Shipping In Q4: What to Expect & How to Prepare?

During May and June, eCommerce sales saw unprecedented volume which wreaked havoc on even our largest retailers’ supply chains, manufacturing, inventory, and shipping. In fact, June had the highest year-over-year growth rate for “nonstore” sales of any month in recorded history according to U.S Department of Commerce data.

COVID-19 has drastically changed how consumers behave, with in-store traffic significantly declining and online sales rising. Those behavioral changes are in addition to moves by retailers themselves to limit in-store shopping, as many big box retailers have announced altered Thanksgiving weekend hours.

The expectation is that sales will increasingly move online through the holiday period, thus potentially dwarfing the surges seen in May and June. If that continues, it will further constrain the logistical bandwidths of FedEx, UPS, and the USPS. Because of this capacity constraint, there is expected to be earlier shipping cutoffs and order delays or limits resulting in potential cancelations and/or increased customer support requests.

Not only will the majority of in-store sales pivot to online, but with the impact of the pandemic during an election year, voting is projected to pivot towards mail-in ballots for many areas, creating additional pressure on mail delivery as far forward as October.

So if shipping delays are expected, what does it mean for cutoff dates this year for your customers? How can you prepare for the unknown? What can you do to be successful as a business and continue providing an excellent customer experience?

Game Out the Possible Scenarios

Work with your team to develop a series of scenarios with shipping challenges that you can game out and therefore be better prepared for.

Examples:

• Inventory ships later than normal during times of peak demand
• Shipping carriers begin experiencing delivery delays at various points
• USPS rates increase or service slows suddenly based on policy changes

Act it out as a customer. How would you react and what action might you take? What are your expectations of the business? What could the business have done proactively to prevent a worst-case outcome, or to reduce dissatisfaction?

Consider the externalities. If USPS is unduly impacted because of policy changes, what kind of surge might that cause for other carriers? Might Amazon’s infrastructure be robust enough to withstand system shocks?

Build business plans. How much inventory should you order and when? How would it affect the promotional plan if the system performed well and you were to end up overstocked? When will you need additional support, and how might their training or documentation need to be adjusted? At what points should you be checking on-time rates, and at what thresholds would you take action? What variability can you build into your shipping carrier agreements?

Communicate, Communicate, Communicate

Bad customer experience happens when expectations are not met, and in the era of online shopping, that means timely shipping. To avoid this, do everything you can to make customers aware of potential delays, earlier shipping cutoff deadlines, and ongoing promotions. Whether it’s via a sitewide banner, exposing shipping challenges in the checkout process, or sending email blasts to previous customers, finding as many ways as possible to set appropriate expectations will put you in the best position to build awareness and forgiveness in the event things break down.

As you move through Q4, you’ll learn more about the impact to shipping expectations. If your initial shipping cutoff date ends up being too early, customers would rather know they have one more day to make purchases as opposed to one less day. But to start, make sure when setting your target shipping cutoff that you do so conservatively. Learnings from Black Friday/Cyber Monday will help you adjust as you move into the latter part of holiday shopping.

Small Acts of Good Faith

Similar to how a lot of consumers supported their favorite restaurants impacted by the initial COVID-related closings by purchasing gift cards, retailers can reverse that script if shipping becomes an issue. Consider it an act of good faith, but adding a free $5 gift card to certain purchases whether determined by AOV (orders larger than $25) or expected shipping date (anything projected to arrive in 10+ days) is a great way to acknowledge the frustration customers may be feeling.

If you’re worried about conversion rate declines from extended shipping timelines, try to respond with other small tokens, like lowering your company’s free shipping threshold. Just be sure to call out the threshold drop and why you’re doing it in your shopping experience to make sure customers know you’re making the effort.

Overstock On Inventory

Not only may your distribution to consumers, but your procurement or manufacturing supply chains by shipping challenges could be impacted, as well. That’s why it’s important to overstock warehouses in advance to ensure that business operations aren’t negatively affected by low stock of inventory.

This can have a twofold effect on your business. Not only will you be sufficiently prepared to survive any delays within the procurement process, but if your competitors begin struggling with stocking, then you’ll have sufficient product to take advantage of the extra market share during peak seasonality and convince people to switch from competing brands.

Game-planning for Q4 is a difficult task that for most retailers is always being refined. Knowing what potential issues could arise and what measures are being put in place to mitigate risk is a key part of organizational success during the holidays. If you’re feeling like you need more experience in your corner for peak season, reach out to our team.