The biggest shopping day in North America is just around the corner, but for retailers — 2021 has been a struggle. Between massive traffic jams at ports, labor shortages in the transportation industry and raw material shortages, the supply chain crisis looks to be forcing many stores to reconsider their normal discounts.
According to research from Adobe, lower inventory and higher costs combined with extended delays in shipments for products that were expected to arrive in time for the holiday season is likely to bring discounts ranging from 5-25%, down from the normal 10-30% that customers have become accustomed to. Not only that, but product discounts will more often be based on what they manage to get stock or have an existing surplus of, rather than what customers are really after. This holiday season, stores won’t be really competing on price — they’ll be competing on availability.
So what’s behind these challenges? And how can retailers and other shippers overcome them? Let’s take a look at the major issues that sellers are faced with heading into this year’s holiday shopping season.
Supply chain issues
This year, everything seems to be in short supply. From the products on the shelves to the boxes needed to ship them, ongoing supply chain issues have created challenges for everyone. With factories both here in America and those throughout Asia being shut down due to COVID-19 outbreaks, port congestion caused by surging demand and a container shortage, as well as a lack of drivers and workers available to move shipments are just some of the are all compounding factors to this global issue.
These issues have caused delays and shortages and are already causing major issues for businesses. Getting products onto shelves and ready to ship out on time isn’t just a Black Friday and Cyber Monday issue either. Both Halloween and the Fourth of July have been impacted this year, and Christmas is likely the next to be hit.
Many big box retailers started early by chartering extra air-freight to ensure supply levels, with some like Home Depot going so far as to charter their own container ships. Of course, not every business can afford to take such drastic measures, but the lesson is there — shippers need to expand their options.
What you can do about it
Considering the fact that trucking delays and rising costs account for a large part of the challenges around getting products where they need to be, this is an area that can be addressed by a business of any size. Many shippers still stick with their “tried-and-true” selection of carriers and shipping modes, and while in the past these arrangements would come with predictable costs and delivery guarantees, it’s a different story in today’s environment.
One of the biggest risks of working with a limited set of carrier options for any level of service is the lack of choice – the choice to make a better shipment execution decision. Without the ability to rate shop multiple carriers and their services, you’re out of luck if a single carrier begins dropping shipments, starts performing poorly, or raises their rates. This will force the shipper to either sacrifice their bottom line by meeting the customer’s expectations at a high price, or go with a low price that will not meet the customer’s expectations.
By working with a larger network of carriers across different modes — LTL and FTL, parcel and final mile, regional and national — you gain the power of choice. And with the right network, you can quickly uncover the best choice to get shipments delivered on time and on budget, reducing the risk of shortages and disappointing customers.
Logistics teams that are spread too thin
The amount of pressure placed on logistics teams during the holidays can seriously take its toll, even at the best of times. That small window between Black Friday, Cyber Monday and the holidays doesn’t leave much room for error, and keeping everything on track is increasingly difficult.
Surging demand saw sales of consumer packaged goods climb 9.4% to $1.53 trillion last year, and it hasn’t let up in 2021. And that same trend has been felt across all retail environments. Growing customer lists, uncertainties around market trends, errors in modeling (especially for those using spreadsheets), mean that those in charge of keeping logistics operations running at peak performance are often left guessing.
With razor-thin timelines and increasing dependence on Just-in-time manufacturing, it is difficult for logistics teams to be agile when they’re spending so much time simply keeping track of everything that’s going on. If businesses are to keep up during the chaos of the holiday season this year, they need to look beyond time-consuming manual tasks and paper-based processes.
What you can do about it
If a business is going to adapt and adjust to fluctuations in the shipping environment in real-time, they need access to real-time data to back it up. Valuable and actionable insights obtained through data enable shippers to optimize routing, uncover lane and carrier performance issues, allow for proactive exception management and give transparency to the entire supply chain, for the benefit of shipping and logistics companies.
To gain this comprehensive level of analytics across a supply chain, you need your Transportation Management Software (TMS), carrier network and visibility systems to be able to work together. Bringing everything together onto a single platform allows big data to go to work by uncovering inefficiencies and focusing on the tasks that can quickly bog down a logistics team, enabling them to access accurate information for better decisions on important matters, while automating much of the more monotonous day-to-day processes.
Growing customer expectations
As restrictions tightened and eased throughout last year, more shoppers turned to ecommerce platforms for their needs. And with that increased engagement has come higher expectations due to what many have called the “Amazonification” of customer shipping expectations. Customers increasingly expect same or next day delivery, but with more supply chain issues, infrastructure problems, congested loading docks and unpredictable weather conditions, those expectations can be hard to meet. Especially during high traffic periods like Black Friday, Cyber Monday and the holidays.
Despite these increased demands around the shipping experience, a 2020 report on consumer expectations during the pandemic found that consumers will be quite forgiving of shipping delays if retailers communicate with them. And yet, out of the 36% of respondents who said they experienced substantial delays, only 19% were well-informed by retailers. And when shipments arrive late, it’s not the logistics company that customers blame — it’s the retailer.
Whether a shipment is going to a customer, distribution center, or retail location, the receiver wants it to arrive on time. If they can’t, the next step to keeping them happy is to keep them well-informed through transparent visibility into the shipment status and provide clear up-to-date ETA information.
What you can do about it
Take a look at the issues mentioned above — infrastructure issues causing traffic delays, extended wait times at loading docks, poor weather conditions forcing last minute routes and scheduling changes. The common element is a lack of visibility into what’s happening across the supply chain in real-time.
Of course, most shipping companies have some level of visibility into what’s happening during transit, but effective visibility technology should go beyond basic track and trace capabilities. Most of these solutions provide insight into where the shipment is, but that alone isn’t enough to take proactive action to prevent delays. To do that, you need a solution that brings visibility not only to the location of the shipment in transit, but to the entire supply chain.
Visibility should be enhanced to take into account things like weather and traffic situations as they develop to allow you to avoid disruption prone areas, along with responsive ETAs that adjust based on predictions for the route ahead to provide accurate information to customers. And of course to provide that information, the visibility solution should also allow for in-platform communication with instant updates to be sent to the customer through email. By enhancing visibility and communication around what’s happening with a customer’s shipment and when they can expect it, you can deliver on their expectations.
The Black Friday and Cyber Monday weekend present one of the year’s biggest opportunities to boost holiday sales for retailers across the country. By learning from the challenges it presents, you can prepare your business to not only satisfy your customers but start the holiday shopping season in a much stronger position.
For more information on how Shipwell’s 3-in-1 TMS, premium carrier network and advanced visibility platform can provide the tools you need to overcome the challenges facing shippers, schedule a demo today.