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Material Handling Equipment

Planning for Peak 2020 – 5 Tips to Succeed in a Year Like None Other

What can be said about Peak 2020 other than the real test (peak season) is yet to come? Extensive modeling or the clearest crystal ball could not have helped plan for the year we've all experienced. Over the past several months I've collaborated with countless eCommerce leaders and business owners. All are grateful for being in a sector that has experienced unprecedented growth but at the same time, many are concerned about how to succeed and thrive with market uncertainly, strained infrastructure, volatile manufacturing, and a "prime" trained customer. Those conversations have led me to create the following 5 tips to succeed in this peak season:


1. Agnostic shipping strategy

Our major parcel carriers have already given strong indications that there is going to be a massive bottleneck with capacity. With only so many sort centers, trucks, and staff, each provider will be challenged to handle the demand caused by COVID-19, retail black Friday deals going online, and traditional peak volume.

Most carriers have either limited account volume or implemented peak season surcharges to drive behavior. If you have all your outbound shipping with a single carrier, I strongly suggest engaging with the other carriers that have been knocking on your door to see if they are willing or able to help. You might have to pay a little more for each shipment but that's typically better than orders sitting on your dock! If you've embraced a multi-carrier strategy, engage with each carrier team now and understand what limits and constraints you may be faced with. This peak season you may have to divert from your typically rate-shopping strategy to one that balances volume between carriers and ensures all orders can be shipped in a timely manner.

2. Expand fulfillment through partnerships

If you're self-fulfilling eCommerce orders, have a clear understanding of the maximum orders you can fulfill on a daily basis. You need to consider not just your infrastructure bottleneck (i.e., conveyance speed, panther labeling, etc.) but your labor constraints. There are many eCommerce and supply chain companies offering peak season incentives like signing bonuses and higher hourly rates, so expect a very competitive labor market. You need the same level of clarity if you're outsourcing your fulfillment. You need to know right now what your partners' capacity limits are.

Once you have the facts and a gap exists between your forecast and capacity, there are some options you may consider, including outsourcing with a third-party logistics 3PL partner. Again, you need to act quickly as 3PLs will be implementing 2020 onboarding lockdown very soon. I recommend finding a 3PL (or expanding the relationship with your current provider) to fulfill a small portion of your high moving SKU's that are typically single item orders to an offsite facility that compliments your current fulfillment network.

You may also choose to partner with a 3PL to manage only your returns or back-orders. This has proven to be an effective strategy during the past year. You also have the option of finding a supply chain partner to handle either all your DTC or all your B2B business, which will allow you to focus on a single sales channel and operate with better efficiency increasing throughput. There are many different options, but you must make decisions and implement your strategy now.

 

3. Re-evaluate Free Shipping offers

Everyone loves, wants, maybe even demands free shipping but that doesn't mean you need to lose profitability. Look at your current offering and compare it to your order history data to see where adjustments can be made. Recently I worked with a company that was offering free shipping on orders greater than $75. They actually reduced prices on a couple of fast-moving SKUs to encourage multiple line item orders to hit free shipping and it was very successful (larger cart value & higher-order net income). You may also want to look at increasing your free shipping offer to account for the increased transportation and labor cost (#1 and #2 above) to stay on track with your financial expectations.

 

4. Promotions early and often

The later in 2020 peak season, the greater the impact will be on transit days. This year will be like no other and it is very likely orders placed mid-December will not arrive before the holidays (unless shipped with shipped with an express service).

It's highly recommended that your promotional calendar launches pre-black Friday and stays very aggressive through the first week of two of December. This is not the year to try and level set volume as delayed delivers will result in more order cancellations and returns. Get your revenue as early as possible and let your customers know why it's important (see #5 below) to forego the procrastination approach.

5. Reset customer expectations

Even an eCommerce giant with billions of dollars invested in supply chain infrastructure has come up short with delivering on their fulfillment commitments this year. The best advice is to look at every page on your site with an order commitment and ask yourself if it's realistic.

As the old adage goes, it's better to under-promise and over-deliver. Be upfront with your customers and let them know the 2020 realities so they can plan accordingly. Once an order is placed and the "post-click" journey begins, over-communicate order status and if it looks like a delay is inevitable, get ahead of the situation, and see what you can do to help. We're all in the same boat and an honest, upfront, clearly communicated approach is always appreciated and more often than not will increase your LTV and create future brand ambassadors.

 

 

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Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, real estate management, and information technology—all engineered for Operational Excellence.