Optimizing Your E-Commerce Fulfillment Strategy for the Holidays

This blog post is part of our 2018 Holiday Planning series. Be sure to check back often or, better yet, subscribe to the blog to stay updated with this year’s latest holiday trends, tips, best practices, reports and more!

You’ve analyzed demand, determined inventory, optimized product listings 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.

When it comes to shipping costs and speed, consumer expectations have shifted dramatically over the past several years. More than ever, your ability to get deliveries on doorsteps at lightning speed will determine whether you exceed or fall short of your goals for Q4.

Keep reading for 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: Free shipping will affect purchase decisions for 96% 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. And if they’re making the purchase at Amazon, they’ll grow impatient long before that four-day mark.

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 shipping was too expensive. Another 24% cancelled orders when delivery was too slow.

And according to Deloitte’s latest annual holiday survey, the vast majority (88%) of shoppers look first for free shipping when considering buying options. Once they’ve made a purchase, 89% of those same consumers expect it to be delivered within two to four days.

In other words …

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

In fact, based on research from FitForCommerce, as much as 73% of sellers could be offering next-day deliveries this season.

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. 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: returns.

Some 1 million packages will be 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 returned merchandise has grown about 16% over the last two years, with the return rate for e-commerce sales cited at two to three times that of traditional brick-and-mortar retail.

Consumers are buying more products online than ever before, and they expect accommodative return policies on those purchases. Yet recent research indicates that many retailers and brands remain unprepared.

According to Pitney Bowes, 97% of retailers provide shipment tracking on outgoing deliveries. But what happens when an order is returned? Only 7% do the same thing for return packages. Which is a shame, since customers tend to check on in-transit packages an average of eight times.

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 optimize fulfillment throughout the Q4 peak holiday season? Be sure to check out our eBook, 3 Steps Toward Ultrafast (& Affordable) Fulfillment, and webinar, Holiday 2018: Planning a Smart Fulfillment Strategy.

And if you haven’t already, subscribe to the blog to stay updated with this year’s latest holiday trends, tips, best practices, reports and more.

Editor’s note: This blog post was originally published on September 20, 2017. It has been updated for accuracy and comprehensiveness.

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