Holiday Shipping: Operations
Operations are the backbone of your shipping function—and therefore your entire eCommerce business. Optimizing your work space layout, processes, inventory, printing/packing materials, equipment, and staff for the holiday season can all help lower costs. Beyond that, smooth-running shipping operations ensure your orders are accurate, packages are packed efficiently and attractively, and that they arrive in your customers’ hands on time—all of which makes for a great customer experience. As an added bonus, well-planned operations will help your employees have a happy holiday!
With the holidays accounting for up to 40% of a merchant’s annual sales, now is the absolute worst time of year to find out that your shipping operation is not up to the task of delivering all the gifts your customers order; as evidence of this, major retailers are hiring tens of thousands of temporary holiday workers, and UPS alone is hiring an additional 95,000 seasonal workers to gear up for the demand, per http://bit.ly/ups-holiday. It’s time to think strategically about your operations, especially in these areas:
- Supply chain: Can you get enough product from your suppliers to fulfill your anticipated holiday demand increase? To answer this, review last year’s demand/out-of-stock data, products shaping up to be popular this
season, and anticipated impact of other initiatives (e.g., free shipping) on demand. If you do not have an inventory management system, it may be beneficial to begin looking now. If your shipping solution offers inventory
management, make sure everything is set up correctly before the holidays. If you’re not already optimizing your inventory management, now is the time to put something in place to help you automate inventory, simplify bundles, and manage purchasing. You’ll want to make sure everything is set up before the holiday rush really hits. Your shipping solution should ideally incorporate inventory management.
- Physical space: How much room do you need to store the planned increase in inventory to meet holiday demand? How much space do you need to accommodate your holiday staff, equipment, boxes, supplies and inventory?
- Equipment, people, and workflow: These are tied together. Is your equipment adequate to handle the increased throughput necessary to meet holiday demand? Can you tweak the process or layout to raise capacity? How does hiring more people impact equipment and workflow? For example, do you need more scales or printers?
- Technology: Is your shipping solution up to the task? Can you benefit from using advanced features like shipping rules, predictive analytics and automation? You might consider innovative approaches to daily
decision-making such as ShippingEasy’s InstantLabel and Buy & Print. Reach out to your shipping solution for help in configuring more advanced options before the rush hits you.
- Downstream: What are the implications of your increased sales goals on your carriers? How much additional volume will they need to handle? Do increased sales qualify you for better rates? More pick-ups? Free supplies? Do you need to complete end of day forms as a result of the additional shipments?
Specific operational preparations flow from the strategic decision areas:
- Supply chain: Be sure your purchase orders reflect increased product inventory needs—and that your suppliers can fulfil them on time; otherwise, it may be time to find backup suppliers or substitute products.
- Physical space: Increased space needs can often be met by taking a hard look at your floor layout and shelving configuration, but if there just isn’t room to handle higher holiday inventory levels, you may need to find supplemental space to lease, or—if workable—temporary solutions such as portable storage units.
- Equipment, people, and workflow: The most common piece of equipment needed to increase eCommerce shipping throughput is an additional scale, which is relatively inexpensive to acquire; remember that it needs to be integrated into your workflow and shipping solution. If you anticipate needing more people, now is definitely the time to determine how they will fit into the workflow (you may consider a partial or full additional shift, adding weekend workdays or overtime), and to hire and train them.
- Technology: If you are concerned about your shipping solutions’ ability to support your operations, now might be the right time to explore other solutions and get set-up. Ask questions about onboarding and configuration to better understand the switching costs involved. If you’re a ShippingEasy customer, contact us to learn more about the features you can use to help ensure a smooth holiday.
- Downstream: Look at your overall anticipated volumes and talk to your carrier reps; see if using an exclusive carrier might lower your overall costs, or if there are other changes you can make, including more efficient packaging to avoid dimensional weight charges, higher use of free packaging, or more liberal use of flat rate packaging. At the very least, be sure your carrier(s) is/are aware of your anticipated increased volumes and that they are planning to provide adequate pickup capacity.
- Returns: In addition to all the stats supporting free returns in the Shipping Service Level section, keep in mind returns typically increase by 15% during the holidays. On average, 20%-40% of consumers will return a purchase, with percentages rising to as high as 50%. Be operationally prepared; ensure your return processes are clear to customers visiting your online store and are clearly explained on your packing slip, internally clearly defined from end to end, and running smoothly to handle the extra workload in your return-processing facility. You might want to include a return label in gift orders to leave a positive impression with potential future customers. Consider scan-based returns where the label can be printed but a charge is not applied unless and until it is scanned.
The kinds of operational changes we recommend are seldom executed without a hitch, so be sure to stress-test any new initiative you can before the orders start flowing in. Once you’re into holiday order time and running the operations, keep a close eye on the reality of demand and operations versus your predictions, and adjust where possible when your operational changes fall short.
Other areas to watch:
- Leveraging return data: You might be able to gain insights from return data flowing through your shipping solution on what kind of products shouldn’t be promoted, or should be made exceptions to the return policy; you even might spot trends that underlie return policy abuse and address them.
- Winding down holiday-specific changes: While some of the operational changes we suggest should provide benefits throughout the year, many will need to be adjusted at the end of the holiday season. For example, changes to your physical space, staffing levels/work shifts, inbound inventory purchases, and volume-related carrier changes will likely need to be rolled back when seasonal demand slows down. Refer to the Post-Christmas section for more ideas on this topic.
- Taking a holistic view: Keep in mind that most of the operational initiatives we’ve discussed influence one another, so if a new process fails to deliver the expected efficiencies, look at whether you can address the shortcoming by adding people or equipment, or re-configuring the space.