hard to gain in the increasingly competitive online retail market, especially with retailers offering free one and two day shipping. Mid-market and growing retailers may feel the burden of tight shipping margins. But shipping promotions undoubtedly attract customers.

Where is the sweet spot between shipping margin and customer conversion?

Setting the Right Expectations

Major shippers and retailers all have different cut-off days for delivery by December 25th. Make sure you note these dates in several crucial places on your website, including the product description page and check-out page.

Considerations surrounding staffing and the warehouse should be made to get the rush of close-to-Christmas orders out the door and on the right carrier.

Valuable space in the warehouse is saved when orders are moved through the order-to-door cycle faster and customers are more satisfied when their orders on on-time and correct.

The Right Platform for Shipping and Beyond

Inefficient shipping is an obstacle that is nearly impossible to recover from during the holiday rush. Customers celebrating gift-giving holidays have a hard deadline. A lost or delayed order will cause loss of trust from that customer.

A shipping management system that demonstrates excellence in holiday readiness includes:

  • Integration with domestic and international shipping companies for price comparison in one centralized source.
  • Freedom to integrate company business processes to auto-choose the carrier with the lowest shipping cost, or pick the shipping company manually if that is your warehouse process.
  • Visibility into order status and tracking to alleviate burden on customer service representative and customers inquiring about the status of their order.

If you are seeing inefficiencies in your logistics management system that are causing obstacles for your important customers, look deeper into the system you’re using.

Every year, retailers are feeling more pressure to stay ahead of the highly-competitive holiday retail market, which seems to be pushed earlier and earlier each year.

With big box retailers feeling the pressure from more holiday shoppers turning to ecommerce, they are driving down prices and finding ways to create an omnichannel presence.

This has caused a ripple effect for e-retailers that don’t have the convenience of a customer being able to find the item they need that day. Streamlined fulfillment is the key to making the online shopping experience as pleasant and convenient as in-store. Plus, no crowds!

The Most Important 4 Weeks of the Year

With just around 30 shopping days between Black Friday and December 25th, the traditional end of the holiday buying season, fulfillment centers and warehouses are inundated with rush orders, heavy load days, large volumes at receiving, and managing manual labor.

The fourth quarter can make or break a company’s revenue and reputation.

Having the right system in place to manage inventory and fulfillment can make sure that that doesn’t happen. Here’s a checklist of essentials for your order and inventory management system:

Seamless Shipping

Inefficient shipping methods not only eat into your bottom line, during holiday it can cause a bottleneck that is nearly impossible to recover from.

Customers celebrating gift-giving holidays have a hard deadline, with a lot of sentimental value attached. A lost or delayed order will cause not only loss of revenue, but loss of trust from that customer.

A shipping management system that epitomizes holiday readiness should include:

  • Integrate with top shipping carriers
  • Automatic rate comparison for carriers/service levels
  • Intelligent decision making - choose the lowest shipping cost or a certain carrier, or some custom rule
  • Built in fulfillment

Abilities like in-store fulfillment and BOPIS used to be reserved for big box retailers with a large staff and deep pockets, but a platform like SkuNexus can make this strategy work for your business, with no exorbitant additional costs for implementation of this capability.

Holiday Post-mortem

Your holiday data is a goldmine to inform your strategy for the next year and beyond. Be sure to start your analysis initiatives in January to plan your roadmap for the next holiday season.

Look back and analyze what you did well, and what you could have improved on. Unless everything went by smoothly, a few things should jump out at you. Document those, and begin working towards a solution. You’ll have plenty of time to figure it out during the year.

And if you can’t seem to find the right solution for you, schedule a demo of the SkuNexus platform. It’s infinitely customizable, and is the best way for merchants with unique fulfillment processes to create a tailored solution.

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