2016 Peak Season Learnings for Retailers
The 2016 peak season saw record-breaking e-commerce growth — reaching over $91.7 billion in online sales, an 11 percent year-over-year increase. The biggest three days for online shopping were Thanksgiving, Black Friday and Cyber Monday (no surprises there), but a grand total of 57 days during the holiday season exceeded $1 billion in sales (up from 53 days in 2015). It’s clear to see that online sales are growing. In fact, they're poised to reach $523 billion by 2020, up 56 percent from original projections.
With 2016 peak season behind us, retailers are now evaluating their performance to identify the areas they excelled and the ones where there's room for improvement. Three common areas for improvement include inventory management, delivery performance and talent retention.
Inventory Management Can Make or Break Omnichannel Success
Technology is key to yielding inventory management success in an omnichannel environment. Antiquated systems are redundant and error prone. A recent survey shows that 62 percent of respondents reported human error from manual processes as the top root cause of inventory fulfillment issues. Retailers must have the right technology in place to help streamline processes and keep information accurate.
To get ahead for 2017, retailers need to select the right omnichannel order management system for their business. This is imperative to gain a clear picture of overall inventory and sales, while also maintaining operations by location — especially when trying to account for in-store operations and shipments from distribution centers. Access to data, modern systems and complete visibility of inventory across channels will become a must to ensure fulfillment processes are maximized across locations.
Delivery Must be Quick and Affordable for Consumers and Retailers
The ease of online shopping has created a new breed of consumers that expect quick delivery and exceptional customer service. Today, partly due to the promise of free shipping, 30 percent of online shoppers buy with the intent of making a return. All of this puts additional pressure on retailers, which are facing higher stakes from increased competition as well as having to balance customer satisfaction and costs.
This is a new dynamic that products must land on customers' doorsteps faster and at a lower cost than ever before. Taking a page from Amazon.com's book, e-tailers should evolve their distribution and fulfillment center’s geographic footprint to include more small, regional operations that bring products closer to their customers vs. having to ship products across the country from one or two main distribution centers. This strategy will not only lower shipping costs and reduce delivery time, but it will keep customers happy and brand reputations intact.
Top Talent Needs to be a Top Priority
A successful peak season comes down to having the right team in place, ideally long before a peak period begins. Hiring seasonal labor can pose significant challenges for retailers, especially for their fulfillment and distribution centers, which face stiff competition for talent. There are a few things hiring managers can consider to make the process smooth and effective.
First, if possible, bring top talent into full-time positions when a peak season ends. This way you’re already prepping for the next period. If a full-time position isn't available, make sure to stay engaged with your seasonal employees outside of peak season to ensure they’re aware of when you're hiring again.
Next, start hiring for seasonal positions well in advance. This way staff is properly trained and prepared by the time the busy season comes around. Additionally, you’re more likely to be hiring the “cream of the crop” if you hire early.
Finally, recognize that it's a competitive market. Make positions at your company attractive by offering hiring bonuses, higher pay and flexible work hours.
E-commerce sales are climbing, and 2017 peak season will be here before we know it. Take the time to evaluate successes and areas for improvement now so you’re well prepared for what's poised to be an even bigger year for e-tailers. Pay special attention to inventory management, delivery times and talent pools to make sure your business is ready to seize the opportunity.
Spencer Moore is executive vice president at Speed Commerce, a provider of fulfillment solutions, customer engagement services and omnichannel order management technology for retailers and manufacturers.