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You’re Not Santa: To Get Holiday Logistics Right, You’ll Need More than Magical Elves

By: Ted Rogers
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Retailers and ecommerce brands are laser-focused on overcoming the challenges that brought more Scrooge than Santa into the past two holiday seasons. With a seemingly endless list of proactive actions to be taken, figuring out which plans to prioritize can feel overwhelming. We’re kicking off a holiday readiness series focused on the most critical areas to focus your efforts on right now, ahead of the holidays. It all starts with the right logistics strategy.

Supply chain disruptions have felt like the movie “Groundhog Day” with the main character’s alarm clock representing the latest unexpected challenge. Since early 2020, many companies have struggled to keep products in stock and fulfill orders in a timely manner. As forward-thinking brands look toward the fast-approaching 2022 holiday shopping season, it appears disruptions will again take a starring role.

To mitigate negative impacts and ensure products are available when and where shoppers want them for the holidays, ecommerce leaders should take a close look at their logistics strategy and make adjustments now that prioritize a positive customer experience. Here are some areas to consider when working to build out an effective logistics strategy that can handle the holiday rush.

Address rising carrier costs

Holiday surcharges initially imposed by carriers in 2020 will likely continue throughout 2022. Last year, parcel shipping prices jumped nearly 6%, with experts predicting another 5% increase in 2022. For cross-border and international shipping, the increase is estimated to be closer to 8-12%.

Given the rise of inflation and the COVID-19 pandemic, carrier costs will likely continue to skyrocket for the time being. While there isn’t a quick fix for the jump in cost, brands should look for opportunities to mitigate excessive spending where possible, including looking for opportunities for opening up new ship from locations or consolidating existing locations to cut costs. Longer term, brands should put out contracts for carrier pricing every 2-3 years to ensure they are getting a good deal. Additionally, third-party audit firms will review contracts and continually audit carrier invoices, looking for savings. Finding ways to account for carrier increases without simply passing the cost onto the consumer will be critical for maintaining positive customer experiences and hitting sales targets.

Navigate labor shortages

Labor shortages continue to affect all sectors of the U.S. economy, but especially logistics. Some estimates suggest the U.S. alone faces a shortage of 250,000 drivers, not to mention shortages in other transportation methods and foreign markets. Many carriers and other logistics companies are still struggling to meet service-level agreements (SLAs) and adjust to their customers’ changing business needs because of staffing-related issues.

If these situations are impacting logistics partners, ecommerce brands should consider a change in supply chain strategy. This might include changing partners, consolidating inventory locations or modifying trade patterns to maximize their ability to meet shopper expectations while minimizing costs or other negative impacts. Successful brands will have a Plan A, Plan B and likely a Plan C as disruptions continue in 2022. Many logistics providers are investing heavily in automation as one way to deal with labor shortages moving forward. Brands should be looking for partners who are working on long-term solutions to this kind of disruption.

Communicate with customers

In the run up to the 2022 holiday season, ecommerce brands must focus on communicating clearly and transparently with their customers to build trust and set realistic expectations. Presenting all information related to stock shortages, shipping, port delays, delivery, and any additional fees upfront can help reduce cart abandonment and improve the overall customer experience. This may require modifying ecommerce sites to feature logistics information either on individual product pages or in the checkout experience. Brands will need to continually monitor their supply chain and fulfillment capabilities to provide the latest, most accurate information to customers.

Following two chaotic holiday shopping seasons, customers do have more realistic expectations, but brands should consider communication and logistics strategies to retain customers beyond the holiday season. Providing transparency during a critical shopping season will go a long way toward building customer loyalty.

Optimize fulfillment options

While it’s true that more consumers are making purchases online than ever before, brick-and-mortar locations can still hold significant value in delivering the types of experiences shoppers demand. Namely, the rise in popularity of buy online, pick up in store fulfilment is expected to continue in 2022. According to eMarketer, 18% of online orders from participating retailers on Cyber Monday in 2021 included curbside pickup. Brands that have physical locations may want to assess their in-store fulfillment process and look for ways to optimize the customer experience through upgrades to customer communications, proprietary apps, staff training or even physical signage.

Stay ahead of the game

As painful as it may be to admit, an end to supply chain disruptions likely won’t be here in time for the holidays. So, the best way to prepare is to start early and be proactive in addressing any shortcomings that could impact consumers. Some brands have already started placing orders to build up inventory in anticipation of the holiday rush. By prioritizing a holiday logistics strategy and dedicating time and energy to optimize related processes, brands can break out of the “Groundhog Day” loop to achieve sales goals and exceed customer expectations this holiday season.

Preparing your organization for the holiday season? Connect with Digital River today and let us help you manage the complexity of payments, taxes, compliance, fraud and logistics so you can deliver outstanding customer experiences.