When Walmart says it will kick off this holiday shopping season “earlier than ever” to give customers more time to prepare, it’s almost like a warning from the largest retailer in the country.
The holidays aren’t going to be an easy ride for retailers this year, and preparation will be key as the window between Thanksgiving and Christmas is five days shorter than last year, and both holidays fall on a weekday.
The perfect storm: Bain & Company’s holiday forecast predicts 3% growth in retail sales this year. E-commerce sales are expected to rise at a 9.5% clip, which will add to shipping volumes. UPS has said it expects “the highest volume ever in our network” on Dec. 18, according to Supply Chain Dive. All of this suggests deliveries could be under strain with fewer days to deliver in time for Christmas.
The shorter holiday season could impact everything from marketing strategies to discounting for retailers. However, on-time deliveries are in many ways the North Star metric for companies to gauge success. Logistics experts told us retailers will rely more on technology, look for ways to ship on Sundays, and push to deliver goods ahead of the peak season.
The way Juan Meisel, founder and CEO of Grip Shipping, sees it, consumers aren’t simply going to buy less because they have less time to shop. “What that means is that you actually have to ship the exact same amount of product, or maybe a little bit less, in five days less,” he said.
Flexport founder and CEO Ryan Petersen told Retail Brew a big focus will be using technology to provide consumers clarity on when their items will arrive. Flexport’s seller portal will track all last-mile shipping and delivery updates across all sales channels from Shopify to Walmart, depending on where merchants sell.
“There’s a lot more demand for tech, as you’ve seen over the last few years,” Petersen said.
“You see it come back again this year, people are like, ‘OK, we’re going to need some solutions for monitoring where inventory is and connecting systems so that down the chain, everybody has visibility about what to expect.’” For instance, Etsy will offer shoppers more accurate delivery dates with a new machine learning algorithm introduced in May.
Getting inventory in for the holidays started in the summer this year, Petersen said. There was a notable increase in demand to ship holiday inventory earlier in the summer, due to the fear of an impending port strike on the East Coast and anxiety about getting cargo in before peak season, he added.
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“There was a big peak of departures for the holiday season inventory in June and July, in particular,” Petersen said. “And normally that peak in departures is in September [or] October. So, it kind of moved to the summer months.”
To be sure, dockworkers on the East Coast are preparing to go on a strike on Oct. 1, throwing a wrench in the works for the supply chain just weeks before the holiday season. The port strike is a big deal because it will dictate retailers’ pricing strategy, Petersen said.
Your package will arrive on Sunday: Meanwhile, Grip Shipping is working with final mile shipping carriers like UPS to determine if there are specific zip codes in the country that can deliver on Sundays. “If you do that, you essentially expand the amount of days that you can ship boxes,” Meisel said.
Another way Meisel is getting ready for the compressed holiday season is by encouraging his clients to ask their customers if they are OK receiving their subscription boxes a week early, especially for perishable goods.
But Meisel is well aware that delivery companies will be flooded with parcels and working at high volumes in the final weeks in the run up to the holidays. FedEx has announced increased fees and surcharges for the peak season.
To counter that, Meisel is also actively working with UPS and FedEx executives to pivot shipments directly into the big sortation hubs in an effort to optimize performance for his clients.
“You just need to be faster,” he said. “You need to be in closer contact with the facilities.”
“I don’t want to go to my local, small rotation center with my boxes; I want to send them straight to the big harbor where there’s a lot more capacity, and you skip one touch point for that box,” Meisel added.
In terms of expectations, Petersen said, “We’re at 99% on-time shipping…We’re going to do everything we can to maintain that 99% on-time shipping performance, even through the peak season.”