Between Thanksgiving and the end of December, UPS, the United States Postal Service and FedEx are preparing to deliver up to 110 million packages a day. And that doesn’t include the large number of items that will be delivered by other last-mile delivery solutions, such as crowdsourced delivery platform Roadie.
PARCEL editor Amanda Armendariz spoke with Roadie’s chief operating officer, Dennis Moon, about what small-package retailers can expect from this year’s peak season, and how to best prepare for it. While smart retailers usually have their peak-season planning in place by the start of Q4, Moon says there’s still time to implement additional strategies if you’re catching up.
PARCEL: How is peak 2022 shaping up compared with recent years?
Dennis Moon: Peak 2020 was all about the failures of the last mile, and peak 2021 was all about the first mile falling apart. As for the 2022 holiday season, there’s a lot of uncertainty in the current environment. The best advice for retailers in any year is to be ready for the unexpected.
Economic conditions are going to be a factor, particularly the labor shortage and the impact of inflation. Gas prices can play a role, up and down the supply chain. The COVID pandemic accelerated the trend towards online shopping, and if gas prices remain relatively high, that’s another disincentive for consumers to drive all over town and do their holiday shopping in-store. And with the labor shortage, it’s going to be harder for retail store employees to check on SKUs for shoppers by phone – yet another reason to shop from the couch.
With the continued growth of e-commerce, not having sufficient last-mile delivery capacity can create a critical failure point for retailers during peak season. That's why it’s important to create the right mix of delivery solutions and not put all your eggs in one basket.
Adding a crowdsourced delivery partner enables retailers to handle unexpected spikes in orders, and expand their reach to more customers. It also frees up capacity with other delivery partners by moving SKUs that aren’t the best fit for those partners over to a crowdsourced network. Plus, because crowdsourced delivery is an “out of the box” solution where packaging is optional, retailers can save themselves the time and expense of having to package every item.
PARCEL: You mentioned the labor shortage. How will that impact this year’s peak season?
Moon: Retailers are simply not going to have the number of workers they’re used to having for their busiest time of the year. That’s why, in addition to maximizing efficiencies in their stores and warehouses, retailers should look for any opportunities to reduce peak-season volumes without reducing sales.
One strategy we saw some customers use to great effect last year is making seasonal deals available weeks before Black Friday, basically pulling consumer demand forward. Why save all your holiday deals until after Thanksgiving when you could just make those sales early? Starting peak season sooner makes life easier for a retailer’s staff, less stressful for customers, and puts less strain on operations overall. And with pocketbook issues front and center in 2022, spreading out deals could make it easier on your customers, too – maybe encouraging them to buy from you instead of someone else.
The labor shortage is going to be felt on the docks, too, with fewer workers at warehouses. Improving efficiency across your last mile operations is going to be key to success.
PARCEL: What should warehouse operations be doing now to prepare for the holidays?
Moon: One thing we’re hearing from retailers this year is that they’ve had too much of the wrong kinds of inventory taking up too much space in their warehouses. As the US emerges from the pandemic, there might be less demand for pandemic-era hobby items, like home bread makers or home fitness gear.
Where slow-moving or deadstock products are clogging up aisles and shelves, smart retailers have been holding flash sales or other promotions to make space for more popular, fast-moving SKUs and help avoid out-of-stocks.
Retailers can consider bringing sorting in-house, eliminating cross-docking. But again, labor is going to be tight, so look for tech solutions like Roadie’s SmartSort that allow you to sort efficiently without adding more warehouse workers.
PARCEL: Any final advice for retailers as peak season gets underway?
Moon: The golden rule is to model your entire supply chain for resiliency – from your suppliers in the first mile to your delivery partners in the last mile.
Although retailers can’t mitigate all their risks – particularly in the first mile – it's important to identify where their biggest threats and weaknesses are and to focus on solutions for the things they can control. For example, a common supply chain vulnerability is what’s known as concentration risk, which is when a retailer relies too heavily on just a single supplier or partner. That can leave the retailer exposed if, for whatever reason, the key partner can’t meet their needs at a crucial time like peak season.