Fulfillment Strategies for the Changing Holiday Season

The evolution of holiday shopping

Traditionally, holiday shopping was synonymous with the frenzy of Black Friday, but times have changed. Today, retailers are changing their approach, spreading out the shopping season over several weeks.  

For businesses, it's no longer about preparing solely for a single day of peak demand. They have to adapt to a new landscape where customers begin shopping as early as November, and Black Friday stretches across an entire week. Amazon, for example, is starting peak season even earlier with their second Prime Days of the year starting Oct. 10-11.  

Automation provides a number of benefits to manage the difficulties of the season, including better inventory management, reduced labor costs, and quicker order fulfilment. The challenge is identifying the right system for your warehouse when you can’t accurately predict the peaks and valleys of demand. The silver lining is that once you have the right equipment, layouts, and processes in place, you can actually control those peaks and valleys, thereby influencing customers’ decisions on how and when to spend their holiday dollars. Looking at it from this perspective, automation becomes more valuable and attainable just by simplifying the design requirements.

Spending and delivery figures

To better understand the impact of the holidays, it's crucial to look at relevant figures, such as the cumulative amount spent and delivery volumes:

• Holiday Spending: According to the National Retail Federation, holiday retail sales in the United States alone exceeded $800 billion in 2022, a significant portion of which occurred during the Christmas season.
• Online Shopping: The share of online holiday sales continues to grow. NRF said that in 2022, online holiday sales in the United States reached approximately $184 billion, representing a 10% increase from the previous year.
• Delivery Metrics: During the holiday season, delivery services experience a dramatic increase in activity. According to Commercial Appeal, major courier services reported delivering over 3 billion packages during the 2022 holiday season, a staggering figure that underscores the importance of efficient fulfillment operations.

The overall impact on the American economy is massive. According to the U.S. Census Bureau, fourth quarter holiday earnings should account for 25 percent of each year’s total sales but many categories, from sporting good to electronics, usually exceed that benchmark.

Demands on retail businesses

For retail businesses, the impact of holiday shopping is immense, both online and brick-and-mortar. Here's a closer look at the challenges they face:

• Inventory Management: To meet the surge in demand, retailers must ensure they have sufficient inventory in stock. Accurate forecasting and inventory management systems are crucial to prevent stockouts or overstocking.
• Efficient Fulfillment: Fulfillment centers must work tirelessly to process and ship orders quickly and accurately. Hiring seasonal staff and optimizing logistics becomes vital to meet customer expectations for fast delivery.
• Customer Service: ‍With increased order volumes, customer service teams must be prepared for a higher volume of inquiries, returns, and exchanges. Providing exceptional customer service during this time is essential for maintaining brand loyalty.

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Adopting the right peak period fulfillment strategy

Understanding consumer statistics like those I mentioned above is the first step to shaping the right holiday fulfillment strategy. For example, studies have shown that buying behaviors are driven not only by deep holiday discounts but also the promise of fast delivery. Analyzing the willingness to pay for expedited shipping can be enlightening. If retailers find that customers are more inclined to opt for faster shipping options, they could leverage that data to optimize order processing and fulfillment speeds.  

The overall goal is to not overwhelm fulfillment operations. In simple terms, the way to do that is "don’t the build the church for Easter Sunday.” You need a warehouse that’s right-sized for your company with enough site flexibility and the right automated tools to effectively manage and influence customer demands throughout the year in order to maintain optimized operations while still meeting the holiday surge.

Understand the balance between steady-state order fulfillment and the need to scale up during peak periods. Embrace the idea that to survive and compete, you have to be flexible enough to adapt to changing customer buying patterns and find ways to leverage or influence those behaviors.

The role of automation

Automation plays a vital role in helping retailers achieve this delicate balance. Automation solutions, like those offered by AutoStore, enable retailers to:

• Optimize Space: Systems like AutoStore make the most out of available storage and fulfillment space, allowing retailers to efficiently consolidate and organize all of the excess holiday inventory.
• Flexible Batching and Waving: Retailers can release batches of orders based on criteria like order size, delivery speed, and location, allowing for more flexible and efficient order processing.
• Steady-State Picking: Automation ensures a steady-state picking operation and throughput, reducing the risk of system overload during peak periods.
• Setting Customer Expectations: Retailers can use automation to communicate anticipated delivery times effectively, helping to manage customer expectations, especially in an era where "same-day" and "next-day" delivery are becoming the norm.
• Contain Costs: Highly accurate data takes the guessing game out of seasonal hiring, allowing you to adjust workforce levels based on predictable buying patterns.

The future of holiday shopping trends

As we look ahead, you have to wonder what the future of holiday shopping looks like. Could something similar to the rise of Black Friday, Cyber Monday, and Prime Day be on the horizon? In my experience, you can bet on it.  

There’s always something new that will reshape the retail landscape and prompt retailers to think about how they can make the most of their existing resources and prepare for the holiday season effectively. It’s a never-ending game where you need to adapt continuously to evolving consumer behaviors.

Conclusion

We all know that the holidays are a time of heightened activity and demand for fulfillment operations in the retail industry. Online shopping, extended shopping seasons, and discounts have transformed the way consumers spend during this festive period.  

But to compete, it’s crucial to no longer think of the holidays as a one-day shopping event; it's a season that demands you to rethink your yearlong fulfillment strategy. You have to be ready to quickly scale your warehouse size or layout while throttling delivery speeds up or down in response to customer demands. Automation provides that type of flexibility and helps you achieve consistent throughput, optimal inventory management, and exceptional customer service. Once you embrace that idea, you can fine-tune your strategies and thrive during the holiday season's ever-evolving landscape.