Black Friday and Cyber Monday (November 24 and 27, respectively) are arguably the two most important days of the year for e-commerce businesses. Of course, the holiday shopping season begins well before that weekend, and is followed by a continuous flow of customers who make purchases up until the last minute.
Unsurprisingly, the final few months of 2017 have the potential to be very fruitful for online merchants. The National Retail Federation estimates that 70% of consumers won’t begin purchasing holiday gifts until November, and according to eMarketer, nearly a quarter of the entire year’s digital sales will occur in November and December.
Additionally, last year’s online sales broke records:
- Cyber Monday 2016 was the single largest online sales day in history, reaching $3.39 billion, a 10.2% increase year-over-year.
- Black Friday 2016 was a close second, with more than $3.34 billion spent online, a 21.6% increase year-over-year.
- Nearly 44% of consumers who shopped during Thanksgiving weekend 2016 did so online.
- 41% of consumers did all or the majority of their 2016 holiday shopping online.
Oh, and these numbers are expected to increase this year.
Just like holidays shoppers who procrastinate, retailers who do the same run many risks, including running out of inventory, falling short on sales goals, sending packages late, and providing poor customer service.
So, how does one prepare for the madness that is Q4? Below we share how our most successful customers have prepared in the past, and how they are gearing up again for a lucrative, (relatively) sane Q4 in 2017.
What should e-commerce merchants know to realistically meet demand for peak holiday season?
1. The more you sell in Q4, the more holiday returns you’ll have
Ugh, the dreaded returns. First and foremost, be sure to have a straightforward returns process that is clearly communicated with customers and potential customers. Next, be prepared for an influx of returns after the holiday rush. If you normally have 50 returns a month, and you’ve forecasted your sales doubling in Q4, then be prepared for it to double to roughly 100 returns each month. You may even want to pad that number a bit more, given that a good chunk of these orders will be gifts for others.
2. Shipment delays are bound to happen during the holidays
During the holiday season, it’s possible that on-time rates will fall slightly. Carriers will be bombarded with record demand, and even with extended delivery windows, seasonal help, and relocated staff, they will struggle to keep up with the demand. While most shipments will arrive on time, delays are going to occur. Use past performance data to see what your average delivery speed and processing times are, and be conservative in your estimates when setting expectations with customers.
Warn customers upfront and as early as you can about possible delays, telling them to allow a buffer of one or two days for packages to arrive. Encourage concerned shoppers to choose an expedited shipping option if they want to err on the safe side. The ‘get this by Christmas’ guarantee isn’t always guaranteed. Do everything you can to prevent and guard against disappointment during the stressful holiday season.
3. Have a coordinated promotional plan for Q4 (don’t just wing it)
Given the craziness of the holiday season, nothing should be done on a whim. This includes every email campaign you send. Your approach for the busiest shopping days of the season must be carefully and cohesively planned out. Establish goals and measures of success, and put in the work ahead of time.
Of course, having marketing ready ahead of time is only part of it – everything else must also be ready in advance of customers clicking ‘buy.’ This means you have production ramped up, inventory is on hand, and you know how will you get it all shipped out on time. Everyone needs to know exactly what your plans are so you can launch and execute on time. Then, you can rest assured as you watch the orders come rolling in.
4. If you don’t have extra product yet, be prepared for stockouts in Q4
In Q4, most online merchants tend to sell more product in a shorter timeframe. To make sure you meet the increase in demand, look at your sales from last year. Do you have enough inventory to get through the holidays? If not, you may be in trouble.
Depending on where your product is coming from, your inventory may not get here in time. If your manufacturer is overseas, ports are bombarded with small parcels and large freights during the final couple months of the year. In addition to possible delays, there’s also a chance there will be higher fees. If you won’t have enough product in time, you should refrain from doing any major promotions that will likely result in stockouts.
5. If you are doing a big holiday promotional push, let your 3PL know ahead of time
Similar to setting expectations with customers, you need to set expectations with any partners upfront. This especially applies to any major volume increases, as this has a direct impact on fulfillment and requires a lot of coordination and communication both upstream and downstream.
If you know you’re going to sell 8,000 units in one day, the sooner you let the 3PL who will fulfill them for you know, the better. ShipBob, for example, typically experiences a fourfold increase in shipments during Q4. Like any company in the logistics space, ShipBob will be staffed appropriately to handle the increase in volume around the holidays. However, if they know about a huge, unplanned volume increase in advance of it happening, they can better plan to accommodate your business.
6. Keep packaging simple during the holidays
Using a custom branded box is a great way to have your customers experience your brand up until the moment they open the delivery. However, the more complicated your packaging, the longer it takes to assemble. When there is a significant uptick in orders, you may want to simplify your packing process to keep it as efficient as possible.
Take a customized box with 10 items, gift wrapped a certain way, and topped off with intricately folded tissue paper. Chances are, by the time you’d wrap one box, you will have five new orders to fulfill. In the thick of the holiday rush, it’s wise to keep man hours and turnaround time to a minimum. Not to mention, having shipments gift wrapped can be risky in general, as Customs or Homeland Security can open anything at any time. The holiday madness also puts more strain on the supply chain, increasing the likelihood of damaged packages.
[Related post: 3 Common Packing Mistakes Every Business Makes]
7. If you’re thinking about outsourcing holiday fulfillment to a 3PL, act NOW
Whether your business is growing fast enough to the point where you won’t be able to fulfill orders on your own, or you need a new 3PL for the holiday rush, the sooner you get in touch with one, the better. There is a definite sense of urgency when it comes to choosing a solid fulfillment partner in time for the holidays. If you think you’ll need more staff or outside help to handle the increase in orders, make sure you get it squared away by the end of October to ensure you get the service you need. Otherwise, they may not be able to get you started until 2018.
In other words, it wouldn’t be a good idea to call a 3PL on Black Friday asking if you can send them inventory to fulfill 100,000 orders that you want shipped out on Cyber Monday. Any fulfillment center will experience delays in receiving inventory during the holidays, as thousands of other customers are also sending more product, more frequently. Remember, this is the craziest time of year for anyone in the logistics space. If you are going to need help with fulfillment, be as proactive as you can.
[Related article: Your Holiday Fulfillment Playbook: How to Start Preparing Now]
Panicking about holiday fulfillment? Get in touch with ShipBob now to ensure your e-commerce business has a profitable holiday season and happy customers.
Online sales are expected to break records again this holiday season. The best way to be meet customer expectations and finish 2017 strong is to be fully prepared now.