It’s a bit difficult to think about winter in the summer, but those of us in the shipping industry know the holidays will be here faster than we know it.
As companies plan for this peak season, they should reflect on the business’ overall performance last season—considering processes with a critical eye may help improve delivery for customers, help retailers stand out from others in the e-commerce space and possibly save money in the process.
E-commerce grew by 13.4% in the 2015 holiday season compared with just 1.7% growth in retail sales overall, according to a recent report by eMarketer, so if you’re going to make the most of this critical holiday shopping period, you need a solid e-commerce game plan. But remember, to fix a problem, you first have to identify it.
Here’s a four-part plan to identify weaknesses and streamline the order fulfillment portion of online sales.
1. Improve warehouse efficiency
Think back to your warehouse and inventory process during last year’s holiday season. Even companies with the most well-designed processes are likely to have room for improvement. My best advice for keeping an efficient warehouse process is to stay proactive and understand what products are coming and the window of time you will receive them. This could help ease congestion at docks and may allow you to store products more efficiently. Ask shippers to provide you with an advanced shipping notice, which could allow you to create shipping labels for products needing to be shipped quickly.
After receiving inventory, stay organized to reduce time spent searching for it. Try putting the top 20 percent fastest moving items at mid-level so workers won’t have to reach up or down for them. Other organizational tactics, like storing items that ship together in close proximity, can shave time off your process. Most importantly, keeping your processes simple may allow employees (both existing and new) to manage stock smoothly and with fewer errors.
2. Streamline your packing, shipping and returns strategy to possibly cut shipping costs
We’ve learned the way you package and ship your products and handle returns can make a big difference on your shipping costs—and could even help boost customer satisfaction. Dimensional (DIM) Weight pricing is used by the transportation industry to establish a minimum charge for the space a package occupies, not just its weight. So a one pound shipment in a 12” x 12” x 12” box costs a 13-pound price by dimensional weight. It might be possible to avoid extra costs by using the smallest container that will safely hold your product, or consider a shipping carrier that does not apply DIM pricing if this is a concern.
I also recommend double checking contracts with shippers to ensure you aren’t paying surprise fees; shippers have been known to add surcharges for residential delivery, delivery to less populated areas, for fuel, large packages, Saturday deliveries and more. Does your shipper have a net minimum charge? This may be preventing you from receiving the full benefit of negotiated discounts.
The returns process occasionally goes unnoticed by businesses that are instead focused on getting their product out. If possible, designate a certain person or group to restock product and credit customer accounts quickly. Providing your customers with prepaid shipping labels, real-time tracking updates and convenient drop-off locations may help greatly with customer satisfaction. For extra points with customers, consider taking their experience a step further and including a special touch, such as a thank-you note or coupon in their shipment. Small tokens of gratitude often go a long way.
3. Crunch the numbers
Before your business makes any changes for the upcoming holiday season, get out your calculator. Take some time to review your key performance indicators (KPI’s) from last year. Consider price spent on each order, how long it took to fill the order and if there were any returns. Increased sales do not always equate to increased profits. You should be aware of the number of order inaccuracies, cycle times and amount of damaged goods to understand where and how to improve.
4. Work smarter with technology
Technology continues to make our lives easier, and now may be the time to re-evaluate your systems and their business impact. For example, if your business uses barcoding to track inventory, did your scanners work properly? Barcodes and radio-frequency identification (RFID) tags can decrease processing times, with barcodes possibly being smaller, lighter and easier to use. RFID tags can also carry much more data and don’t have to be in line of sight of a scanner to read, so perhaps RFID tags are a better fit?
Other technologies include point-of-sale (POS) and enterprise resource planning (ERP) software that may help analyze and organize inventory in a more efficient manner. If your business plans to update existing technology, I suggest testing it well in advance of the holiday season to avoid potential glitches.
The busiest time for e-commerce requires a 360-degree view to effectively evaluate a product’s life cycle—from the warehouse to your customer’s door. As you prepare for the peak holiday season, consider developing an action plan based on these four areas I’ve just outlined to evaluate where improvements may be necessary, what can be done to improve them, and the actions needed for implementation within the next week, month and even three months.
Learning from previous challenges can lead to future success, and planning earlier may help position your business for a successful holiday season. For additional tips on efficient shipping, visit www.USPSdelivers.com.
By Cliff Rucker, vice president of sales for United States Postal Service