How to Scale ecommerce Fulfillment for the Holidays

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1 How to Scale ecommerce Fulfillment for the Holidays As much as online retail has become an integral component of holiday shopping 1, some online retailers may still hit serious roadblocks during the holiday season. A key one is fulfillment while customers can walk out of a brick-and-mortar store with merchandise minutes before Christmas, online shopping requires the timeconsuming step of shipping merchandise to customers. Even though online retailers are not able to take advantage of the last minutes before Christmas in the same way as physical stores, they can evaluate their fulfillment options to extend the delivery window to one or two days before the holiday. Exploring shipping options early on, offering shipping promotions, and enhancing customer service help position online retailers for success during the holidays. An Amazon Webstore Guide

2 EXTEND HOLIDAY FULFILLMENT One of the biggest ways to capitalize on the holiday shopping season is to continue to take orders as close to the holiday as possible, while still guaranteeing on-time delivery. The National Retail Federation found that 44% of online shoppers in 2012 planned to continue shopping through the week of Christmas. 2 This is a trend that will undoubtedly continue as ecommerce continues to grow. The National Retail Federation found that 44% of online shoppers in 2012 planned to continue shopping through the week of Christmas. 2 Guaranteeing on-time delivery for the holidays and not following through is worse than not making a guarantee at all. Retailers need to evaluate fulfillment options and accurately assess what their company can realistically provide. To maximize revenue during the holidays, ensure your company s fulfillment operations have the capacity to extend delivery windows as close to Christmas as possible. EXPLORE FULFILLMENT OPTIONS Companies that aren t able to handle the logistics of premium delivery on their own may want to consider working with third-party providers 3, they are often equipped to deal with high-volume traffic. Where in-house fulfillment requires allocating additional warehouse space and hiring additional staff to handle holiday shipping 4, third-party providers have the ability to scale to meet the changing inventory demands of holiday fulfillment. Outsourcing fulfillment may keep the virtual doors open even one day longer than the competition, 2

3 which translates to more sales. This flexible option can also work in overflow situations, when companies get more orders than expected. Despite which fulfillment option an online retailer implements, inventory must be managed efficiently to ensure an effective and timely delivery process. 5 By accurately assessing and managing inventory, businesses can determine how much space is needed to house inventory, the length of time the space is needed and inventory replenishment needs. Ensure your current fulfillment option is able to handle seasonal spikes. If not, consider outsourcing fulfillment for scalability. OFFER SHIPPING OPTIONS AND PROMOTIONS Providing a variety of shipping options and shipping promotions can help online retailers drive more sales during the holiday season. No matter when a customer places an order, whether it is at the beginning of the holiday shopping season or the end, customers expect a simple checkout experience with shipping options that fit their needs and budgets. Online retailers should provide as many shipping options 6 as possible without making the process of selecting one complex. The more complex the purchasing process, the more likely customers will be to take their business to a retailer that provides a simpler shopping experience. Create a shipping promotion structure with enough tiers to meet most customer needs but not so many that they get 3

4 confused. For example, a simple scheme could be (1) one-day, (2) two-day, and (3) five-day shipping, with just one price point for each option. Implementing shipping promotions during the holidays is crucial to remain competitive. Some holiday shipping promotions to consider include free shipping on minimum order value, special shipping offers for regular shoppers, free upgrades to express shipping options, or free shipping on all orders. During the 2012 holiday season, more than half of the leading online retailers offered some form of free shipping. 7 Free shipping, in particular, has become increasingly important to the online shopping experience, especially during the holidays. During the 2012 holiday season, more than half of the leading online retailers offered some form of free shipping. 7 Not only is free shipping good for customers, but it s also good for business. Forrester found ecommerce retailers report 10-20% overall life in revenue from free shipping offers. 8 Provide customers standard and premium shipping options without overcomplicating the shopping experience. ENHANCE CUSTOMER SERVICE As the ecommerce environment continues to evolve, customers demand more from online retailers and naturally expect enhanced customer service. 9 Customers have come to expect 4

5 tracking numbers to check on the status of their orders. In addition, customers need retailers to make things right if and when something goes wrong; for example, offering upgraded shipping at no charge to the customer for an order that doesn t arrive when promised. Although not mandatory, providing holiday extras, such as gift wrapping and return labels, is also a great way to win customers over during the holiday season. 10 Not only is it a brand differentiator, but it also provides a better customer experience. As a retailer, the key here is to establish a process upfront to provide the gift-wrapping service either with existing resources or through a third party and evaluate the total cost. Build a better customer experience by providing tracking numbers and return labels. Go the extra mile by giving customers the option to include gift messages and have purchases gift wrapped. PLAN AHEAD To prepare for the holiday season, evaluating fulfillment processes early on is crucial to success. Established procedures and standard operating procedures (SOP) should be robust enough for seasonal employees to learn quickly or for outside providers to replicate. Ideally, retailers should cultivate a year-round strict adherence to best practices and high standards for customer service. Ramping up inventory early in the year is important, but even more so, it s important to strike a balance between being prepared and avoiding any unnecessary costs. For example, a retailer may reserve rack space in June but not actually use it until October, which results in four months of renting empty space. It s important to remember that every online retailer has different needs and every vendor will have different offerings. 5

6 Another factor in preparing for holiday fulfillment is to make items easy to ship. Products should have correct barcodes and shouldn t require any additional preparation (for example, a sticker that needs to be placed on the item) before sending. Ramp up and prepare key holiday inventory earlier in the year for easy shipping during peak times. SUMMARY The success of online retail stores during the holidays depends largely on their ability to allow customers to shop as late in the season as possible, while still receiving their orders before Christmas. These five tips can help businesses scale ecommerce fulfillment for the holidays: Extend holiday fulfillment. Online retailers should examine fulfillment operations to ensure they can continue taking orders as close to the holiday as possible and still guarantee on-time delivery. Explore fulfillment options. Online retailers should examine their current fulfillment abilities and determine the best course of action for the upcoming holiday season - using in-house order fulfillment, outsourced fulfillment, or a combination of the two. Offer Shipping Options and Promotions. Businesses should offer promotions for various shipping options to fit various customer needs without creating a complex shopping experience. Enhance customer service. Because timing is critical during the holidays, retailers should be sure to have robust customer service processes in place for gift wrapping, returns, and backup plans. Plan ahead. Things like estimating inventory space requirements, ramping up inventory, and preparing for easy shipping can be done well in advance and increase the likelihood of succeeding during the holidays. 6

7 1 Holiday FAQ. National Retail Federation. (accessed October 15, 2013). 2 Holiday Shipping: Plan Now for Last-Minute Shoppers, Entrepreneur, (Accessed October 14, 2013). 3 Outsourced warehousing and fulfillment for small businesses. The PartnerShip Connection Blog. partnership.com/blog/bid/260241/outsourced-warehousing-and-fulfillment-for-small-businesses (accessed October 15, 2013). 4 5 things to know now about hiring temporary or seasonal workers. U.S. Small Business Administration. (accessed October 15, 2013). 5 Managing inventory assets for an online retailer. Startup Nation. (accessed October 16, 2013). 6 Shipping rate strategies for your online store. Shopify. (accessed October 15, 2013). 7 7 Ways to Improve a Customer s Shipping Experience, Practical ecommerce, com/articles/ ways-to-improve-a-customer-s-shipping-experience (Accessed October 14, 2013). 8 Smarter Strategies for Free Shipping, Forrester Research, Free_Shipping.pdf (Accessed October 14, 2013). 9 The key to your online retail success: your customers experience. UPS Compass. (accessed October 16, 2013). 10 A wrap up on gift checkout. The Usability Blog (accessed October 16, 2013). 7

8 Amazon Webstore is a complete commerce platform that enables companies to leverage Amazon technology and expertise in building and managing their directto-consumer business. Commerce sites built on the Amazon Webstore platform utilize Amazon s powerful cloud infrastructure and payment processing technology to deliver a scalable, secure online shopping experience to customers. Amazon Webstore also integrates seamlessly with selling on the Amazon Marketplace and using Fulfillment by Amazon, Amazon Prime, and other Amazon Services. To get started with Amazon Webstore, visit the website at or contact the Amazon Webstore team directly. 8