Everything You Need to Know About Holiday Shipping 2021
All signs point to another challenging year for ecommerce brands and the supply chain. Carrier capacity shortage, a.k.a. shipageddon, hit hard last year and there’s no foreseeable end in sight. In fact, The White House ordered the Port of Los Angeles open 24 hours a day to ease the bottleneck going into the holiday season, while carriers like FedEx and UPS have committed to unloading during off-peak hours. The lingering impact of a global pandemic has taxed the supply chain to its max with shortages in labor, materials and transportation. True to the season, the holidays may be full of surprises — some more exciting than others. But knowledge is powerful in preparing for the expected and unexpected to come. Here’s our holiday shipping reality check to steady your brand and customers for the best possible outcome.
Holiday Shipping Reality Check
A chaotic season may repeat itself. Surging demand depleted stock and crushed carriers last year. Many brands learned hard lessons from the 2020 holidays that have helped them prepare for Q4 2021. Labor availability and supply chain durability remain as high risks. With a limited number of goods being manufactured and long backups at ports, costs are rising, creating ripple effects everywhere. Brands may find themselves fighting over the same labor pool during the shortest holiday period — just four weeks between Black Friday and Christmas Day. Although late in the season, implementing a holiday checklist can help prioritize the next three months and identify vulnerabilities. There’s plenty of opportunity for savvy brands with U.S. retail ecommerce sales expected to rise 14.4% to $211.66 billion this holiday season.
U.S. companies are expected to nearly triple ocean freight spend in H2 2021 compared to the same period in 2020.
Take stock of the supply chain now. Although a lot is outside your control, transparency is a critical asset. The more you know about your supply chain for the next 90 days (November through January) or even beyond, the better. Look for opportunities to capture sales at every turn. For example, what inventory is available and where is it located? If a big-box retailer can’t accommodate your products, shift to an ecommerce strategy for fulfillment. If your goods are sitting in ports, how can you move them to a sellable location as fast as possible? Data-driven inventory pooling across one fulfillment network with partners like Whitebox enables you to move inventory as needed across different channels. A Plan B won’t go far enough this season. Prepare at least three to five contingency plans if things go awry.
Flex all your options. Like any investment portfolio, diversification can minimize risk. Reduce reliance on single-points-of-failure across manufacturing, sourcing and fulfillment. If there’s a global shortage of corrugated cardboard, everyone will suffer. However, brands can gain economies of scale on supplies and carrier relationships working with 3PLs like Whitebox versus scrambling on their own. What’s more, a full-service modern commerce company like Whitebox can spot opportunities to move volume to other locations based on inventory levels and demand so your products are as close to customers as possible.
Acknowledge consumer holiday stress. According to the American Psychological Association, nearly a quarter of Americans said they feel “extreme stress” during the holidays. Compounding that seasonal pain are the lingering effects of a global pandemic and the strains on families, jobs and social connections. Communicate early and often about what products you have in stock and for how long. After the sale, set realistic expectations about delivery times and get ahead of expected delays by keeping your customer as informed as you are. One furniture retailer has shared live imaging of its ship in the Port of Los Angeles to help customers contextualize the logjam of products and even offered a direct line to Customer Service versus routing to a call center. Another brand offered customers similar products to backordered items if those purchased have months-long lead times.
Nearly a quarter of Americans said they feel “extreme stress” during the holidays.
Drive demand as early as possible. FedEx and others have shared shipping deadlines, but we anticipate the carrier network tapping out earlier than planned. Consumers are taking notice too. Nearly a third of U.S. consumers plan to start holiday shopping in October or earlier, with 55% expected to start prior to Thanksgiving, per a Jungle Scout survey. Capture those early shoppers by focusing on closing sales at the start of November to avoid the December crush. Running sales, offering deals or expanding shipping options earlier in the season mitigates some carrier risk while managing consumer expectations. Also consider adding subscriptions or pre-sale options to capture sales that won’t require inventory right away.
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Define and communicate your glass ceiling. Only you know what your brand can tolerate on margin and sales. Don’t delay those uncomfortable internal conversations around non-negotiables. Determine what’s possible to drive demand and what you’re willing to sacrifice. To get started, reassess your inventory management strategy if you’re concerned about running out of stock. If you have limited stock, what will you prioritize and why? What margins can you shave to capture the sale? Can you increase product prices to offset rising costs? Align teams on product and shipping cutoff points so marketing doesn’t push ghost inventory. Approach consumers with similar transparency. Although they have come to expect free shipping in normal times, the stress of the holidays may make them more amenable to absorbing delivery fees if gifts arrive on time. Offering different shipping costs and speeds empowers the consumer to decide what’s best for them.
Don’t neglect employee experience. The last 20 months have been grueling for everyone in ecommerce, from marketing to manufacturing, packing to distribution. Your employees are your most valuable resource so increase your investments in their success and happiness. Eliminate known and unspoken pain points. Deploy technology and teamwork to reduce friction and free your people to do their work faster, better and safer. Look for ways to creatively flex (and rest) your labor pool. Need ideas? Ask your employees. At Whitebox, we’ve cross-trained high performers and engineered for efficiency using team input and our proprietary tech.
Everything Will Be Okay
The good news is this too shall pass. Carriers and 3PLs have managed through crises before and lessons learned will continue to improve the supply chain. Also, take comfort in knowing that brands are all stuck in the same boat (pun intended), no matter the geography or vertical. Recognize there will be hiccups and be prepared to pivot to your backup strategy’s backup strategy in real-time. And, remember to take time to celebrate you’ve made it this far and the only way is up.
Looking for more efficiencies from your ecommerce fulfillment strategy? Whitebox can help. Our modern commerce tech-driven approach streamlines your marketing, warehousing and fulfillment in one consolidated partner. Contact us to learn more.