Shipping challenges have plagued retail since March to the point that even Amazon has had difficulty keeping up. Currently, carriers are already 5% over capacity and we haven’t even reached Peak Week yet.
Over the past few weeks Dsco has held a series of community calls with top 50 retailers and their suppliers to discuss Peak Season challenges such as navigating carrier issues.
Here are some of the Peak Season strategies discussed during our most recent calls:
Maintain Strong Relationships with Trading Partners and Carriers
We heard from several retailers that their suppliers are already getting capped by carriers. Other suppliers don’t know if carriers have trailer capacity for them, where in years past they had a committed space. All this means that suppliers may be put in a position where they have to decide which retail partner to fulfill orders for.
Maintaining strong relationships with suppliers and brands will therefore be vital to make sure retailers are prioritized in order fulfillment queues.
One way that retailers can help out their suppliers is by contacting carriers on behalf of their trading partners. Oftentimes retailers carry more weight with carriers than brands, especially if a brand/supplier is small. So retailers, go to bat for your key trading partners!
Another way retailers could help out brands who are being capped by carriers is by purchasing inventory from trading partners wholesale and moving it into their own warehouses for customer distribution. This will also give retailers guaranteed inventory as we move into peak season.
In order to deal with higher shipment volumes this year, carriers are having to make tough decisions on when to ship orders from various retailers and suppliers. Planning and communicating with your carrier, as well as maintaining a solid relationship with your carrier representative will help make sure your orders are prioritized.
Take Advantage of Non-Traditional Carriers
Carriers are already over capacity, with surcharges and caps in place well before traditional peak week. UPS planned marginally better than FEDEX prior to the pandemic by investing in leaner processes. USPS is struggling to even deliver ballots on time. Regional carriers like DHL and LaserShip are reporting around 50% more orders than last year.
Things are so bad, one of the suppliers on our community call is renting tents to house packages waiting to be picked up. They’re following a FIFO (first in, first out) model. This means their packages will be packed on time, but if the carrier is delayed, what can they do?
Some retailers have therefore decided to partner with courier companies like Doordash, Instacart, and Shipt to attempt to close the gap on the last mile for their customers. They’ve also been establishing relationships with local carriers to give them wider delivery coverage in local markets. Make sure your operations are doing the same.
Increase Curbside And BOPIS Solutions
It’s almost certain many shipments will be delayed during peak season. This will cause higher opportunity costs as consumers abandon carts, as well as lead to negative ecommerce experiences for those customers who are forced to wait for packages.
If you can, therefore, direct your traffic to pick up their orders at stores, this will keep your carrier options open for those customers who need/want home delivery, or who live too far from a metropolis with store locations. Studies show that 37% of customers are willing to pick their items up from a store. Take advantage of this trend.
Some retailers are using in-store promotions or incentivizing store pick up programs to push customers to store locations. Other retailers are turning some store locations into “dark stores” that become local fulfillment and pickup centers. This not only speeds up item delivery times but also saves retailers a huge amount on delivery costs (sometimes as much as 90%).
Overall, in the current COVID environment, the key with in-store pickup is to communicate with your customers that you are doing everything you can to keep them and your employees safe with cleaning and social distancing practices.
Manage and Adapt Your Drop Shipping Program With Intention
Drop shipping is a reliable growth category during this time. Some companies are experiencing 5-20% volume growth over LY’s Q3 and Q4. This is therefore not a time to put your drop ship program on auto-pilot. Now is the time to keep a very close eye on what’s happening with your trading partners. Should you be scaling up or down based on category or attribution? Which suppliers are lagging behind in fulfillment? Which have cancellation rates creeping up?
Take a look at your analytics and see what strategies make the most sense for your organization. For example, you could adapt with key categories when a brand/supplier gets throttled by putting the product in your own warehouses. Diversifying your channels should give you the opportunity to move quickly and cost-effectively where you are experiencing the squeeze.
Use Dynamic Reporting Across Teams To Eliminate Surprises
Information often gets siloed within each respective department or channel. This season, however, with so much uncertainty around processing and shipping orders, reporting and visibility between each of your teams will be vital. Everyone needs access to the same data and source of truth, so they can respond to issues and changes quickly as the need arises.
One organization we spoke with built out real-time information that three different teams had access to, and had daily standups to make sure there were no surprises from other parts of the organization. This has led to a huge increase in their efficiency as they anticipate and/or catch problems before they turn into major issue