This peak season looks to be a busy one. In this QAD Precision Report, we look at how retailers can manage the high levels of both e-commerce orders and returns.
Peak season is here and it is estimated to be one of the largest yet. A recent survey by the National Retail Federation (NRF) reports US consumers plan to spend $997.73 on gifts and other holiday items this year. The survey also indicates 49 percent of holiday shoppers started browsing and buying before November. This is up from the 42 percent that reported they were shopping early in 2020.
Similar trends can be seen in the UK. Iconic British retailer Marks & Spencer reported that almost 50 percent of consumers plan to have bought all their holiday gifts by the end of November.
Peak season is growing in both length and breadth with each year and 2021 is no different. In the US, peak season sales are expected to increase 7-9 percent from November to January totalling $1.3 trillion dollars according to Deloitte.
Although early holiday shopping has been a growing trend for some years now, what is new for 2021 is the why. Consumers are reporting high levels of concern over the availability of their desired gifts. Stock shortages and delivery times due to supply chain bottlenecks could result in popular items not being available or arriving late for the holidays.
The National Retail Federation (NRF) estimates 47 percent of holiday shoppers are concerned about the difficulty finding items this season. Their top items of concern are: electronics, clothing and toys.
Likewise, the UK has been rocked by a series of supply chain crises. These have been caused by the pandemic and a Brexit-related lack of truck drivers. Estimates suggest that the UK has a shortfall of 100,000 truck drivers.
This has resulted in delays unloading at busy ports such as Felixstowe. As a consequence, the UK has experienced shortages of everything from fuel to holiday favorites, such as turkeys, technology and toys.
Shoppers are purchasing their holiday gifts earlier and in larger quantities than ever before. Retailers must deal with the reality that with large online shopping, comes large quantities of returns.
The NRF reports that an estimated $428 billion in merchandise was returned to retailers last year. This accounted for 10.6 percent of all 2020 retail sales in the US. Estimated returns for 2021 are even higher, EMarketer predicts that approximately 30 percent of online orders will be returned in 2021.
To help meet customer demand and manage returns, here are four processes that retailers can implement to increase customer satisfaction while controlling costs:
Omni-channel shopping and returns
Multi carrier shipping
Choose the best carrier for returns
Clear communication with customers
The consumer wants options, which is why more and more retailers are utilizing omni-channel shopping and returns. Omni-channel flexibility is convenient and cost effective for both the retailer and the customer. Retailers can leverage one of their most valuable tools for both fulfillment and returns — brick and mortar stores.
Options such as “click and collect” or “buy online, pick-up in store” (BOPIS) are increasingly important. One major benefit is that the customer is able to get their goods quickly, oftentimes the same day. This also benefits the retailer. By increasing store footfall, the retailer has the opportunity to up-sell and cross-sell to the customer while they are in the store.
In-store returns are also convenient for customers. Again, this is a benefit for the retailer, allowing for the possibility of an exchange instead of a refund. Furthermore, undamaged returns can be quickly returned to inventory.
Retailers should leverage their stores as well as e-commerce distribution centers for order fulfillment and returns. As a result, retailers are able to optimize distribution channels — saving money while delivering goods to the consumer even faster.
Omni-channel will be particularly important this peak season with both retailers and consumers having to pivot to manage supply chain delays.
It is becoming increasingly important that retailers utilize multiple carriers to deliver merchandise. Recently, FedEx, UPS and USPS announced reduced capacity and surcharges for peak season. These surcharges not only affect the retailer, but also the consumer as the increased shipping costs are often rolled into the merchandise price.
By using multi carrier shipping software, retailers can select the best and most cost effective option to ship to the consumer. Retailers are able to avoid at least some costly surcharges and carrier capacity constraints by employing a multi-carrier strategy.
A carrier mix also allows shippers to choose the best carrier for the job.
Some carriers excel at outbound shipping while some are better suited for inbound shipping. Shippers are able to choose the best carrier for each individual instance. Whether it's a carrier offering the lowest same-day rate or a carrier that handles return shipping faster and more efficiently than its competitors.
Many retailers offer ‘free and easy’ returns as a benefit to consumers. However, returns are historically not easy, and they are never free for the retailer. Shippers can meet customers' needs while controlling costs by including a pre-printed return label in the package. Doing so ensures there is clear direction for customers while controlling shipping costs for the retailers — a win, win.
Furthermore, retailers should leverage add-on services many carriers offer for returns, such as drop-off points.
Retailers need to communicate early and often with their customers. Most customers would rather have too much information on their delivery, rather than too little information.
Unfortunately, late deliveries are the reality of the supply chain delays we are currently experiencing. After all, a Christmas gift has a lot less novelty after the day passes. No parent wants to issue an IOU to their children. Although shippers cannot control delays and bottlenecks, what they can do is provide clear communication to customers.
They can communicate to customers that their package is delayed and offer potential solutions. This could include alternative in-store options available to purchase. Retailers need complete visibility across their supply chain to communicate delivery estimates clearly and often with their customers.
Although peak season is notoriously unpredictable, there are several things that retailers can and should take control of. Utilizing these tactics will contribute to the ultimate peak season win — a positive customer experience and cost saving for the retailer.
LET’S KEEP IN TOUCH
If you would like to subscribe to the QAD Precision Report, or would like to receive notifications about QAD Precision events, webinars and news, please click here.
WINNING PEAK SEASON WITH MULTI CARRIER SHIPPING SOFTWARE
3 MINUTE EXPLAINER: WHAT IS MULTI CARRIER SHIPPING SOFTWARE?
CHOOSING A GLOBAL MULTI CARRIER SHIPPING SOLUTION: 3 QUESTIONS TO ASK