9 Effective Tips for Managing High Shipping Volumes During the Holiday Season & Beyond
With the surge in online shopping during the holidays and beyond, the demand for flawless fulfillment and fast and reliable shipping has never been higher.
According to Deloitte, holiday retail sales growth is expected to be 3.5%–4.6% for the November 2023–January 2024 season compared to 2022, reaching $1.54–$1.56 trillion.
In that time frame, online holiday sales in the U.S. are expected to grow to $278–$284 billion. This means merchants will have to deal with stockouts, returns, and other challenges related to high shipping volumes well into the new year.
How can you overcome these challenges and deliver a great customer experience during the peak shipping season? Keep reading for effective tips to help you manage high shipping volumes and optimize your fulfillment operations.
The challenges of managing high shipping volumes
Managing high shipping volumes during the festive season and beyond can pose several challenges for online merchants, including:
Running out of inventory can result in lost sales, unhappy customers, and a damaged reputation. Stockouts can occur due to things like:
- Inaccurate demand forecasting
- Poor inventory management
- Supplier issues
#2 Handling high shipping volumes and high volumes of returns
U.S. consumers return 16.5% of all online sales, with clothing, bags, accessories, and shoes being the most commonly returned purchase categories.
The above means that, besides a surge in shipping volumes brought on by the surge in online holiday sales, merchants have to deal with a surge in reverse logistics.
In other words, you must learn how to tackle processing, inspecting, repairing, restocking, or disposing of returned products. Returns can also affect customer satisfaction, loyalty, and retention.
#3 Not enough workers to keep up with shipping volumes
Finding reliable staff is hard enough during regular times, let alone during the holiday season.
According to the logistics company Saddle Creek, 77% of merchants said labor shortages impacted their operations in 2022, and that's likely to carry into the 2023 season.
Labor shortages can lead to delays, errors, and inefficiencies in the fulfillment process. That's a scenario you don't want to add to your plate during the busiest time of the year.
#4 Digital sprawl
Digital sprawl refers to accumulating disparate software tools, data sources, and IT systems that don't integrate well. It can cause problems like:
- Data silos
- Security risks
- Wasted resources
Digital sprawl can also hinder the visibility and agility of your fulfillment operations, particularly during the high-shipping volume holiday season.
#5 Increased shipment costs
Couriers often raise their fees during the peak season because of higher-than-normal demand.
While online retailers can pass these extra costs down to their customers, it makes competing in terms of price more difficult.
What are the peak shipping season dates?
Now that you know what to expect during the winter holiday shopping season, let's take a look at exactly when you can see these peak volumes.
Peak shipping season typically starts in late October and lasts until early January, depending on the holidays and events that you are targeting. For example, some of the major dates that drive online holiday sales and shipping volumes in the U.S. are:
- Black Friday
- Small Business Saturday
- Cyber Monday
- New Year's Eve
- New Year's Day
In the following section, we'll share some actionable tips to help you prepare for these dates and maximize their potential for your business.
We organized these tips according to the particular challenge they address to make it easier for you to focus on the ones that have the highest impact.
Three tips to minimize stockouts during the holiday shopping season and beyond
Stockouts can have a negative impact on your holiday revenue, customer satisfaction, and brand image. To avoid stockouts, you should implement the following tips:
Tip #1: Partner with more than one supplier
Multiple suppliers can reduce the risk of running out of inventory due to supplier delays, shortages, or quality issues. You can also diversify your sourcing locations to mitigate the effects of natural disasters, political unrest, or trade disputes.
When partnering with new suppliers, it's important toplan ahead and establish clear lines of communication about your inventory replenishment to avoid stockouts.
Tip #2: Forecast demand as accurately as possible
Demand forecasting is the process of estimating future demand for your products based on historical data, market trends, customer behavior, and other factors. It can help you optimize your inventory levels, avoid overstocking or understocking, and reduce costs.
You can use various methods and tools to forecast demand, such as moving averages, exponential smoothing, regression analysis, or artificial intelligence. The key to success is to forecast holiday sales of individual products separately for each day of the season.
Tip #3: Keep your reorder points updated
The reorder point (ROP) is the inventory level at which you should place a new order with your supplier to avoid stockouts and minimize storage costs.
While there are different ways to calculate its components, the most widely used formula for ROP is:
ROP = [(lead time in days) x (forecasted daily demand)] + (safety stock level)
You should keep your reorder points updated based on the changes in these factors, especially during the winter holiday season. You can also use many software tools to forecast sales and calculate the ROP for all the products you sell, making your life much easier.
Two tips to handle a high volume of shipments and returns
To handle the high volume of shipping and the associated volume of returns during the peak sales periods, you can implement the following tips:
Tip #4: Partner with multiple freight carriers or delivery providers
The holiday season invariably witnesses a surge in online shopping, leading to high shipping volumes that can be challenging.
One effective strategy to manage these elevated shipping demands is partnering with multiple delivery service providers. A prime example of this approach is demonstrated by the men’s fashion brand StudioSuits.
They've partnered with popular carriers and delivery providers like UPS, FedEx, DHL, and others, all featured on their website.
This multi-carrier strategy offers several benefits. It enhances delivery speed, provides flexibility in shipping options, and guarantees customers receive their orders punctually, even during the peak holiday season.
Tip #5: Set a clear return policy
A clear and generous return policy can reduce customer hesitation, increase conversions, and build trust. However, it's important to communicate your return policy clearly on your website, product pages, checkout pages, confirmation emails, and packing slips.
A dedicated landing page for returns and exchanges lets customers know exactly where to find your return policy. It reduces confusion and helps build confidence in your brand, especially when you sell large-ticket items.
Two tips to handle a lack of workforce during the all-important holiday season
Labor shortages can lead to delays, errors, and inefficiencies in the fulfillment process. To handle a reduced workforce, you might implement the following tips:
Tip #6: Automate business processes
Business processes like order entry, invoicing, inventory management, and customer service can be tedious and time-consuming, and they require a lot of staffing if handled manually.
They're also prone to human error and can cause unnecessary bottlenecks during the busy sales times.
That's where business process automation comes into play. Using automation can free up staff for tasks where they’re needed most and streamline your processes, helping to ensure shoppers receive their orders on time.
It can be highly beneficial with:
- Ad automation tools
- Generating shipping labels
- Streamlining order processing
- Optimizing warehouse operations
- Automating inventory management
The result? Timely and accurate order fulfillment that minimizes the risk of errors, ultimately improving the customer experience.
Tip #7: Hire seasonal workers
A common way to manage high shipping volumes during the winter holiday shopping season is to hire seasonal workers to help cover the surge in demand.
However, this creates another challenge related to managing a larger workforce and keeping employees organized and productive. Here's when an employee work schedule maker like Connecteam can come in handy to create effective, efficient schedules that balance your team's needs and the high demand of the holiday season.
A work schedule maker will build schedules for workers dealing with shipping orders with minimal time and effort. That way, you never find yourself in a pickle where you don't have enough workers to handle order flow.
How to manage digital sprawl
Managing your supply chain tech stack is more important than ever before. Here's a way to improve it for high shopping seasons:
Tip #8: Choose the right software tools with a focus on integration and sustainability
Choosing the right software tools for your fulfillment operations can make a big difference in your performance, efficiency, and scalability.
Choose software tools designed for your specific needs, goals, and challenges, and make sure they can integrate seamlessly with your existing systems and platforms.
Avoid using too many software tools that overlap in functionality or that aren't compatible with each other.
Besides focusing on functionality and integrations, forward-thinking businesses are now exploring ways to set up an environmentally responsible tech stack. One strategy gaining momentum is storing a business’ entire IT equipment in a sustainable data center for managing and optimizing shipping operations.
These data centers follow eco-friendly practices and are designed to minimize energy consumption. They also use renewable energy sources to reduce the carbon footprint of high-volume shipping, contributing to a greener and more sustainable approach to meeting holiday demand.
How to manage extra costs
Managing increased shipping costs can be challenging, but it's doable. Here's a way to improve it for peak shopping seasons.
Tip #9: Offer shipping protection
Your ability to deliver products to your customers directly impacts customer satisfaction. More importantly, when issues like package damage, loss, and theft occur, you as the merchant are often responsible for paying for a replacement product and covering the shipping costs.
Gain cost control and tap into a new source of revenue with shipping protection, which offloads the labor and costs associated with resolving shipping issues. Customers gain peace of mind that their packages will be protected during one of the most delicate legs of the ecommerce buyer’s journey, and merchants save on replacement costs while efficiently addressing customer needs.
Deliver a great customer experience during peak shipping seasons
Managing high shipping volumes during the holiday shopping season and beyond can be challenging, but it can also be rewarding.
By following the tips in this blog post, you can optimize your fulfillment operations, overcome common challenges, and deliver a great customer experience.
Learn more about Extend Shipping Protection to control costs and keep customers happy.