Before people start even thinking about summer vacations, e-commerce retailers need to start planning for the holiday demand that peaks in the winter months.
Peak season 2016 was one for the record books. Total e-commerce sales reached a whopping $91.7 billion, representing an 11% growth compared to 2015. In fact, online sales are expected to continue growing and reach $523 billion by 2020, up 56% from original estimates in 2015.
With the massive growth of e-commerce, fulfillment and distribution centers should evaluate their 2016 peak season performance to ensure efficiencies are maximized for the coming year. The key areas to be evaluated include inventory management, delivery performance, and talent retention. Let’s take a closer look at each.
Inventory management in an omnichannel world
Omnichannel is here to stay. Getting a handle on inventory management in an omnichannel world of “buy anywhere, fulfill anywhere” can be a huge challenge.
Selecting an omnichannel order management system is a must. Putting the right order management system in place is essential to gain a clear view of overall inventory and sales while maintaining operations by location. Access to data and complete visibility of inventory across channels will become even more necessary in 2017 to ensure fulfillment processes are optimized across locations.
Speedy & affordable product delivery rules
The convenience of online shopping and promise of free shipping has created a new breed of consumers. Today, 30% of shoppers purchase with the intent of returning unwanted items – a fourth of those same customers say they would not order an item if they had to pay for the cost of returns.
With that in mind, retailers and e-tailers are seeking innovative to get products into the hands of customers quickly, and for less. Similar to Amazon, distribution and fulfillment centers should evolve their geographic footprint in 2017 by opening smaller, regional operations. These changes would get products closer to customers and reduce delivery times while lowering the cost of shipping.
Build a talent pool of top-performing seasonal labor
2016 peak season posed a challenge to fulfillment and distribution centers in the fight for seasonal labor. To beat out the competition, many employers offered incentives such as hiring bonuses, flexible hours, and higher wages.
The competition for seasonal labor will also be steep in 2017. Hiring managers should start building talent pools now. Companies should consider offering full time positions to the top performers of 2016 seasonal hires. Additionally, evaluations should be made about onboarding and training processes to learn from last year’s mistakes and carry out improvements where needed.
The time to prepare for 2017 peak season is now. E-commerce is on a steady path for growth. The distribution and fulfillment centers who turn last year’s mishaps and successes into actionable insights will place themselves one step ahead of the competition.