Business
Preparing Your Logistics Strategy for the 2022 Holiday Season
Global Banking & Finance Review®
Company
By Andrew Scargill, Logistics Manager, EMEA at Digital River
For retailers, Christmas is the hot topic for summer as preparations for the biggest buying season are well underway during these summer months. After two years of Covid-induced disruptions, unfortunately, retailers are not yet out of the storm. Inflation, fears of a recession and supply chain disruption have continued to dampen spirits, and many are preparing for a challenging holiday season.
However, there is the opportunity to ensure Christmas cheer.
Addressing logistics concerns now will increase the likelihood customers are left with a warm glow come December. Logistics leaders must use these summer months to assess, and if necessary, reinvent their logistics strategy. Let’s take a look at what retailers can cross off their logistics to-do list now, to ensure success in the months and years to come.
Holiday surcharges initially imposed by carriers in 2020 will likely continue throughout 2022. Last year, parcel shipping prices jumped nearly 6%, with experts predicting another 5% increase in 2022. The increase for cross-border and international shipping is estimated to be closer to 8-12%.
Given the rise of inflation and the COVID-19 pandemic, carrier costs will likely continue to skyrocket for the time being. While there isn’t a quick fix for the jump in cost, brands should look for opportunities to mitigate excessive spending where possible, including looking for opportunities for opening up new ship from locations or consolidating existing locations to cut costs. Longer term, brands should put out contracts for carrier pricing every 2-3 years to ensure they are getting a good deal. Additionally, third-party audit firms will review contracts and continually audit carrier invoices, looking for savings. Finding ways to account for carrier increases without simply passing the cost onto the consumer will be critical for maintaining positive customer experiences and hitting sales targets.
Labour shortages continue to affect all sectors of the global economy, but especially logistics. Many carriers and other logistics companies are still struggling to meet service-level agreements (SLAs) and adjust to their customers’ changing business needs because of staffing-related issues.
If these situations are impacting logistics partners, ecommerce brands should consider a change in supply chain strategy. This might include changing partners, consolidating inventory locations or modifying trade patterns to maximise their ability to meet shopper expectations while minimising costs or other negative impacts. Successful brands will have a Plan A, Plan B and likely a Plan C as disruptions continue in 2022. Many logistics providers are investing heavily in automation as one way to deal with labour shortages moving forward. Brands should be looking for partners who are working on long-term solutions to this kind of disruption.
In the run-up to the 2022 holiday season, ecommerce brands must focus on communicating clearly and transparently with their customers to build trust and set realistic expectations. Presenting all information related to stock shortages, shipping, port delays, delivery, and any additional fees upfront can help reduce cart abandonment and improve the overall customer experience. This may require modifying ecommerce sites to feature logistics information either on individual product pages or in the checkout experience. Brands will need to continually monitor their supply chain and fulfilment capabilities to provide the latest, most accurate information to customers.
Following two chaotic holiday shopping seasons, customers have more realistic expectations, but brands should consider strategies to retain customers beyond the holiday season. Providing transparency during a critical shopping season will go a long way toward building customer loyalty.
While it’s true that more consumers are making purchases online than ever before, brick-and-mortar locations can still hold significant value in delivering the types of experiences shoppers demand. Namely, the rise in popularity of buy online, pick up in store fulfilment is expected to continue in 2022. According to eMarketer, 18% of online orders from participating retailers on Cyber Monday in 2021 included curbside pickup. Brands that have physical locations may want to assess their in-store fulfilment process and look for ways to optimise the customer experience through upgrades to customer communications, proprietary apps, staff training or even physical signage.
Supply chain issues are here for the long haul, and in the short term some brands started placing orders last spring to build up inventory in anticipation of the holiday rush. It is no good relying on old logistics models to deal with the new normal of our post-Covid landscape. Retailers who want to safeguard their 2022 ambitions while also setting a strategy for the future are investing in new approaches right now. Reinvigorating logistics now could prove to be the gift that keeps giving.
Logistics refers to the detailed coordination of complex operations involving people, facilities, and supplies. In retail, it encompasses the movement of goods from suppliers to customers.
Ecommerce is the buying and selling of goods or services using the internet. It includes online shopping, electronic payments, and online transaction processing.
Carrier costs are the expenses associated with transporting goods from one location to another. This includes shipping fees, surcharges, and handling charges.
Supply chain management involves overseeing and managing the flow of goods, information, and finances as products move from supplier to manufacturer to wholesaler to retailer to consumer.
Customer experience refers to the overall perception and feelings a customer has about a brand or service based on their interactions throughout the buying process.
Explore more articles in the Business category
