Holiday and seasonal shopping are the busiest and most stressful times for retailers. With higher demand for products in stores and increased orders online, retailers are challenged to prepare for peak season fulfillment and supply enormous volumes of products in just a short peak shipping season. The 2022 peak season, however, will bring its own set of challenges to face and overcome, from predicted lower purchase volumes, rising transportation costs, labour shortages, and more.
The Importance of Peak Season
The holiday peak season is the most important time for direct-to-consumer brands, and many make approximately 19% of their yearly sales during this time alone.
Customers expect more and more from their retailers to make their online experience the most enjoyable and memorable. This includes expectations around free and fast shipping, as well as a seamless returns process. Additionally, with the dominance of Instagram and Tik Tok, brands and consumers are looking to create ‘share-worthy’ unboxing moments, which are made possible with specialized kitting and packaging. Retailers who manage to ‘pull-off’ the perfect end-to-end shopping experience can win over loyal customers and grow their likes and shares.
In this article you’ll learn about consumer shopping trends, the specific challenges wholesale and direct-to-consumer brands will face in the 2022 holiday peak season, and how partnering with SCI can help set you up for success for future peak seasons.
Canadian Consumer Peak Season Fulfillment Trends You Should Know
According to Canada Post’s recent 2022 holiday report, consumers are shopping earlier, spending more online, and prioritizing sustainability during the holiday season. According to their surveys in 2021:
- 47% of Canadians completed their holiday shopping early because they were worried about item availability and low inventory
- 20% of Canadians started shopping in September & October and 23% shopped in early November
- 50% of shoppers planned to buy more items online during the holiday season
- 1 in 4 plan to avoid going to malls and stores
- 87% of shoppers want free shipping
- 60% of holiday shoppers say easy returns is an important factor that influences their choice of retailer and 82% look for free returns
- 61% of shoppers value brands that use sustainable packaging
Partnering with a Trusted 3PL
Missing out on peak season revenue due to supply chain deficiencies can lead to large setbacks for companies of any size. This is why it’s so important to find the right 3PL supply chain partner that can be adaptable to your changing demands. It can make the difference between having a successful, lucrative peak period, versus causing larger problems, stretching beyond the supply chain itself.
To alleviate this risk and avoid the “growing pains” of peak season fulfillment, the best strategy is to rely on an experienced supply chain partners (3PL) like SCI that can take away the stress of distributing your products on time.
Peak Season Fulfillment Challenges and Solutions
1) Peak Season Fulfillment Volume Increases & Inventory overflow
One of the biggest challenges for companies is managing the significant increase in orders during a short period in the year. With the higher volume there is a huge risk for delayed orders and disappointed customers if orders aren’t fulfilled on time. This is an issue for brands with fulfillment operations that can’t scale quickly and effectively.
To ensure they have enough product to meet demand, and to avoid potential shipping container delays and empty shelves at stores, many retailers have increased their on-hand inventory, which requires a place to be stored. It also requires someone to manage the increase in order volume and potential customer demands. SCI has a wide warehouse and fulfillment network coast-to-coast across Canada that includes 32 distribution centres.
Leveraging the latest technology
At SCI we also use the latest technology to manage volume fluctuations and offer up-to-date end-to-end visibility of your supply chain data that can be accessed at any time to make decisions more quickly and accurately.
Our progressive business intelligence tools allow you to better track your supply chain performance during peak season with insights such as historical trends and comparisons to SLAs. These tools enable us to measure, monitor, and optimize your operations, so together we can make better, more informed decisions year after year. By monitoring your network, we can understand health trends, which we use to balance service levels and costs and improve your bottom line.
2) Supply Chain Labour Challenges
Volume increases during peak season also require a flexible labour force to manage and store the inventory, pick and pack products, provide last mile delivery, etc. With ongoing labour challenges its important to work with a 3PL that is finding innovative ways to offset any issues created by a shortage in labour.
A poll taken during our North American e-commerce webinar in 2021 found that the majority of attendants had concerns about labour shortages related to peak season.
This continues to be an issue entering the 2022 holiday season. During the pandemic many truck drivers retired, or changed careers, leaving an 9% vacancy rate for jobs in the trucking industry. In general, many people’s work priorities changed, with some opting for more flexible work-from-home jobs, creating a challenge for warehouses and supply chains.
Overcoming peak season labour shortages
It’s important to arrange for extra personnel well in advance of peak season and provide sufficient training so employees can feel confident in their positions. Working with a 3PL like SCI connects you to highly trained personnel, and a flexible workforce made available through a robust recruitment network, and relationships with staffing agencies.
Offsetting labour shortages with technology and automation
SCI has implemented goods-to-person automation strategies such as vertical lift modules, and automated parts storage machines to offset labour shortages. SCI has also invested in technology such as collaborative robots that assist with picking to enhance the productivity of existing workers. Scalable automation solutions can increase your production capacity and utilize warehouse space more efficiently, while reducing the dependency on manual processes and labour, especially during periods of peak demand.
3) Increased Transportation Costs
High gas and diesel prices are making fulfillment, transportation, and last-mile delivery more expensive. Retailers will have to consider how they can offset these costs through more efficient shipping methods, consolidating inventory, and other effective operation and shipping solutions. With our end-to-end supply chain capabilities, including asset-based transportation solutions, SCI can you streamline and scale your supply chain operations from inbound to final mile.
How to reduce peak season fulfillment transportation costs
SCI adds value to your business by finding ways to reduce your transportation costs. We work with you to understand your business and identify where the most effective improvements can be made to optimize transportation operations. Fulfilling orders from warehouses closer to your customers, zone skipping, and in-house value-added services are just a few efficiencies that can help save on fuel costs. SCI also has the flexibility to switch between our multi-carrier networks to avoid delays and get your delivery to its destination as efficiently as possible.
We plan which carriers to use, negotiate pricing for given service levels, and manage contracts. We also conduct real-time outbound order rate shopping between partner carriers to choose the best price for a given level of service. Our unique combination of national coverage, forward-thinking expertise, progressive technology, and asset-based capabilities means we can design transportation solutions that fit your current supply chain needs and adapt as your business grows.
4) Holiday Shoppers Spending Less
One of the many consequences of the pandemic was a sharp rise in supply chain costs, which has put a strain on the global economy, and raised the cost of living. This unfortunately means that many people are cutting back on their spending during the holidays as people tighten their purse strings and only buy necessities. As a result, some retailers are predicting a decrease in order volume for 2022, resulting in excess inventory and slimmer margins. A way to offset these challenges is to widen your consumer base and find innovative ways to save costs within your value chain.
Broaden You Consumer Base Across North America
Many American direct-to-consumer brands have the opportunity to reach more customers in a similar market by expanding into Canada year-round, but especially during peak season. Black Friday and Cyber Monday continue to be two of the busiest shopping days of the year for Canadians, both in-store and online.
American retailers can also target Canadian consumers looking for Boxing Day/Boxing Week sales. Boxing Day occurs the day after Christmas when retailers slash prices on un-sold inventory, and shoppers rush to get post-holiday deals. By localizing inventory in SCI’s Canadian warehouses retailers can reach Canadian consumers faster, with lower supply chain costs.
Save with Section 321 Shipping
Setting up inventory in Canadian warehouses also opens the opportunity to save up to 20% in duty and tariff costs using Section 321 fulfillment shipping. Section 321 is an exemption in the Canada-U.S.-Mexico Agreement that allows small shipments to enter the U.S. duty-free. This offers direct-to-consumer ecommerce retailers an opportunity to reduce their cost per unit through waived or refunded import duties on items that enter Canada bound for U.S. recipients, without affecting the customer’s experience.
When experiencing lower volumes during peak season Section 321 shipping is a way to save money and maximize revenue. By consolidating distribution in strategic centers in Canada, retailers can maximize orders by servicing both the U.S. and Canadian markets from a single location. It also enables retailers to reduce their inventory carrying costs and turn products faster, while driving down supply chain costs.
SCI has in-depth knowledge of the U.S. and Canadian supply chain industry, and relationships with top US carriers to help you develop a streamlined cross-border strategy. Our team supports you from start to finish with strategic planning and consultation to help your brand reduce or eliminate your import duty and tariff costs and comply with non-resident trade regulations.
With Section 321 we’ll ship your products from our Canadian facilities to your consumers in the U.S., but the delivery experience will be no different if it was fulfilled domestically. SCI’s last mile-delivery partner network can reach 80% of U.S. consumers in under 3 days. We are also able to manage all returns from strategic locations in the United States, so your products don’t need to be sent back over the border.
5) Returns and Reverse Logistics
A peak in sales inevitably results in a peak in returns. You’ll first want to ensure your return policy is clear and easy to understand, and that your customer service team is trained to ensure a smooth return experience. Poorly handled returns can harm both reputation and revenue. When returns are handled quickly and easily, you’ll see better customer satisfaction and loyalty while reducing costs and capturing valuable data about processes and quality.
Finding Cost Savings in Your Reverse Logistics Strategy
Retailers should have a process in place to handle returns that avoids any disruptions to your operations. SCI offers end-to-end reverse logistics capabilities that can take the stress out of this additional piece of the peak season fulfillment puzzle. We work with you to create a reverse logistics program that is seamlessly integrated with your current supply chain and logistics process. Find cost savings and operational efficiencies with a thorough inspection to determine whether your products should be reshelved, repaired, or salvaged for parts before resorting to recycling and disposal. If parts need to be recycled, we do so responsibly.
6) High Expectations for Kitting and Packaging
The importance of having aesthetically pleasing boxes and packaging for your products has grown in recent years with the rise of influencer marketing on social media platforms such as Youtube, Tik Tok, Instagram, etc. Unboxing moments get recorded or photographed and uploaded for followers to view and comment. Even beyond influencers, the general public often uploads images to their social media to share what they received as a gift during the holidays.
In some ways the appearance of the box and presentation of the product has become as important as the appearance of the product itself. Brands looking to convey a cohesive brand identity, an aspirational lifestyle, or a particular message need to design their packages with the un-boxing experience in mind. Working with an experienced 3PL with in-house value-added services such as packaging and kitting can ensure you exceed customer expectations during peak season.
No matter how unique your packaging and kitting needs are, SCI’s team can skillfully fulfill your orders to satisfy you and your customers. Whether you ship stock or offer custom subscription kits, we’ll execute a fast and accurate kitting process. We can also add a personalized touch to orders for special occasions, such as the holidays, with special inserts, tissue paper, or gift-wrapping.
Your Trusted Peak Season Fulfillment Partner
SCI has managed wholesale and direct to consumer e-commerce supply chains for decades for many well-established retailers, as well as high-growth new entrants. We pride ourselves on adding value to clients’ businesses with our commitment to reducing costs, risks and complexity through continuous improvement, business intelligence, analytics, and transparency. We give our clients the competitive advantage they need to grow their business.
As a trusted strategic partner, our team is dedicated to understanding the unique intricacies of our clients’ supply chain, providing end-to-end management of the entire customer experience. We have the North American expertise and 30+ years experience to deliver on this commitment and keep our clients steps ahead of their customers’ expectations.
Contact one of our experts today for more information on how SCI can help improve the scalability of your end-to-end supply chain during peak season, and all year round with our inventory management, strategic planning, warehousing and distribution services, transportation solutions, and post-sales logistics. SCI’s supply chain solutions guarantee that retailers meet their seasonal requirements and delight customers.
