For many people, the holiday season – which begins in the US on Thanksgiving and goes all the way to the end of the year – is a time to relax, unwind, and take a break from the daily grind of work. This is not the case for most retailers.
For retailers, the holiday season is the busiest time of the year – a make-or-break period that can account for more than 40%
of their annual sales.
For ecommerce companies, this upcoming peak season is expected to smash all-time sales records. Online sales during the holiday season – which have shot up by 46.8% over the past two years in the US – are forecasted
to increase by 12.8% to 14.3% this year to reach between $260 billion and $264 billion.
To satisfy surging demand during the holiday season – which typically reaches its high point during the “the Turkey 5
” (the five days stretching from Thanksgiving to Cyber Monday) – ecommerce companies must be able to ensure:
The question is: How can online retailers ensure their products are in stock and their customer orders are delivered on time during the busy holiday shopping season?
It all boils down to how well their manage their end-to-end logistics operations – from upstream inventory management
to order fulfillment
– and deal with supply chain challenges and constraints during the end-of-year peak sales period.
To help them handle their logistics operations during the high-volume, high-stress holiday season and meet high expectations from customers, many ecommerce companies engage third-party logistics (3PL) providers
In this guide, we will walk you through the steps you need to take with your 3PL to make sure your ecommerce business is prepared to satisfy demand and deliver on time for your customers during this upcoming holiday season.
As mentioned above, it may be a good idea to give your 3PL partner a seat at the table during your holiday sales planning discussions. Some 3PLs – like Amazon Supply Chain – can provide expert insights on inventory management, order fulfillment, and supply chain management that can really help you crystallize your sales plan.
Step #2: Make an inbounding plan
Once your holiday season sales plan is firmed up, the next step you should take is to work with your 3PL partner to create an inbounding plan.
Before creating the inbounding plan, you should check with your 3PL regarding a few potential issues:
Check to see if your 3PL has enough capacity to handle the volume of orders that you expect to have during the holiday season. If your 3PL does not have the capability to inbound, store, pick, pack, and ship your products, you may need to look for other 3PL partners to help handle your holiday season order fulfillment. Be aware that some 3PLs may charge you for the cost of hiring additional staff required to handle your holiday season orders.
Find out which surcharges your 3PL imposes. Some 3PLs have a surcharge for order fulfillment and other services rendered during the peak period, and they may have other surcharges as well including zonal surcharges and fuel surcharges. It’s important to get a grasp of the true cost of your order fulfillment
during the holidays – as this will enable you to budget appropriately.
Ensure that your 3PL provider has a footprint in those locations where your customer base is located. Ideally, you would be able to partner with a 3PL like Amazon Supply Chain, which has a network of over 200 fulfillment centers around the world. Working with a 3PL with a global presence allows you to distribute your inventory so it’s as close as possible to your customers – thereby reducing shipping times and costs.
Make sure that your 3PL has integrations with the various sales channels that you are using. With Amazon Supply Chain, for instance, you can integrate with essentially any ecommerce website or social media channel via API or app – and thereby automate the entire order fulfillment process.
Find out when your 3PL’s cutoff date is. During the holiday season, most 3PLs implement cutoff dates, after which they are not able to accept new inventory shipments. You will want to make sure that your inventory is inbounded to your 3PL well before their cutoff date – so that’s it’s ready to be shipped out to customers once holiday shopping commences.
After checking with your 3PL about these and other important issues, you can start creating your inbounding plan.
Generally speaking, the goal of this inbounding plan is to ensure that you send the right amount of the right products to your 3PL at the right times – so that your 3PL can efficiently pick, pack, and ship those products out to customers during the holiday season.
The inbounding plan that you create with your 3PL should stipulate:
Which SKUs, in which quantities, you will send to your 3PL.
When you will send those shipments to your 3PL.
Which of your 3PL’s facilities – such as upstream distribution centers or fulfillment centers – you will send the shipments to. Some 3PLs – like Amazon Supply Chain – will automatically and optimally distribute your stock across their network.
Which channels you would like to allocate your SKUs to. Some 3PLs – like Amazon Supply Chain – allow you to consolidate your inventory
into a single pool, which can be used to fulfill orders across all of your sales channels.
What are the optimal inventory levels of various SKUs that you would like to maintain across your 3PL’s storage and distribution network – so that you can replenish whenever necessary.