For the many retailers that rely on increased holiday business for a significant chunk of revenue, it’s time to begin planning for the peak shopping season. In fact, you’re behind if you haven’t started already. At UPS, we started planning for this year before last year’s holiday leftovers were cold. 

“Black Friday,” or the day after Thanksgiving when millions hit stores for mega holiday-shopping savings, is a retail boom. Increasingly, so is the following “Cyber Monday,” when millions shop online for similar savings. And, there’s the mid-December rush, when millions more go online for last-minute shopping, just in time to get their packages delivered before the holidays.

In this tough economy, preparing your business for the peak consumer season is more important – and more challenging – than ever. This is especially true if you, like many companies, are waiting as long as possible this year to stock inventory in the hopes of avoiding piles of unsold inventory at season’s end.

In a tough economy, an increase in sales over the holidays can be even more critical to your bottom line. But the increase in holiday demand can be a double-edged sword. Providing the right inventory and great customer service over the holidays can win you new customers – and failing to do so can lose faithful ones. 

Let’s dive deeper into some key considerations for the holiday season:

The Season of Scalability: If your company handles logistics and distribution in-house, the sharp increase in consumer demand around the holidays can stretch your supply chain to the breaking point. Operational scalability and flexibility are key – and this may be the time to consider outsourcing some or all of your logistics and distribution functions to a third-party logistics provider (3PL). 

Adding capacity in-house can present several challenges, from taking on seasonal employees to procuring costly technology that may be under-utilized the rest of the year. Working with a 3PL provides the flexibility to seamlessly expand and contract your supply chain as necessary, without disrupting other critical parts of your business. A good 3PL should capitalize on sophisticated technology, e-commerce distribution expertise and decades of holiday logistics experience to develop a solution to meet your needs, leaving you to focus on the important stuff – like your customers. Companies like UPS hire thousands of temporary seasonal employees and add trucks and airplanes to their fleets, expanding their capabilities so you don’t have to.

Inventory management: Effective inventory-management is crucial to handle spikes in consumer demand; having products available when customers want them and avoiding being left with excess inventory at the end of the holidays is vital.

You likely have a system to forecast consumer demand for your products, but you also need a supply chain nimble enough to react accordingly. To maintain accuracy from planning through delivery, streamline inventory distribution by reducing the amount of touch-points in your supply chain. And, increasing automation can help you quickly react to sudden demand swings. 

This is another area where you may benefit from working with a 3PL, especially one with automated distribution that can deliver inventory based on demand. Your carrier may offer services that allow you to specify a specific window of time for delivery – allowing you to best utilize staff necessary to stock shelves – and services that offer insight into what’s in the packages that are coming your way. 

Visibility: Knowing what inventory is coming and when it will arrive is important; it’s just as important to provide your customers with visibility into the movement of purchased goods. 

To keep customers happy and coming back, utilize tracking technology that lets them know when their packages will arrive, and even proactively alerts them to changes. If your in-house tracking methods are lacking, consult a 3PL to see what they can offer. 

Returns: Turning increased consumer demand into increased sales is a primary goal for your business over the holiday season. But, regardless of the quality of your products, you also have to be prepared to handle the influx of product returns you’ll experience soon after.

If you rely heavily on e-commerce for holiday sales, focus on streamlining the returns process, which can increase sales, customer loyalty and incremental revenue. Your returns process should be easy for the customer; a good 3PL will offer a solution that includes e-mailed return labels and simple return instructions – and that electronically captures data on each shipment for increased visibility of what’s headed back your way. Some returns solutions even are adaptable to business rules – allowing you, for example, to specify different shipping destinations depending on the origin of the shipment. 

Is your business prepared to handle the rush of the holiday season? If you find yourself scratching your head about any of these issues or others associated with peak season logistics and distribution, consider working with a 3PL to help ensure your holiday season is a happy one