Each year, the holiday season turns out incredible sales and offers that shoppers simply can’t pass up. Next comes the hard part: Getting those products from manufacturers to retailer’s warehouses to distribution centers to consumers.
Over the past two years, supply chain disruptions added yet another pain point to an already complex transaction. This year doesn’t have to be that way.
Previously, customers just expected their goods to arrive on time, but supply chain disruptions became mainstream news in 2021 and expectations adjusted. A study by McKinsey shows that holiday shoppers were most concerned last year about product availability (51%), shipping lead time (45%) and pandemic-related delays (44%). Now that the supply chain crisis is beginning to subside, those expectations will be more demanding again.
To satisfy demand and start alleviating challenges, retailers need a comprehensive last-mile strategy to make the holiday shopping season easier. According to Insider Intelligence, the last mile accounts for 53% of total shipping costs. It’s also the most valuable stage, because it’s customer-facing.
So what does a successful last-mile strategy look like?
Setting the Right Plan
The holiday shopping season accounted for nearly 20% of the $4.583 trillion in total U.S. retail sales in 2021. With the stakes that high in the final two months of the year, there’s a need to maximize profits amid any disruptions that might occur.
The first step on the way to a great holiday season is to determine the margins you’re expecting, and set prices accordingly. This is important for core products, of course, but also can increase potential for selling ancillary goods. Then identify what inventory you can actually make available for the holiday shopping season.
Next comes the part most applicable to last-mile delivery: convenience for customers. Map out how you plan to move goods from warehouses to stores or customers’ homes faster than your competitors. If you can optimize costs and deliver on time, you’ll have an advantage.
Technology can enable your logistics plan, but it’s truly about people. With the right visibility into your network (including last-mile visibility for your customers, too) you can work with partners to make sure that deliveries are fulfilled accurately and timely. When issues arise, you can work together to navigate them and manage exceptions so that customers are satisfied.
The potential cost of falling short is far-reaching. An eye-opening 67% of shoppers are less likely to purchase from a retailer after hearing someone they know had a bad experience, according to a recent study from Metapack. Even second-hand accounts of a poor delivery can affect your business, which underscores why the last mile is so important.
Executing on the Last Mile
It’s not just supply chain disruptions that made e-commerce so chaotic over the last couple of years; the pandemic has had an effect, too. According to McKinsey, 10 years of e-commerce growth occurred in a three-month span once the pandemic hit, and it was suddenly harder to meet customer expectations.
Retailers trying to meet those demands have been at the mercy of courier services that aren’t always able to meet capacity and reliability pressures. Maintaining consistent service has been a challenge for logistics providers. Finding qualified drivers to hire (37.8%) and making the process more efficient (24.4%) were the top two pain points in a 2021 report from Scandit, and the rise of fuel prices has exacerbated the issue.
In June, annual consumer inflation saw its largest increase since 1981, so customers are more cognizant of prices than usual. They won’t tolerate shipping costs that are more costly than the goods they’re looking to purchase, and they want to know where their packages are and when they’re arriving.
The right last-mile fulfillment and delivery service gives you and your customers real-time visibility into where packages are, optimizes routes to reduce miles driven, and lowers the risk of failed deliveries. Over the past two holiday seasons, it was difficult to get a shipment picked up and delivered at all. The bar is much higher now.
What’s needed for success in the 2022 holiday shopping season is a partner that can reduce the friction in your supply chain, and produce an entire courier network that can meet the capacity needs of the busiest time of year.
Interoperability is yet another crucial attribute for a last-mile partner. Your logistics provider shouldn’t be incompatible with your enterprise resource planning (ERP) system or other management tool. You need real-time data to get ahead in retail today, so don’t settle for a partner that can’t provide it.
The last two years have shown just how unexpected delays and disruptions can be, so put your organization in the best position to succeed by planning ahead. A record 61% of shoppers began making purchases in early November last year, according to the National Retail Foundation. Implementing plans for your last mile can’t wait, and if you make the right choices it can lead to a successful holiday shopping season.
Bill Catania is chief executive officer of OneRail.
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