4 Challenges Brands Need to Start Thinking About Now for a Smoother Peak Season
Take these steps now to avoid common pitfalls of peak.
In the U.S., peak holiday shipping season generally begins in October and lasts through December, when order and shipment volumes increase, requiring businesses to ramp up production and stock up on inventory. With peak season often accounting for a significant portion of annual sales and profit, it's a good idea to begin getting things in order as early as mid-to-late summer.
The demand that comes with this busy season can cause issues despite your best preparations, but there are steps you can take now to alleviate some of the common pitfalls of peak.
Secure the space you need to store your inventory
Consult with your sales and marketing team to get a handle on the latest demand forecasting so you can project and accommodate any change in storage needs. Also, look carefully at whether it's more space you need, or if there is an opportunity to optimize the space you already have. Like all real estate, warehouse space is costly and in high demand, so the last thing you want is slow or non-moving inventory taking up space that should be dedicated to items expected to move during peak.
Generally speaking, SKUs that haven't moved in 90 days or more are not doing you any favors, as they tie up capital you could be investing in more productive avenues while occupying expensive warehouse space. There are many ways to offload inventory without it being a total loss; consider promoting targeted discounts, bundling, cross-selling, or adding lower-value items as a gift-with-purchase.
Troubleshoot around strained carrier networks
As demand during peak has grown and the season has gotten longer, carriers have responded to the strain on their networks by placing limits on volumes from all shippers during a specified time frame, as well as setting holiday shipping cutoffs. Businesses, in turn, are hedging their bets by adopting holiday shipping cutoffs and diversifying their carrier mix to ensure customers receive packages on time, as well as to mitigate the rate of returns due to late deliveries.
To keep customers interested, compliant, and content, the strategy and messaging behind peak-centric order deadlines must be carefully considered and delivered. Encouraging shoppers to place holiday orders as early as possible can help circumvent shipping delays, with the added benefit of reducing the impact of extra emissions caused by rush shipping.
Set peak-specific free shipping thresholds
Outside of major retailers, for a business to absorb all its customers' shipping costs is neither realistic nor advisable. With the cost of shipping services on the rise, and particularly expensive during peak season, setting free shipping thresholds has become standard practice in e-commerce. It's maintainable for most businesses and, when implemented well, mutually beneficial.
When it comes to setting free shipping thresholds, as tempting as it may be to set a nice, round number, or to look at the value your competition has set, if your minimum doesn't align with your Average Order Value (AOV), it's very likely you'll see increased cart abandonment rates, and you might actually end up reducing your AOV. Consider your shipping costs, average order values, and gross profit margins to find the magic number that maximizes profits while enticing shoppers.
Optimize returns management
Returns management is a part of doing retail business, especially during peak, but with proper planning, you can mitigate some of the downsides it entails.
First, offer total transparency into your return policy, particularly if it differs during peak season. By letting shoppers know what they're committing to before they purchase an item, you create trust; making that information accessible is also likely to cut down on time spent managing customer complaints.
Additionally, don't underestimate the impact packaging can have on your return rate. With volumes higher during peak, packages spend more time in transit and are handled more frequently, making them more susceptible to damage. If you are seeing a high rate of returns tied to damaged shipments, it might be time to update your packaging procedures. Some SKUs may be better suited to boxes than mailers; also, minimizing any empty internal space--whether by right-sizing packaging or adding more packing material--will better protect products from damage in transit (and, as an added benefit, may reduce the dimensional weight of the package).
There is no such thing as a perfect peak holiday season for any business, but there are ample solutions to the problems that are likely to arise. Getting preparations in order early and surrounding yourself with the best strategy, contingency plans, and partners will position you for resilience--and, ultimately, success.
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This article was written by Maria Haggerty from Inc. and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
