Ecommerce to Stress Shipping Value Chains Over Christmas

October 29, 2020

After a year of disruption and challenge, retailers need their holiday season to go right. Unfortunately, they may find themselves in a tough position where the growth in online orders will put stress on supply chains and shipping partners on a scale the industry has never seen before. And the result for brands could be a multitude of late packages and frustrated customers.

The Data:

  • 🚚 Package carriers FedEx and United Parcel Service Inc. say they’re prepared for the onslaught with FedEx and UPS plan to hire a combined 170,000 seasonal workers this year.
  • 📈 Estimates say that the surge in online demand may result in an extra 7 million packages flowing through delivery channels each day.


What Does it Mean?


Many retailers are already fulfilling an increasing amount of online orders from stores amid the Covid-19-related drops in foot traffic.

For these brands, teaming up with a delivery partner — the way restaurants and grocery stores do — could be a good way to get purchases through that last mile. Sephora, for example, has started a partnership with Instacart for same-day delivery.

But how else can retailers plan for an unprecedented period? Well, here are a few ideas:

  • 💵 Deals and promotions should be focussed on consolidating orders. For instance, a store could offer a $10 gift card to shoppers who spend $100, instead of a blanket “10% off” discount, because that format would incentivize building a bigger shopping cart and result in potentially fewer fragmented shipments.
  • 🛒 Use inventory analytics and management systems to make sure orders go out in as few boxes as possible, including trying to bundle together multiple orders from the same household that have come in a short time window.
  • 😊 Communication: Customers will want to be kept informed about expected package arrival times from the time an order is placed through the delivery process, and they’re not going to be thrilled if they don’t get their items on time. But, at least if they have a reliable heads-up about a delivery date, they can make contingency plans.