Navigating Demand Spikes: Automating Your Way to Successful Peak Seasons
As many countries grapple with another wave of the pandemic, retailers are continually challenged to adjust to shifting consumer habits, anticipate spikes in demand for specific items and meet delivery expectations. For many retailers, 2020 emphasized that there may no longer be just one peak shopping season, but rather peaks and/or ‘micro peaks’ can strike year-round—and often with minimal warning.
Whether driven by traditional shopping peaks or unexpected consumer demand, technology-enabled warehouse operations, fulfillment practices, and transportation planning are essential in helping omnichannel retailers effectively manage surging order volumes when they do hit. As organizations contend with changing consumer behaviors, taking a more strategic approach to unifying brick-and-mortar and ecommerce channels is emerging as a critical component of long-term peak season(s) success.
Automate Warehouse Operations
To efficiently manage a swell in customer orders, retailers with ecommerce channels need to prioritize flexibility in their warehouse operations—and manual paper-based processes are a clear impediment to the agility needed today. From the time an online order is placed through to outbound shipment execution and returns management, retailers must automate key workflows in the warehouse to eliminate time-consuming, administrative-intensive, error-prone manual practices, all of which can jeopardize good customer relationships.
E-commerce-enabled warehouse management systems (WMS) can help companies achieve extremely high levels of order accuracy while boosting capacity and minimizing the pick/pack/ship time required to get products into the hands of consumers. What’s more, this technology is important for better returns management, which is typically very labor-intensive and mired in manual procedures. During peak times, it’s not uncommon that returns are “put in the corner” to be dealt with after the rush. Some retailers may bring in extra staff to receive returns, issue customer credits and coordinate the disposition of returned goods, but this comes at a fairly high cost. With WMS and mobile capabilities that support barcode scanning of RMA documentation, item barcodes and condition/disposition barcodes, returns can be quickly scanned, assessed, and put back into market/made viewable online for purchase again. By automating these types of warehouse processes, businesses can save time and labor while simultaneously ensuring order accuracy and delivering a great customer experience.
Implement flexible fulfillment strategies
In the wake of the pandemic, U.S. ecommerce growth has jumped to over 30%, which represents a level of online shopping sales not previously expected until 2022. With such extraordinary growth, compounded by peak season, retailers with both brick and mortar and ecommerce channels need more flexible fulfillment strategies. Instead of looking at each channel independently, blending fulfillment practices across both creates an opportunity to bolster ecommerce speed-to-market and cost efficiency—especially important considering ecommerce fulfillment can require 3x more space than brick-and-mortar due to SKU variety and operational needs for preparing and executing parcel shipments.
For some retailers, this could mean a shift in the traditional definition of brick and mortar where stores perform double duty serving socially distanced in-person foot traffic while at the same time acting more as a local fulfillment center. In this scenario, ecommerce orders can ship directly from stores, in addition to serving as a pick-up location for Buy Online Pickup in Store (BOPIS) shopping—an important capability for retailers looking to remain competitive during and after the pandemic. By using physical stores as local warehouses, distance to customers can be reduced (if shipped at all), which ultimately reduces the higher costs of delivery from distribution centers. Alternatively, some brands might leverage regional third-party facilities for fulfillment while others may pursue creative options like abandoned mall space, as it can be cheaper than traditional warehouse space in today’s market.
Reduce transportation costs
The rapid swing to ecommerce fulfillment has left many retailers with drastically increasing transportation spend as a percentage of sales. Ecommerce shipping modes are significantly more expensive than their brick and mortar equivalents, leaving retailers to absorb much more cost to maintain revenues. As retailers get past the initial urgency to adapt, they will need to be more strategic in building cost-effective ecommerce transportation models and mode choices.
This poses a need not only for flexible order management solutions, but also for modern transportation management systems (TMS) and visibility technology that many retailers have neglected in the past. By managing transportation holistically and providing cost visibility across sales and fulfillment channels, organizations can drive greater omnichannel profitability. For example, using a single entity to aggregate carrier data through all segments of the supply chain, retailers can track end-to-end transportation performance and identify strategic cost-reduction opportunities through understanding their true cost to serve. By systematically tracking key transportation metrics (e.g., cartons/order, touchpoints/order, origins/order), as well as performance-based metrics on distribution channels (e.g., DC to consumer, Store to consumer, BOPIS), retailers make more informed transportation decisions based on insights from combined data sources. Increased visibility also helps retailers to identify supply chain delays downstream, facilitating real-time updates to consumers and driving enhanced customer satisfaction.
Capitalizing on Peaks
Interestingly, as consumer routines have been thrown out and people experiment with new purchasing avenues, many retailers are picking up new customers and gaining an opportunity to form new loyalties. Consumers will be quick to abandon these loyalties, however, if the delivery experience (or cost) is not on par with heightened consumer expectations. To stay nimble in the face of peak season and future events catalyzing changing shopping behaviors, retailers can find value in technologies to help them navigate uncertain and dynamic market conditions. With greater omnichannel agility across warehouse operations, fulfillment strategies and transportation management, retailers can better tune their supply chain and logistics practice to help overcome challenges and capitalize on opportunities.