While the holiday season always brings a boom in demand for shipping, the COVID-19 crisis will have an undeniable impact on peak season. Since the beginning of the pandemic early in 2020, more and more people have become reliant on ecommerce for their day-to-day shopping needs. Mass closures of businesses and public health concerns have relegated people to their homes, using the internet to make purchases they might otherwise have made in-person. According to the chart below, ecommerce sales jumped from 0.8% to 16.1% of all retail sales in the United States between the first and second quarters of 2020.
This large spike in a short amount of time has carried over into the second half of the year. The amount of people shopping online regularly in the United States doubled from 20 million to 40 million between February and April alone. Reuters reports that ecommerce sales in general are expected to account for a record 15% of all U.S. sales this year.
Common peak season challenges
Increase in demand
In any normal year, shipping demand is its peak around the holidays. Advancements in technology and the steady growth of ecommerce has increased that demand over the years, as well as consumer expectations of fast, efficient delivery options. In 2019, 60% of consumers did more than half of their holiday shopping online – a number which is bound to increase exponentially this year considering public health concerns caused by the pandemic.
This year, businesses across industries have had to adapt quickly to pandemic-related closures and public health concerns. More people than ever are selling their products online. In order to remain competitive, businesses need to be able to offer fast, trackable, efficient shipping. E-commerce giants like Amazon and Walmart have created an expectation of secure 2-day shipping amongst consumers, so shipping processes need to be as fortified and efficient as possible in preparation for the coming holiday season. Getting a plan in place as soon as possible so that you won’t be overwhelmed with the influx of holiday orders is critical in order to stay ahead of the competition.
This year, carriers like FedEx, USPS, and UPS will be instituting heavy surcharges for the holiday season in order to accommodate the surge in demand. Make sure to check with your carrier ahead of time and account for extra fees if you plan on shipping with them during peak season. A third-party logistics provider or fulfillment service can help you stay in budget and plan for this.
Tips for the 2020 peak season
Prepare for pandemic-related delays
This year, the pandemic has been causing backups and unusually long shipping times for months. The Postal Service and other carriers haven’t been able to catch up before the start of peak season. Many ecommerce companies like Target, Best Buy, and Kohl’s, have moved up holiday promotions to October to try to get a head start against the anticipated delays in shipping. There will undoubtedly be extra delays this year for which shippers need to prepare as early as possible.
- To prepare for pandemic-related delays, reach out to your logistics provider early. Offering promotions earlier in the season may afford you an advantage over the competition.
- When booking with a carrier, take the entire transit time into account, from the time the product is picked up from the factory or warehouse to the day it is delivered to the customer. This can be significantly longer than shipping time, so make sure to keep that in mind.
- If you’re shipping internationally, make sure your supplier us authorized to export by the CIQ (China Inspection & Quarantine Department). Your goods need to clear customs, regardless of country of destination, and the cost of duties and taxes should be considered
Make use of technology and automation
Given the importance of getting your products shipped as fast and early as possible, integrating automation tools this year is crucial. Start making automation modifications now so that you won’t be trying to learn a bunch of new systems all at once. Some of the most beneficial automations you can implement to maximize shipping efficiency include:
- Generate labels and shipping documents – There are many tools available that can generate shipping labels, packing slips, and customers declarations for you.
- Set shipping presets – If you’re sending a lot of shipments with identical information, you can preset the same parameters (weight, dimensions, insurance, carrier and service, etc.) to multiple orders at once.
- Automate rate shopping – Automating the rate shopping process ensures that you are hitting your delivery dates at the lowest possible costs. You can automate rate shopping between parcel, rail, freight forwarders, LTL, and hyperlocal. This will enable you to offer fast, flexible shipping to your customers.
- Integrate software systems – You’ll want to make sure your employees or warehouse workers don’t have to hand-type addresses, tracking numbers, costs, carrier information or weights or select services in a shipping system. Fully integrating your software systems well before the beginning of peak season will set your business up for success during the high-pressure holiday season and promote a streamlined shipping service.
- Carrier load/volume balancing – Carriers often place maximum capacities on shipping volumes for customers, and can cut those capacities when they’re especially backed up. It’s likely that’s going to be the case this year, so automating carrier volume balancing will ensure that you are using the carrier that has the capacity to meet your sales volumes.
Expect an uptick in e-commerce shipping
E-commerce sales are expected to grow exponentially this year, particularly during the holiday season. The pandemic has relegated many shoppers to their homes for the season, making shopping online even more convenient and necessary than it was before. According to Deloitte’s annual holiday retail forecast, e-commerce holiday sales are expected to generate between $182 and $196 billion this season. A Glassbox survey indicated that 70% of U.S. consumers intend to make the majority of their holiday purchased online this year, and a SYKES survey shows that around 44% of consumers will not feel comfortable shopping in-person again until the COVID-19 crisis seems to be under control.
Work with a third-party logistics service
Working with a team of shipping and freight professionals can make the upcoming peak season significantly less stressful. A third-party logistics provider can quickly update your shipping processes with the most up-to-date, efficient automation technology available, helping you fulfill your orders and avoid delays. Accuracy and speed are more important than ever, given the broadening landscape of ecommerce retailers that are able to offer one or two-day delivery options. Make sure you can compete by partnering with a third-party logistics service that knows the ins and outs of the freight industry and can help make sure you’re ready for the 2020 holiday season.
Plan for major sales and promotions (Prime Day, Black Friday, etc.)
A major contributing factor to the holiday ecommerce increase are major retail events, such as Prime Day and Black Friday. Cyber Monday 2017, for example, held the record for biggest online sales day in U.S. history, as shoppers spent over $6.59 billion that day alone. In 2019, that record was broken on Super Saturday (the last Saturday before Christmas), which brought in a staggering $34.4 billion in sales. This rapid increase was bolstered by the rise of ecommerce shopping without the added demand of public health concerns. It is likely that these major holiday sale events will cause major demand increases for shipping and freight carriers, so it’s important to plan around them. Some of these major sales and retail holidays include:
- Amazon Prime Day – Oct. 13-14
- Black Friday – Nov. 27, 2020
- Small Business Saturday – Nov. 28, 2020
- Cyber Monday – Nov. 30, 2020
- Green Monday – Dec. 14, 2020
- Super Saturday – Dec. 19, 2020
If you’re looking to partner with a third-party shipping service before peak season, contact Sologistx today. We’re here to help you navigate the unprecedented 2020 holiday season and make sure your shipping processes are as fast, streamlined, and efficient as possible.