Last Christmas, Black Friday produced a record number of online orders which many retailers struggled to fulfil. Getting delivery wrong can have serious consequences for a retailer’s reputation – and bottom line – so they need to start their Christmas planning now to avoid the same pitfalls. This year, as a direct result many retailers are making fresh investments in order management systems and decentralised fulfilment programs.
Tobias Hartmann, eBay Enterprise
To ensure that they are ready for the Christmas rush, retailers should begin the process of trialling and stress-testing these new solutions in the coming months. New demand patterns require new approaches, and below are eBay Enterprise’s four tips for retailers getting ready for the busiest time of the year.
Planning: allow for every eventuality
Christmas delivery requires careful contingency planning to allow for the impact of factors like extreme weather conditions and the effectiveness of marketing promotions. For maximum flexibility, retailers can work with multiple delivery partners to ensure that they can switch their operations seamlessly. Overall strategy should be completed in spring and a cross-departmental team created to implement this at all levels of the company. This plan should direct staffing levels and contingency plans at every level and should include detailed KPIs to use as a benchmark for performance throughout the period. We advise retailers to finalise staff numbers for customer service and fulfilment now and begin peak staff recruitment during the summer months. Retailers should also complete new product implementations in late summer to allow for comprehensive staff training to begin pre-peak sales ramp up. The website should be properly resourced in advance – the best-laid plans can come to nothing if a site crashes – and retailers need to ensure that their IT infrastructure is sufficiently robust to withstand the prolonged peak in demand. Some retailers may also find it useful to implement an outsourced cloud hosting system so that the scaling can be done quickly and effectively without excessive time investment. Either way, what’s key is using insights from previous years’ web traffic to identify when they will need it.
Order Management: save the sale
High volumes at Christmas inevitably mean that there will sometimes be a discrepancy between demand and available stock. Investing in an Order Management System (OMS) is a good antidote to this, maximising stock availability through central stock visibility across all channels. The OMS allows retailers to optimise stock picking for each order by balancing stock levels across outlets and preventing inventory from building up or running out. As well as balancing inventories, the OMS can also address out-of-stock situations when they do arise by allowing customers to order items for delivery from another store. Research from Motorola showed that 68% of out-of-stock incidents occurring in-store could be converted to sales through this process.
Fulfilment: make better use of store networks
Retailers operating their fulfilment from a central distribution centre alone are vulnerable to the impact of bad weather, industrial action, and other force majeure factors that can disrupt their ability to deliver orders. Store-based fulfilment models such as click-and-collect and ship-from-store provide an insurance policy against this disruption, replacing a single delivery channel with a network of mini-distribution centres set up to fulfil local online orders. Most retailers will be able to service up to 50 per cent of their orders through a combination of ship-from-store and click-and-collect. Ship-from-store also allows retailers to be strategic with their fulfilment; for example, by dispatching online orders from distribution centres during peak footfall, or switching to ship-from-store in order to clear floor space for seasonal stock. This program needs to be in place by pre-peak to ensure it is fully bedded in in time for the festive peak.
Returns: prepare beyond Christmas
Festive retail isn’t just about selling as much as possible before the big day. Our own experience at eBay Enterprise shows that retailers should be equipped to handle a much higher return rate in the period after Christmas too. This means clearly communicating the returns policy at the point of purchase and beyond – particularly if it differs from the rest of the year. It is also vital that retailers have enough customer care staff on hand to cope with a higher volume of calls, so recruitment planning needs to start now. Equally, using a third party is a good way to scale up and down this demand as needed, by using overflow customer care staff when capacity is stretched.
Conclusion
The surges in website traffic, deliveries, and returns at Christmas should not come as a surprise. Retailers eager to learn from the difficulties they faced last year and ensure that they are competitive during peak shopping periods should begin their preparation now.
eBay Enterprise provides commerce solutions to retailers, including fulfilment and order management.
