It was just a few months ago when we thought that the worst of the pandemic—and the shipping challenges that came with it—were behind us.
Unfortunately, that’s not the case. Around the world, retailers and shipping companies are still being challenged by a host of issues, including shipping container shortages, port congestion and surging customer demand. And, those issues will only get more acute in the coming weeks as the entire supply chain continues to ramp up to handle peak season demand. The industry is dealing with one supply chain squeeze on top of another.
This peak season, however, is set to be different from last year’s because merchants and shippers both expect and are better prepared for disruptions. This preparation has become especially critical for smaller players, who have comparatively fewer resources and thus must be more disciplined in ensuring that they’re able to fulfill customer demand during this challenging time. Here’s what the smart players are doing right now.
Start early to understand receiver capacity and requirements
Given the scale and complexity of the current supply chain challenges, one of the most effective disruption mitigation measures is to start having conversations with carriers as early as possible.
This is important for two reasons. For one, given the tight shipping capacity, it’s more important than ever for merchants to maximize the amount of time they have to prepare for potential supply squeezes. By proactively sharing volume forecasts and information about potential spikes, merchants can help ensure that carrier partners can manage their shipping volume.
Starting early has also given merchants more time to negotiate better rates with carriers, even those that have introduced shipping volume limits and peak surcharges. Smaller merchants have more leverage than they realize.
Develop contingency plans to resolve unexpected shipping issues
The success of some online marketplaces has trained a generation of consumers to expect their purchases to appear on their doorsteps within two days (or, increasingly, just one). But, with the capacity challenges we’ve seen over the past year, even the largest of online marketplaces are beginning to slip.
Given this reality, it’s become increasingly important for merchants to develop contingency plans to help manage and preserve the customer experience in the event of delays. For example, many merchants have begun waiving shipping fees if customers’ orders arrive late. Other merchants have extended their merchandise return windows, giving consumers more flexibility and giving merchants more time to safely handle returned products. Predictable and reliable are the new fast.
Likewise, to reduce their reliance on expensive last-mile delivery services, large retailers are better leveraging their power of their brick-and-mortar locations though click-and-collect services. They’re also using their stores as centralized fulfillment hubs, tapping delivery services to get customers their orders.
Invest in technology to diversify their carrier mix
As e-commerce has continued to take center stage, the rise of more sophisticated merchants have turned to technology platforms to level up their shipping processes and operations.
Increasingly, one of the most critical applications of technology is in carrier diversification. Given that capacity issues have forced many carriers to cap volume, it’s never been more important for merchants to have alternative carriers to switch to in moments of crisis. Merchants need not just backups, but backups for those backups.
New platforms have made this process effortless, allowing merchants to compare shipping rates across carriers, print labels, and provide delivery tracking to customers. Moreover, new platforms also streamline the process of tracking shipping volume across multiple carriers.
Leverage the lessons of peak season 2020
Overall, the lesson here is clear -- merchants that survived peak season 2020 got a crash course in resiliency. Those hard-won lessons will be critical this year as the entire supply chain responds to the next phase of the crisis. Given what we’ve seen from merchants and shippers so far this year, the entire ecosystem will be far more prepared for this peak season than it was for the last one.