Guide to ecommerce fulfillment during the 2023 holiday shopping season

The holiday shopping season presents a unique set of logistics challenges that ecommerce merchants must grapple with. Although each year’s peak season is different, there are a handful of common challenges that emerge every year:

Coping with the spike in customer orders

The last two months of the year typically bring with them a surge in orders, as consumers rush to swoop up deals and snag gifts for friends and family. In 2022, shoppers spent over $3 billion on 38 of the 61 days in November and December. Handling this massive volume of peak season orders – and ensuring products are delivered on time to customers – is a tall task for ecommerce businesses, placing significant strain on their logistics operations.

Dealing with capacity constraints

Many ecommerce businesses find that they don’t have the necessary capacity to handle throughput during the peak period. One capacity constraint is workforce – and many companies look to hire additional workers, which, of course, results in additional costs. According to a recent survey, retailers cite labor costs and labor shortages as the two biggest challenges they face during the holiday shopping season. Another capacity constraint is warehouse space, as many ecommerce businesses simply don’t have the infrastructure required to store and distribute the huge amount of stock needed for holiday order fulfillment.

Effectively managing inventory

One of the biggest peak season logistics challenges for ecommerce companies is getting the right products in the right warehouse or fulfillment center locations at the right times – so they can satisfy holiday shopper demand as quickly and cost-effectively as possible. Achieving this involves optimizing the way you manage your inventory – from inbounding to storage and distribution to picking, packing, and shipping. Failing to manage your inventory correctly can result in stockouts (and a corresponding loss of sales and customer trust) and overstocking (which keeps precious working capital tied up).

Ensuring carrier availability

Most ecommerce businesses depend on carriers to deliver their orders to their customers’ doorsteps. During the holiday season, shipment volume surges and demand for carrier services (along with carrier costs) skyrockets. Unless you have already booked sufficient capacity with the carriers you use, you make find that your peak season shipments are not able to be sent out on time.

Handling returns

Order returns are an all-too-common phenomenon during the holiday season, and retailers forecast that 17.9% of merchandise sold during the upcoming holiday season will be returned. Unless your ecommerce business has a robust and reliable returns process in place and is equipped to handle returned shipments, customer service, and inbound inventory processing, you will likely find it difficult to deal with the high volume of holiday season order returns coming your way.

Dealing with these and other holiday shopping season logistics challenges can be overwhelming, but fortunately there are 3PL providers out there that can help you overcome these obstacles.

Amazon Multi-Channel Fulfillment (MCF), for example, can help you handle your holiday order fulfillment challenges by:

• Allowing you to leverage Amazon’s fulfillment network – which has over 2,000 facilities (including more than 200 fulfillment centers) – to handle the surge in customer orders during peak season. MCF provides order fulfillment – with shipping speeds as fast as one day, a >97% on-time delivery rate, and deliveries made 7 days a week – for orders from off-Amazon sales channels including your brand website, other ecommerce marketplaces, and social media stores.
• Enabling you to utilize MCF’s 3PL services on demand – with simple, pay-as-you-go pricing for fulfillment and storage – so that you can easily scale your logistics operations up and get the warehouse, workforce, and transportation capacity you need to cope with the influx of customer orders during the holidays.
• Helping you to optimize your inventory management by:
  
  • Consolidating your stock into a single pool that can be used across all your sales channels. MCF orders are fulfilled using the same inventory pool that you use for your Amazon.com orders (with Fulfillment by Amazon or FBA) – so that can maximize inventory turnover and minimize stockouts.
  • Distributing your inventory across Amazon’s fulfillment network so it’s as close as possible to your customer base – thereby minimizing shipping times and costs.
  • Leveraging cutting-edge technologies such as warehouse management systems and scanners to give you an accurate, real-time view of your inventory levels as well as warehouse robotics to automate and expedite your order processing.
• Providing carrier services using Amazon’s fleet of over 120,000 trucks, vans, and planes to deliver your holiday season orders. Most 3PLs depend on external carriers to ship orders, but a handful of 3PLs – including MCF – are carriers themselves. By dealing directly with MCF as your carrier, you can ensure that your peak season shipping needs will be met.
• Managing the end-to-end returns process – from handling the shipping of unwanted products, to receiving and processing them at Amazon’s fulfillment centers, to helping you assess whether they should be disposed of or added back into your Amazon inventory.

With a 3PL like MCF, you can conquer the logistics challenges of the peak season, and consistently deliver packages on time and deliver smiles to the faces of holiday shoppers around the globe.

What does your ecommerce business need to do to make sure you are ready and able to manage the spike in orders during the holidays?

Although there’s no blueprint for success when it comes to holiday order fulfillment, there are three key actions you can take that will help you prepare for peak.

#1: Choose the right 3PL provider

As we’ve discussed above, the holiday shopping season brings with it a whole slew of logistics challenges and complexity – and a 3PL can help you navigate those difficulties.

Ecommerce companies of all sizes – from small- and medium-sized businesses to large enterprises – opt to outsource logistics operations to 3PL providers during the end-of-year shopping period (and at other times as well).

Of course, it’s imperative that you choose the right 3PL for your unique business needs – and there are tons of providers out there to pick from. When evaluating prospective 3PLs to help you handle your peak season order fulfillment, some important questions to ask are:

By asking these and other questions, you can identify the right 3PL partner that can help your business thrive during the peak shopping season and beyond. Learn more about the questions to ask prospective 3PLs.

#2: Establish alignment across your team

For your ecommerce business to be successful during the busy holiday season, everyone on your internal team (from sales and marketing to product to operations) needs to be on the same page.

One of the common pitfalls that prevents ecommerce businesses from maximizing sales revenue, on-time delivery performance, and customer satisfaction during the holidays is that the various functions of their team are operating in silos. For example, if your sales and marketing team are running special holiday season promotions for certain products during a certain period of time, your operations team needs to know about this – so they can prepare to handle higher order volumes.

Establishing coordination and collaboration across your internal team ahead of the end-of-year holiday shopping season is paramount. Take the time to ensure all your internal team members are aligned, and involve your 3PL as early and as much as possible in your holiday season planning and preparations. Indeed, giving your 3PL a seat at the table during your internal team’s peak season planning discussions will help you get a good grasp of their capacity and service-level agreements (SLAs) during the holidays – so you can tailor your sales, marketing, inbounding, and other plans accordingly.

#3: Develop an integrated peak season plan with your 3PL

Once you’ve firmly established the lines of communication and collaboration across your internal team and with your 3PL, you can work together to generate an integrated peak season plan that covers sales, order fulfillment, inventory management, and other areas. You will probably want to start putting together this integrated plan for the holiday shopping season a few months before the onset of “the Turkey 5” – so that you can make you’re ready for the surge in customer orders.

Your integrated peak season plan should encompass several critical components, including:

A sales plan

Using historical data and demand forecasts, formulate a sales plan that specifies which products you plan to sell during the holiday season, which deals, promotions, and marketing campaigns you plan to run, which channels (such as brand websites, ecommerce marketplaces, and social media stores) you plan to sell on, how much inventory you will need to satisfy demand from holiday shoppers across these different channels, and where you will source or manufacture this inventory.

An inventory plan

Collaborate with your 3PL to create an inventory plan that details which products you will send to your 3PL, when you will inbound that inventory to your 3PL’s facilities (taking into account your 3PL’s cutoff dates), how much stock you plan store at your 3PL’s warehouses and fulfillment centers over the course of the holiday season, and what is your 3PL’s warehouse slotting process to ensure that products are optimally positioned in the warehouse – so they can be picked, packed, and shipped at the right times.

A capacity plan

Determine how much capacity you will need from your 3PL and carriers to handle the volume of peak season orders you are forecasting – and confirm with your 3PL that they will have the capacity to inbound, pick, pack, and ship your orders during the holidays and also help you handle returns. It’s important to note that some 3PLs – like MCF – have great flexibility in terms of the volume, variety, and timing of orders they handle during peak season (and throughout the year), while other 3PLs place restrictions on how many orders you can send them at any given time and may actually charge you for the cost of hiring additional staff to process your orders.

A contingency plan

Work with your 3PL to explore supply chain risks and what-if scenarios and create a contingency plan. Then, if some issue (such as an inclement weather or a production disruption) arises during the holidays, you will be prepared to deal with that unexpected event as efficiently as possible and keep your logistics operations running smoothly.

Once you’ve gotten input from all key stakeholders – including your 3PL – and pulled together your integrated peak season, you are ready to start executing that that plan. As the saying goes, “Plan your work and work your plan” – get your team aligned and prepared conquer the challenges of the peak season order fulfillment, and then put your plan into action!

The holiday shopping season is a time of high importance for shoppers, who want to have all their orders for family and friends delivered on time. According to recent research, 65% of shoppers are worried about shipping delays during the holiday season.

To meet customers’ expectations for fast, reliable order fulfillment during the holidays and manage the huge volume of orders, ecommerce businesses like yours need to overcome numerous challenges.

By engaging the right 3PL provider, establishing alignment across your team, and putting in place an integrated peak season plan, you can set up your ecommerce business to succeed during the holiday shopping season and beyond.