Though it's only October, retailers are already deep into holiday preparations. The next few months could be a make-or-break time for retailers, especially those with challenged earnings during the first half of the year. With the National Retail Federation forecasting increased consumer spending over last year’s holiday season for both online and brick-and-mortar retailers, forward-minded retailers — and even laggards — are assembling the right resources with which to capitalize on the upcoming demand spike.
It’s no surprise that the retail industry plays a major role in the overall economy, especially in the fourth quarter. With many retailers forecasting double-digit growth in sales and shipments during the holiday season, a scalable infrastructure is critical for retailers to match the uptick in demand and contribute in a meaningful way to the wellness of peak season.
The reality is that a few major players in e-commerce (like Amazon.com) have raised customer expectations for the rest of the industry, and few online or brick-and-mortar retailers can compete on that battleground. Most of today’s retailers have a choice to make: deliver an outstanding customer experience or make money. They’re faced with increasingly complex infrastructure requirements and an ultracompetitive industry landscape.
Scale This Holiday Season
The holiday season is prime time for retailers to discover the extent to which Amazon has shrunk the remaining share of the consumer’s wallet that all other retailers have to fight over.
It’s time for retailers to fight back, and there are a few things they should seriously consider to stand tall. While it might be too late to make major changes in the back-end infrastructure to affect this upcoming holiday season, it’s never too early to start planning for the next.
How to Offer Customers Choice, Convenience and Control
This means more than just front-end aesthetics. Retailers must have adequate back-end muscle to deliver a world-class customer experience at scale both before and after checkout, during the holidays and beyond. How do customers want to receive their products? Where do they want them? How much do they expect to pay?
Retailers should also be sure their infrastructure supports the full life cycle of an order, from purchase to delivery, in the most efficient ways possible. This means leveraging the following:
- A centralized order management system: Using a centralized and scalable system with intelligent order routing to the optimal fulfillment source will make integration between order and delivery seamless. It's also essential for meeting the increased customer demand during peak season and the profitability goals of the retailer. Such systems ensure purchases are delivered in the exact way the customer requested, while also ensuring the retailer maximizes the profitability of every order.
- Store fulfillment options: Shipping costs can be minimized, sales can be saved and delivery times slashed by implementing store fulfillment options like ship-from-store and in-store pickup. When it comes to Black Friday, for example, the smartest retailers will have processes in place that determine exactly where a purchased item should be shipped from — a distribution center across the country, a retail store around the block or even a drop-ship supplier. This reduces costs for retailers and fulfills orders in the fastest way possible for consumers. Studies have also shown that 65 percent of consumers make additional purchases when they visit a store to pick up their online order. And ship-from-store delivery can result in a 20 percent to 40 percent increase in online revenue. Both options represent incremental revenue opportunities for omnichannel retailers that pure-play retailers simply can’t leverage.
- Fraud management solutions: According to Forrester, fraud grew more than 100 percent in 2016, and shows no signs of slowing down, especially as more criminals have turned to the internet following last year’s EMV liability shift. Having a robust fraud management capability that combines machine learning and the human touch can dramatically increase approval rates, decrease manual review rates, systematically detect and prevent fraud, and provide a frictionless shopping experience. This is especially critical during the holiday season as criminals take advantage of higher order volumes and tight shipping windows to perpetrate fraud. Robust fraud management creates higher profits, happier customers and a bonus — frustrated criminals who might go to other, less sophisticated retailers.
- People: While technology is critical, the human touch on a shopping experience cannot be replaced, especially during the holiday season. Whether it’s warehouse personnel, customer service agents or store associates, staffing and training for peak season should already be underway to ensure a flawless customer experience. Some companies may hire more seasonal workers starting as early as June to manage fulfillment ahead of peak season.
Retailers have more options than ever before to meet customers’ rising expectations. With the right technology, operations and human touch, retailers can cater to unmet needs and see profits grow while continuing to attract, convert and delight customers this holiday season.
Stefan Weitz is the chief product and strategy officer, and general manager, payments, taxes and fraud, for Radial, an omnichannel commerce technology and operations provider.