Optimizing Your E-Commerce Fulfillment Strategy for the Holidays

You’ve analyzed demand, fine-tuned pricing strategies, fixed inventory issues and planned promotions. But a critical factor still remains, and it’s one that could make or break a successful holiday sales season: order fulfillment. 

Consumer expectations for shipping have shifted a lot over the past several years. Now more than ever, success hinges on your ability to get deliveries on doorsteps efficiently, affordably and at lightning speed.

To help, we’ve pulled together some of the most important e-commerce fulfillment trends as they relate to peak seasons — and what sellers can do to remain competitive this holiday season.

E-Commerce Shipping: Fast or Free? You Need Both 

If there’s one thing you can count on this season, it’s this: for Free shipping will affect purchase decisions for 97% of your shoppers.

Does that mean “free” trumps fast? Not necessarily. Based on recent reports from eMarketer, shoppers aren’t willing to wait more than four days for an order to arrive — even when there’s no charge for delivery. Which there usually isn’t: The percentage of holiday transactions that include free shipping has jumped dramatically in recent years, from a low of 67% in 2017 to a high of 87% last season.

This “fast and free” reality is playing out in surveys throughout the industry.

In one study, for example, 54% of consumers abandoned shopping carts because delivery was too expensive. Another 24% cancelled orders when delivery was too slow.

And according to Deloitte’s latest annual holiday survey, the vast majority (85%) of shoppers look first for free shipping when considering buying options. Once they’ve made a purchase, 68% expect orders to be delivered within three to seven days.

In other words…

Fulfillment is fast becoming the differentiator for sellers during peak seasons. And with same-day and express options appearing alongside more and more listings, the competition is climbing. 

What this means for seasonal sales:

Rising shipping expectations are creating some big obstacles for brands and retailers to overcome. While free shipping can often be absorbed as an expense, expediting delivery typically involves sophisticated warehousing, comprehensive back-office execution and strong partnerships with third parties such as UPS and FedEx.

What you can do to address it:

When planning for the Q4 holiday rush, consider options for diversifying your carrier strategy. This will make it easier to stay ahead of holiday shipping deadlines and mix up your fulfillment pricing strategies. Though it can be tempting to rely on one carrier for ease in management, this approach can cost you during the holiday season. That’s because the most efficient, cost-effective fulfillment method can vary significantly from one order to another. 

For many shipping scenarios, private carriers like UPS and FedEx are ideal. For others, a lower-cost option like USPS may be in order. If needed, use shipping management software to stay connected to multiple carriers and route orders based on factors such as shipping costs, delivery speeds and customer locations.

E-Commerce Returns: Expectations Are High

Delivery speed is important, but it’s not the only mission-critical element to consider. Another holiday shopping trend looms large, with the potential to blindside unprepared sellers: e-commerce returns.

An estimated 1 million packages are returned each day leading up to December 25. Another 1.4 million are expected to boomerang back to retailers on National Returns Day in early January.

The amount of sales lost to returned merchandise is now up to a staggering $369 billion, driven in large part by e-commerce options such as buy online return in-store (BORIS). The issue is particularly plaguing brands and retailers that focus on categories like fashion and apparel, where returns are notoriously high. Last holiday season, for example, half of US shoppers ordered clothing online that they planned to return due to poor fit.

Consumers are buying more products online than ever before, and they expect you to accommodate returns on those purchases. If they don’t have a positive experience with your company, there’s a good chance they’ll take their money to a competitor.

While 62% of e-commerce returns are accompanied by an additional purchase to replace the returned item, 14% of those transactions occur with a different seller. Consumers say they’re most likely to switch retailers when an item is out of stock, delivery is too slow or the return and exchange experiences are poor. 

When optimizing your holiday e-commerce fulfillment process, it pays to focus on returns policies.

What this means for seasonal sales:

Many of your hard-earned holiday sales WILL be returned. How you handle them can be the difference between lasting loyalty and damaging reviews.

What you can do to address it:

Instead of dreading the inevitable holiday returns (or, worse yet, doing nothing to prepare for them), it’s time to approach these as an opportunity to build loyalty. Whether you choose to rely on a third-party logistics (3PL) partner or handle holiday returns in-house, look for ways to connect with consumers and grow sales.

Looking for more tips you can use to fine-tune your holiday selling strategies? Download the eBook, Your Roadmap to Holiday 2019 E-Commerce Success, for insider knowledge on the latest trends impacting online sellers.

Editor’s note: This blog post was previously updated on November 2, 2018. It has been further updated for accuracy and comprehensiveness.