The study, which analyzed more than 175 orders placed on the last day that retailers guaranteed delivery by Christmas, found that 15 percent of orders did not reach their destination in time. Retailers were responsible for 56 percent of those delays, which accounted for 8 percent of overall shipments. While carriers contended with extremely high volume and severe weather issues, retailers’ shortcomings were largely due to internal processing errors or a failure to upgrade shipping.
“Although the major carriers took some well deserved blame for late shipments, they were not the sole reason for missed deliveries,” said Al Sambar, partner and director of the Soft Lines practice at Kurt Salmon. “Several of the retailers trying to press latest possible delivery dates failed to get the parcels handed to the carriers in time for delivery. It’s a fiercely competitive time of year, but there is a big gap between being good and being great when it comes to fulfillment. Some brands were stunned by last-minute demand, and they simply didn’t have the systems in place to respond in time.”
However, many retailers successfully planned and executed last-minute holiday shipping campaigns. In the Kurt Salmon study, the top five retailers that delivered orders placed on the latest ship dates were Zappos.com, Coach.com, Belk.com, UnderArmour.com and Sears.com.
According to Debbie Fortnum, senior vice president of supply chain at Belk, “We expected the end of the holiday season would be more challenging from a fulfillment perspective because there was one less week between Thanksgiving and Christmas. But we were ready. We developed an integrated shipping plan, including volume expectations and timing, with our carrier partners that aligned with our promotional schedule. Our priority was delivering on our promise to shoppers, so careful preparation and coordination was key.”
As retailers in 2014 look for ways to adjust their fulfillment strategies in order to minimize problems and capitalize on existing strengths, Sambar suggests the following best practices:
• Update Forecasting: Some retailers may have been surprised by the uptick of online activity right before Christmas. Now that retailers are aware of the consumer expectation to order at the last minute, it’s important to adjust peak season forecasts to ensure seamless operations that account for a later influx of orders.
• Align Promotional & Distribution Activity: It’s easy for the marketing department to send a promotional email to customers highlighting last-minute shipping deadlines without a sense of what’s happening in distribution centers. Create an aligned promotional plan, and communicate it across all departments to ensure it is achievable.
• Use the Stores: Many retailers have already begun shipping from stores as it can shorten transit times. This is no simple task when stores are extremely busy with holiday activity, but retailers report tremendous benefits. We expect the use of this tactic will grow through 2014.
Kurt Salmon, in partnership with StellaService, will publish the full results of their fulfillment analysis in the first quarter of 2014.
Source: Kurt Salmon