Regardless of preparedness, most retailers should brace for significant challenges this peak season. Atop the explosive growth of e-commerce in 2020, experts are calling for additional growth this year. The National Retail Federation revised its annual forecast in June 2021, projecting 2021 non-store and online sales to grow another 18-23 percent to $1.09-1.13 trillion, and many retailers should expect significantly more e-commerce order volume.
Merchants and other shippers also face lingering supply chain difficulties across a wide range of industries and products, as well as widespread shipping capacity limitations imposed by carriers. Some carriers have stopped accepting new peak season business completely, including some regional carriers. OnTrac, for example, stopped accepting new peak business on September 1.
Capacity limitations, of course, only represent part of the carrier-related peak season challenges shippers must overcome. Following suit with other major carriers like FedEx and UPS, even the USPS announced peak season surcharges for 2021, and if not properly managed, the additional fees and rate increases imposed by FedEx and other carriers can prove to be even more costly.
Alternative means of fulfilling orders can take pressure off some shippers; it can also help them attract new customers who prefer to shop online but pick up at the store or require faster delivery from a local distribution point. This is particularly true for retailers who can leverage a footprint of physical stores or tap into a new breed of gig economy carriers.
While all these solutions have the potential to help shippers improve performance and please customers during peak season, implementing them disrupts the workflows of unprepared distribution centers and stores, especially when done so haphazardly. A failed implementation can be more costly than no implementation at all in many of these cases.
With peak season here, shippers that have yet to come to terms with these challenges should honestly assess how bad things could get and consider what options may still be available to them to mitigate some of the problems. For most shippers, this means determining the right solution and the right now solution.
The Right Now Solution
It’s too late for unprepared shippers to properly address the problem this year. Band-Aid solutions will fill the gap for partially or totally unprepared shippers. Many unprepared U.S. shippers will rely more than ever on the USPS, for example.
Those who have diversified their carrier network to at least include multiple carriers will direct parcel volume to different partners, and multi-carrier parcel shipping technology can help them do this in a strategic and cost-effective manner. Those with business intelligence at their fingertips can consider more than cost to manage the entirety of their parcel shipping needs as effectively as possible.
Previous Fulfillment Investments Now Easing the Crunch for Some
Navigating peak season is not an all-or-nothing proposition. Even partially prepared shippers will lean on their strengths to ease the crunch.
Omnichannel retailers facing major carrier-related challenges may, for example, want to determine the value of each order that can be fulfilled without the use of a national carrier. Those who determine this to be a valuable outcome can stock locally popular products in nearby stores for quicker shipments with alternate carriers. Others will provide compelling incentives to customers, encouraging them to buy online, pick-up in store (BOPIS) or accept slower shipping. All these efforts can reduce fulfillment pressure on the organization.
Omnichannel retailers like Walgreens, which implemented same-day delivery in under two hours for more than 24,000 retail products, will be tapping into gig economy carriers for additional capacity. This can help to offset need for national carrier capacity and drive more sales to existing and new customers.
Shippers of all types who have taken the time to onboard additional carriers will have multiple pools of carrier capacity available to them. For some, this might only consist of two national carriers; others may have onboarded multiple major carriers, the USPS, and regional carriers where they fit nicely. Multi-carrier parcel shipping technology not only helps shippers deploy carriers more strategically, but it can also help them prioritize efforts to secure the right carrier mix in the first place to best meet customer expectations. With the right carriers in place, this technology empowers shippers to optimize carrier deployment for on-time delivery, cost saving, performance, and more.
The Right Solution
On January 2, while navigating returns season, tear off the Band-Aid measures put in place this year as the right now solution and begin to heal your fulfillment processes. Do not make the same mistake again; start planning for peak season right away in 2022. Shippers should secure executive support for the changes that need to be made to implement the right solution and invest in fulfillment processes so they can be readier than ever for Peak 2022. Addressing the need for carrier capacity and cost containment early in the year can free teams up to focus on growing sales and pleasing customers with far fewer fulfillment worries.
Unprepared shippers have very few fulfillment options available to them for 2021 Peak at this point, but whether there’s a need for last-minute guidance and recommendations or it’s time to start getting strategic with 2022 in your sights, Logistyx can help. To learn more, watch our webinar, Embrace the Unprecedented Pace and Scale of Parcel Shipping Technology.