In my previous post, I reviewed some of the challenges currently faced by e-commerce fulfillment and distribution operations as a result of coronavirus-wary American consumers redirecting their restaurant dining, travel, and entertainment dollars to online shopping. The significant (and unexpected) spending spree caused many retailers and their fulfillment centers to experience a holiday-level peak in order volumes, capacity and throughput months ahead of the usual timeframe.
As a result, many operations are now predicting an even bigger holiday peak than normal. They’re also recognizing that, in the age of COVID-19, the traditional approaches to handling the increased order volumes and reverse logistics associated with this peak season — namely adding more labor through temporary hires or additional shifts — won’t be enough. Particularly with social distancing, reduced staffing, and an already challenging labor market for hiring and retaining warehouse associates.
So how can retailers mitigate these seasonal peak distribution challenges? Here are a few strategies:
- Encourage holiday shoppers to shop sooner than later. Consumers who like to wait until Black Friday, Cyber Monday, or during Cyber Week because they anticipate the biggest discounts may discover they’ve waited too long. Many companies have not caught back up with stocking inventory that was delayed due to global shutdowns in the early spring. Further, the true last-minute shoppers who prefer to complete their gift purchases within a few days of Christmas, may not receive items on time or when they expect, as facilities struggle to keep up.Retailers can attempt to forestall some of these consumer disappointments — as well as spread out their workload by a few additional weeks — through extra-extra-early holiday promotions. In 2019, Black Friday promotions started appearing at the beginning of November; 2020 could see customers offered extra incentives or discounts to buy holiday items in October. For example, Amazon’s annual Prime Day sale event is typically held in July. Due to the pandemic, however, it has been rumored by several media sources that the sale will be held in October Whether Amazon intended the rescheduling as a means to circumvent the holiday peak or not, the strategy will likely help stabilize workflows around Black Friday and beyond.
- Offer incentives that prompt customers to pick up their online purchases curbside. With the increased strain on most supply chain networks, retailers should consider approaches that allow shoppers to pick up their items curbside at the store to avoid additional constraint on their supply chain. These might include promotions such as bonus discounts or specially priced items only available for at-store, non-contact pickups. Curbside pick-ups will not only reduce the volume of direct-to-consumer shipments from fulfillment centers (in turn reducing the amount of labor required to fill those orders), but also lessen overall shipping costs associated with meeting buyers’ expectations for free, one- or two-day delivery.
- Partner with alternative last mile delivery services. To provide additional options to lessen the load on today’s logistics supply chain, retailers could look at supplementary partners for last mile deliveries. Uber and Lyft, for example, have seen a dramatic drop in riders and revenue since the onset of COVID-related shutdowns and restrictions. Yet companies such as these have robust routing and transportation networks of drivers who could be leveraged to deliver packages instead of people. This could improve delivery times while reducing the costs associated with normal last mile deliveries.
- Utilize existing brick and mortar retail stores as micro-fulfillment centers. Mass merchandise retailers such as Walmart and Target have extensive national footprints; in fact, 90% of Americans live within 10 miles of a Walmart store. Not only does this allow for much easier curbside pickups by e-commerce shoppers, it also allows the retailer to significantly reduce its shipping costs by fulfilling purchases with available inventory from the location closest to the shipping destination.While this reduces labor demands in traditional warehouses, it does mean that store associates will need to be trained as pickers and packers. However, the reduction in volumes at traditional distribution and fulfillment centers will likely offset the costs of the required training time.
- Increase flexibility to handle returns. With the surge in online shopping, and the reduction in people’s willingness to physically enter stores due to the pandemic, more returns will be shipped back by carrier than taken to a customer service desk. Organizations that choose to handle returns in-house (as opposed to outsourcing them to a third-party reverse logistics provider) need to establish a strategy for increasing their flexibility when dispositioning product.One approach is to leverage existing sortation technology and software during off-peak times to evaluate returned items and route each according to its condition (return to stock, damaged beyond repair or resale, sell to secondary market retailer, recycle, refurbish, and so on). This method allows an operation to utilize its current equipment without a significant investment in new technologies or systems.
Looking for more strategies that can help your traditional retail or e-commerce order fulfillment operation better handle seasonal and holiday peaks? Connect with us.
Satyen Pathak, Account Executive, firstname.lastname@example.org
As an SME in material handling, Satyen has an extensive background in creating solutions for the retail/e-comm, Parcel, Post, and baggage handling market verticals. He has worn several hats including Product Management, Applications Engineer, Technical support and most recently as an Account Executive with DCS. Satyen has conducted numerous educational speaking engagements and has sat on committees for MHI providing directional insight for the industry.