During the holiday season in the United States and Canada, which kicks off with Thanksgiving and extends through the end of the year, many people look forward to a period of relaxation and respite from their daily work routines. However, this is far from the case for the majority of e-commerce businesses.
For e-commerce businesses, the holiday season represents the busiest and most critical time of the year, making or breaking their annual performance, accounting for over 40% of their total sales. For e-commerce companies, the upcoming peak season is expected to shatter previous sales records. Online sales during this festive period, which have experienced a remarkable 46.8% surge over the past two years in the US, are projected to increase by 12.8% to 14.3% this year, reaching an estimated range of $260 billion to $264 billion.
To meet the soaring demand during the holiday season, which typically peaks during the five days from Thanksgiving to Cyber Monday, e-commerce companies must ensure maintaining ample stock of the products that shoppers desire is paramount for online retailers during the holidays. Failure to do so can result in a loss of customer trust and loyalty, leading to a decline in sales.
According to a McKinsey survey, nearly 70% of shoppers, when faced with out-of-stock items, opt to switch to different retailers or brands. Further, e-commerce companies must prioritize timely product delivery in preparation for the year-end festivities. Delivery delays rank high among the concerns of online shoppers, with 65% expressing anxiety about the punctuality of their holiday gifts’ arrival.
Ensuring product availability and timely delivery during the bustling holiday shopping season hinges on effective management of end-to-end logistics operations. This incorporates everything from upstream inventory control to seamless order fulfillment while addressing supply chain challenges and constraints unique to the peak sales period at the end of the year. To meet customer expectations, many e-commerce companies opt to collaborate with third-party logistics (3PL) providers.
In this blog, we will guide you through the essential steps to take in partnership with your chosen 3PL to ensure that your e-commerce business is well-prepared to meet the rising demand and uphold punctual deliveries for your valued customers during the upcoming holiday season.
1. Plan it out
To ensure a prosperous holiday season for your e-commerce business, it’s essential to initiate your sales planning process well in advance. This includes planning for various aspects, such as manufacturing and optimizing your website and choosing your delivery partners.
Ideally, your sales plan should be in place at least two to three months before the peak shopping season begins. However, if you find yourself running behind schedule, don’t worry; make every effort to firm up your sales plan as swiftly as possible.
Consider including your 3PL partner in your holiday sales planning brainstorming sessions. Certain 3PLs, such as Ecom Logistics, have expertise in inventory control, order fulfillment, and supply chain management. The insights can amplify and enhance the clarity and effectiveness of your sales plan.
2. Curate an inbound plan
Creating a well-structured inbounding plan with your 3PL partner is a crucial step once your holiday sales plan is finalized. Before proceeding with this plan, it’s important to address several key considerations with your 3PL:
- Capacity: Ensure that your 3PL has the capacity to handle the anticipated volume of holiday season orders. If they lack the capability to manage inbound logistics, warehousing, order picking, packing, and shipping for your products, you may need to explore additional 3PL partnerships. Keep in mind that some 3PLs might charge for extra staff needed to meet holiday season demands.
- Surcharges: Understand the surcharges imposed by your 3PL. Some providers apply surcharges during peak periods, which can include order fulfillment surcharges, zonal surcharges, and fuel surcharges. Gaining clarity on these costs will help you budget effectively.
- Cutoff Date: Determine your 3PL’s cutoff date policy. Most 3PLs establish cutoff dates during the holiday season, beyond which they won’t accept new inventory shipments. Ensuring that your inventory reaches your 3PL well ahead of its cutoff date is crucial to be ready for shipping as the holiday shopping season approaches.
After addressing these critical considerations with your 3PL, you can proceed to develop your inbounding plan. This plan’s primary objective is to ensure that you deliver the right products in the right quantities to your 3PL at the right times, facilitating efficient picking, packing, and shipping of products to customers throughout the holiday season.
The inbounding plan you craft in collaboration with your 3PL should specify:
- SKU Details: Which SKUs and quantities you will send to your 3PL.
- Shipping Schedule: The timeline for sending these shipments to your 3PL.
- Facility Selection: Determine which of your 3PL’s facilities, such as upstream distribution centers or fulfillment centers, will receive the shipments. Some 3PLs, like Ecom Logistics, automatically optimize the distribution of your stock across their network.
- Optimal Inventory Levels: Define the optimal inventory levels for various SKUs within your 3PL’s storage and distribution network. This helps in timely replenishment as needed.
By addressing these aspects in your inbounding plan, you can streamline your logistics operations, enhance efficiency, and ensure a smoother holiday shopping season for your e-commerce business.
3. Dispatch your Inventory to your 3PL
Once your sales and inbounding plans are in place, you’ll be ready to initiate the process of sending your inventory to your chosen 3PL, following the schedule outlined in your inbounding plan. As previously emphasized, it’s crucial to ensure that all your inventory reaches your 3PL’s facilities well in advance of their cutoff date. Maintaining close communication and collaboration with your 3PL is paramount to ensure a seamless inbounding process.
Once your inventory is received and safely stored within your 3PL’s warehousing facilities, you’re essentially prepared, particularly on the order fulfillment front, to manage the surge in orders from holiday shoppers. This is where the advantage of partnering with a 3PL truly shines: You can entrust them with the responsibility of handling the intricate tasks of picking, packing, and shipping your orders during the heightened holiday season, allowing you to concentrate on sales, marketing, and overall business development.
4. Give your 3PL the charge of your order fulfillment
Allow your 3PL to take charge of your order fulfillment operations during the holiday season. Before the holiday shopping frenzy begins, it’s crucial to ensure that your website is optimized, and all your promotions and deals are active across your online channels.
If your sales and inbounding planning have been executed correctly, and your products are strategically distributed across your 3PL’s fulfillment centers, you can then relax and witness the influx of holiday orders and the efficient dispatch of shipments.
Your 3PL partner should handle the bulk of the logistical tasks, but maintaining operational visibility is essential in case of:
- Inventory Depletion: If your inventory levels run low during the holiday season and require replenishment, coordinate with your 3PL to explore options such as redistributing stock or utilizing buffer and backup inventory. Some 3PLs offer cost-effective bulk upstream storage in distribution centers, ensuring that inventory is automatically restocked in fulfillment centers as needed.
- Order Issues: In the event of any issues with customer orders, most 3PLs provide customer service and support. During peak seasons, they typically have representatives available around the clock to assist with order fulfillment problems. Additionally, should customers need to return or exchange holiday gifts, your 3PL partner can assist with reverse logistics.
Maintaining this level of oversight ensures that your operations run smoothly, even during the demanding holiday season, and that your customers receive the best possible service.
Summary
The holiday season in the United States and Canada is a time of relaxation for many but a peak period of business for e-commerce companies. These businesses can experience over 40% of their annual sales during this time, and the holiday season is expected to set new sales records. To meet the increased demand, e-commerce companies need to ensure product availability and timely delivery. Many opt to partner with third-party logistics (3PL) providers for efficient operations.
Key Steps:
- Plan Ahead: Begin sales planning early, ideally 2-3 months before the peak shopping season. Include your 3PL partner in planning discussions for their insights.
- Inbounding Plan: Collaborate with your 3PL to create an inbounding plan. Address capacity, surcharges, global presence, integrations, and cutoff dates with your 3PL.
- Inventory Dispatch: Send your inventory to your 3PL according to the inbounding plan, ensuring it arrives well before the cutoff date. Maintain close communication with your 3PL.
- Order Fulfillment: Let your 3PL handle order fulfillment, ensuring your website is optimized and promotions are active. Maintain visibility for inventory management and address issues promptly.
By following these steps and partnering effectively with a 3PL, e-commerce businesses can navigate the challenges and opportunities of the holiday season successfully.
Why Partner with Ecom Logistics?
Ecom Logistics is a leading Canadian 3PL providing end to end logistics solutions to North American businesses since 2017. Headquartered at North york, Ontario, equipped with more than 250,000 sq feet of warehousing space and the latest fulfillment technology, we have proved to be a trusted partner for thousands of businesses for all their warehousing and fulfillment needs. We also offer complimentary logistics services such as inventory management, same day and next day delivery, Canadian, US and international shipping options, returns management, LTL freight and much more.
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