Cyber Monday Alert: The Crucial Importance of Retail Compliance

Cyber Monday is fast approaching, and retailers are gearing up to take advantage. Last year’s Cyber Monday sales broke records, and experts predict this year will as well.

The problem? Many small companies trying to place their products with large retailers are simply not prepared to cope with the Cyber Monday demand, and this can cause fulfillment problems, especially with ongoing supply chain, fleet management, and fulfillment logistics issues. Meanwhile, retailers, especially the larger ones, are facing sky-high customer expectations and they’ll pass a lot of that burden onto vendors.

To make sure they meet customer expectations — especially with the intense demands of Cyber Monday — larger retailers set up a system of vendor compliance. These requirements include standards related to product quality, labeling, packaging and shipping. Noncompliance can lead to chargebacks, delayed payments, and strained relationships.

The Cost of Compliance

Cyber Monday can flummox small vendors. Large retailers tend to place substantial orders, which can be challenging for vendors to fill, especially if they lack the necessary production capacity or resources. And, since customers are Amazon-trained to expect next-day deliveries, large retailers often have narrow delivery windows and may impose penalties on vendors for late deliveries.

The high costs of compliance, coupled with the typically longer payment terms of large retailers, can be a financial quagmire for smaller vendors. Pair these day-to-day demands with a high-volume shopping event like Cyber Monday and you’ve got a recipe for stress and chaos. Newer vendors, unaccustomed to these stringent requirements, may not be fully aware of the consequences of not complying.

I’ve heard some vendors speculate that because demand during Cyber Monday is so high, retailers should be more lenient with compliance requirements. Spoiler alert: retailers are at their most strict during high-volume shopping events.

Balancing Compliance With Demand

So how do you balance keeping up with all those compliance demands with a sudden influx of orders? Here are my recommended best practices:

1. Rely on technology.

The more you rely on human power, the more human error you’ll see. I recommend researching compliance management software to stay abreast of all the requirements and monitor adherence in real time. Using this software can help vendors track and manage shipping and labeling compliance for each order, ensuring that products meet retailer specifications and avoid costly chargebacks. Most of these software packages send real-time alerts for any discrepancies before the products are shipped, allowing for immediate correction.

Not sure what software is a good fit for you? Ask your retail partner what they recommend — they work with tons of vendors and can point you in the right direction. Remember, these compliance demands aren't trying to trip you up. Retailers just want to ensure their customers are satisfied.

2. Develop a contingency plan.

Remember Murphy’s Law? If something can go wrong, it will. That’s why every vendor should create detailed contingency plans to tackle potential disruptions, such as delays due to inclement weather — of which there are more and more every year, it seems — or the sudden unavailability of raw materials. These plans should include alternative suppliers and logistics providers to ensure uninterrupted supply to retailers.

For instance, a small electronics vendor will probably have agreements with multiple component suppliers. If a primary supplier faces a shortage, the vendor can swiftly switch to an alternative supplier, ensuring continuous production and adherence to delivery schedules during high-demand periods like Cyber Monday.

3. Talk to your retail partners.

So often I hear my fellow vendors cry, “Why are they requiring this? How on earth do they expect us to manage this tight turnaround/quality standard/inventory management?”

Well, rather than crying, try looking at it from the retailer’s perspective. Talk to your representative. They’re your partner, and their success relies on yours. If you maintain transparent and regular communication with retail partners, instead of trying to read their minds, it’s much easier — and faster — to understand any altered requirements and resolve any uncertainties.

Suggest weekly meetings with your retail partners leading up to Cyber Monday to discuss any changes, ensuring that both parties are in sync and that you can implement changes in time to meet increased demand.

Final Thoughts

Complying with retailer requirements can be challenging at the best of times, let alone during a busy, stressful period like Cyber Monday. However, if you stay compliant, you’ll be able to strengthen your relationship with retailers, ensure customer satisfaction, and set yourself up for success next year.

Carl Wasinger has led Smart Warehousing since 2001 and spent his entire career in the logistics, warehousing, and fulfillment space, from working the warehouse floor to CEO and founder. He is a logistics management and operations veteran, actively leading the business to its next phase of growth.