This is a guest post from Rachel Go at MyFBAPrep. Learn more about MyFBAPrep at the end of this post.
Throughout the year, e-commerce businesses can expect to hit certain highs and lows in sales volume, and must manage their stock properly for times of extreme busyness as well as lulls. The past two years have seen a surge in online shopping, as Covid-19 impacted shoppers’ ability to visit stores in person around the globe. Adobe forecasts that, in the U.S. alone, holiday sales will hit $207 billion between November 1 and December 31.
Of course, this surge in online shopping is music to the ears of e-commerce professionals, provided you’re prepared for the spike in orders.
In a perfect world, you’ve already created and continue to foster a strong supply chain; that is, one that’s both sustainable and scalable, and protects your supplier and your customer relationships. A robust supply chain ensures your inventory makes it to your warehouse(s) before being purchased by customers and then delivered to them in a (relatively) seamless fashion.
Unfortunately, one of the many casualties of Covid-19 was the global supply chain. With virus outbreaks on ships, staffing shortages at ports, and more, the disruption to the usual workflow is still felt by both consumers and sellers alike. The break in the global supply chain has resulted in empty store shelves and warehouses and major delays in shipping times, and it’s expected to continue well into the 2021 holiday season. This means consumer behavior may be more erratic — stockpiling packages of toilet paper, anyone? — making it harder than ever to forecast accurately.
Fortunately, this disruption isn’t the end of the world (or your business).
As the old adage goes, “Success is where preparation and opportunity meet.” With opportunity awaiting in the 2021 holiday season, it’s time to prepare yourself to accommodate the upcoming sales spike by establishing a strong supply chain.
Here’s how.
Know What’s in Store (no pun intended)
We’re not just talking about your inventory (although that’s important, too); you need to know what to expect during any peak season, from Halloween to Black Friday, through Christmas and New Year’s Eve, Easter, grading season, and every parent’s favorite: back to school. Peak seasons include holidays and other seasonal waves of sales or higher than normal demand for particular products.
During peak seasons, it’s not uncommon to face additional challenges in your supply chain. These can include the following four problems.
Abnormal Losses
Theft in the supply chain is always a problem, but it intensifies during peak seasons. From porch pirates seeking to snag a parcel from its intended doorstep, to sophisticated thieves who target delivery vehicles and cargo lots, expect and plan for additional losses during peak seasons.
Miscommunications
When volumes spike, it’s easy for everyone in the supply chain to feel harried, and it’s during those frenzied moments that miscommunications take place. Because so many parties are involved in the supply chain, a simple communication error at any point can create chaos for everyone and, worst of all, lead to a bad customer experience for your buyer.
Inventory/Stock Shortages
Perhaps the most common issue during peak seasons, inventory shortage is also the most manageable concern of the bunch — at least, in theory. Remember the “Tickle Me Elmo” craze of 1996? Much to the dismay of parents everywhere, stores were unable to bring the lovable (and annoying) toy back to their shelves after the product sold out almost everywhere between Thanksgiving and Christmas that year. Prior to that, the product had sold well, but within the margins of what could be reasonably restocked.
Almost every peak season features a different must-have product, and stock shortages are often unavoidable as demand spikes and suppliers or manufacturers are unable to keep up.
Shipping Delays
Even with the best fulfillment partner, shipping delays can cause major problems in your supply chain, and they’re more frequent during the holidays as folks ship parcels in droves, both domestically and internationally. These delays can result in canceled orders and payment reversals if shipping deadlines (like two-day shipping) aren’t met.
While any of these issues creates a huge backlog (and a pain in the butt) for you and your business, the good news is the risks can be mitigated to keep your business and supply chain running as smoothly as possible.
Plan Ahead
Many of the serious peak seasons and holidays like Christmas follow the same schedule each year, meaning you can plan ahead to ensure you’re as well-prepared as possible. Planning in advance should, ideally, begin at least a quarter or more ahead of your busy time. It’s why we see Christmas goodies in stores before Halloween has come and gone; if you don’t have it early, you might not get it at all!
Manage Your Inventory
Managing your inventory cycles and planning for your busy (and not so busy) times is one of the most important elements of your e-commerce business. Regular inventory management will help you avoid low-stock or out-of-stock situations and keep your fulfillment process running smoothly.
To best manage your inventory, you should cycle your inventory counts regularly, with weekly and monthly checks and quarterly physical counts to avoid unpleasant surprises. As you lead into busy times, increase the amount of stock on hand for your most popular products (which will vary with seasonality and certain holidays) to make sure you’re in a position to fulfill every order that comes in.
Source Products and Suppliers
A big part of your inventory management is carefully sourcing your products and suppliers for quality and trust. Receiving your store’s inventory at your warehouse(s) is at the top of your supply chain funnel, meaning if it doesn’t go smoothly here, you’re in big trouble for the rest of the journey.
Once you’ve found the products you want to sell and a supplier you can rely on, communicate clearly and prepare them for any surges in stock requirements as peak seasons hit. It’s possible you’ll need to rely on alternate suppliers to fill gaps and support your business during these times. Always vet every supplier carefully, looking at reviews and diligently reviewing contracts before you sign.
Find a reliable fulfillment partner
Trying to ship an item from Hawaii to Alaska? In two days? Good luck! This is where a reliable fulfillment or third-party logistics (3PL) partner can save your bacon.
A fulfillment partner like MyFBAPrep has warehouses all across the country, with the ability to deliver on two-day shipping times to keep your customers happy and your orders moving efficiently. Fulfillment partners also remove the guesswork and risk associated with managing shipments on your own, allowing you to refocus your energy on marketing, sourcing products, and selling more!
A reliable fulfillment partner is a critical component of your supply chain, as it ensures your customers’ expectations are met.
Look Ahead on Your Cycle Prediction
If you experienced Christmas in July, just imagine how hectic the real holiday will be. Planning for seasonality and understanding data from past years can help you look forward in your cycle prediction to ensure you’re ready for the coming seasons.
Hit the (Accounting) Books
Are you financially forecasting for busy times? Sure, there’s the added costs of selling more, meaning you pay more fees for the services that keep your business moving forward. But it’s important not to overlook the sometimes hidden cost of these busy times: supply-demand cost increases.
Across all sectors, costs are rising for consumers, thanks, in part, to the current state of the global supply chain. The impact of Covid-19 over the past two years has driven increased demand for products, while the supply continues to suffer from global work shortages and supply chain issues.
As demand spikes and supply stays the same, you can expect to see a rise in the cost of your most popular products. If you don’t want to pass these expenses onto your customers, the best thing you can do is, you guessed it: plan ahead and forecast your spending accordingly.
Forecast Customer Behavior
Predicting how people will behave can leave you scratching your head, but a good look at your previous year’s (or peak season’s) data can help you understand how your customers may behave and plan accordingly.
Customer behavior changed significantly from 2019 to 2020, with a 50% YoY increase in online shopping, and online shopping is predicted to be even more popular this year. However, what products you’re most likely to sell or what the average order could look like depends on your own business data.
Did your orders for knickknacks soar last year? Maybe you sold more books than ever before. Have a look at the types of products you’ve sold in higher quantities over the past year and cross-reference this information against your previous year (and even years prior) to spot patterns. If you don’t have a previous year to refer to, look at your most recent peak sales window and do your best to draw conclusions.
If you know your customers’ orders have doubled in size over the past several holiday seasons, you can expect to need to double your in-stock inventory leading into peak seasons.
Document Everything
The 2021 holiday season is upon us, so it might feel too soon to be thinking about 2022, but it’s not. Document everything you can over the course of your peak seasons and learn from any missteps to ensure you don’t repeat them the following year or during your next busy time.
This is an especially important task if you don’t have years of experience to draw on.
Your e-commerce platform will offer some form of analytics as well, so keep your monthly and quarterly reports and look for trends. Make notes about anything you noticed; do cart abandonment rates spike at a certain time in your holiday season? Perhaps you start selling Christmas wares in October. Marking when certain milestones occur can help you understand how and when you need to adjust your behavior to support your business and your customers.
Remove the Weak Links from Your Supply Chain
Although there is no one-size-fits-all solution to strengthen your supply chain for the holidays, with a little planning and diligence, you can set yourself up for success no matter the season.
Even without the unique disruptions caused by the Covid-19 global pandemic, peak seasons can still wreak havoc on the most well-oiled e-commerce supply chains. Working closely with your operations teams, suppliers/manufacturers, and your fulfillment partners will help you solidify your supply chain prior to peak season kick-off. With a strong supply chain in place, you can manage or even avoid disruptions.
About the Author
Rachel Go is the marketing director of MyFBAPrep, a nationwide and international network of prep centers with 50+ warehouses, 1 million+ square feet of operating space, and the ability to reach any US customer (or FBA center) in 1 – 2 days. MyFBAPrep provides access to strategic warehouse locations and a wide variety of eCommerce services with a single partnership, along with white glove customer service and best-in-class technology. Sellers can send items into a single MyFBAPrep location and let us handle shipment splitting, prepping, packaging, and shipping across their sales channels.