With the holiday season fast approaching, e-tailers are gearing up for the busiest period of the year. The peak of e-commerce sales activity is upon us! And for many sellers, this time of year can be hectic and problematic.
E-commerce sales soared in the wake of the COVID-19 pandemic, and 2021 has only confirmed this trend. While sales growth is reassuring, it’s both a boon and a risk for e-tailers. Indeed, the global context of rising transport costs and raw material shortages is playing havoc with sales. It’s essential to anticipate these problems in order to be as well prepared as possible for the peak of activity from October to December.
1/ Packaging shortages and rising raw material prices
While some people are already thinking about buying gifts to put under the tree, e-tailers have bigger concerns: how to wrap these items and get them to their destination on time?
Indeed, packaging such as cardboard boxes is becoming increasingly hard to find, forcing brands to anticipate their orders even further in order to deliver to their customers on time.
The surge in online shopping during the pandemic has led to unprecedented demand for cardboard boxes. This surge is squeezing supply for box manufacturers in the middle of the most prosperous e-commerce period of the year. The shortage could lead to the delivery of poorly packed and therefore damaged parcels, or to increased costs and/or delays in home deliveries. Carton manufacturers, meanwhile, are facing supply problems as demand rises along with raw material prices.
This situation is more difficult for some than for others… A company like Amazon is obviously going to be at the forefront of obtaining the necessary quantities of packaging, while smaller structures find themselves at the back of the queue. They don’t have the capacity to absorb these costs as easily, and so have to pay exorbitant prices. This is the Amazon effect”, which, according to the Financial Times, is one of the factors exacerbating the shortage of cardboard in Europe, where many small online businesses are being squeezed out of the market dominated by the e-commerce giant.
This disruption could, however, encourage innovation and help pave the way for more sustainable packaging options. Some companies are already making it possible to ship products in reusable packaging: French brands Hipli, Opopop and Petrel, for example.
2/ Rising transport costs
Container shipping rates from China to the USA and Europe continue to soar, topping $20,000 per container, compared to just $4,000 a year ago. This continuous rise in prices threatens the smooth running of end-of-year deliveries for e-tailers.
When Covid-19 first hit China in late 2019, manufacturing in the country froze. Companies dependent on China for finished products or certain components suddenly experienced a bottleneck in their supply chains. Subsequently, the arrival of the Delta variant, the semiconductor crisis and storms on China’s southern coast all contributed to slowing global container turnaround rates in several countries, while e-commerce purchases continued to rise.
These factors have transformed global container transport into a highly disruptive and undersupplied market, in which shipping lines can charge four to ten times the normal price to move cargo! Demand for ships and containers is only set to increase with the upcoming holiday season.
This has led to more competition for container space, resulting in delays of several weeks and skyrocketing costs.
Shipping doesn’t normally account for too large a share of the total cost of an item. However, with prices so high, companies have to choose between covering the costs themselves, which reduces their margins, or raising the price of their products, which can harm sales. At present, in France, it is the national post office that absorbs this increase.
It’s vital for e-tailers to be aware of what’s at stake, and to be as prepared as possible for the end of the year, which promises to be a little more difficult than previous years…
How to prepare for peak activity in 2021?
In this unfavorable context, it’s essential to develop a solid strategy to avoid the vagaries of the end-of-season season. What steps can you take to ensure you maximize your sales?
Here are our 4 tips:
1 – Plan ahead
It’s never too early to get organized. This first step is the most crucial.
Communication is essential here, both to guarantee capacity and to establish a positive, collaborative relationship with key carriers. Communicating in advance about expected increases and decreases in your freight volume can help carriers plan and prioritize your shipments; staggering your shipments over a few weeks, where possible, can also help. The earlier you communicate about upcoming shipments, the more likely you are to guarantee capacity and benefit from advantageous rates.
2 – Be flexible
Being adaptable will be your best asset. Consider alternative modes of transport and shipping methods. Using multiple carriers increases flexibility and availability, and can improve the customer experience and better meet your immediate needs.
3 – Communicating with your customers
With the democratization of D +1 or same-day express deliveries, customer expectations are increasingly high. What’s more, customers are volatile, and can change their purchasing habits at the click of a button, so it’s more important than ever to pamper them.
E-commerce delivery is a strategic point in the post-purchase customer experience. During this tense period, make sure you optimize all your channels of communication with your customers to maintain proactive communication. This avoids unnecessary confusion and also helps to defuse tensions that arise after delivery delays and stock-outs.
To do this:
- Be responsive via support channels such as social networks, site chat, e-mail, etc. The more product information you have, the lower the risk of returns.
- Update your site in the event of stock shortages or the end of promotions.
- Concentrate on tracking deliveries: make sure all your shipments are tracked in real time, or expect to receive WISMO calls from anxious customers.
- Redirect buyers to **a brandedfollow-up page** to reassure your customers.
4 – Communicate your returns policy
With so many orders leaving and potentially coming back, it’s important to anticipate the flow of returns. Studies show that a good returns experience is essential to building customer loyalty.
- Inform your customers: customers must have access to your return policy on your home page, product pages, order page and in post-purchase messages. If customers don’t find this information quickly, they may not order from your store.
- Be forgiving: most buyers avoid merchants with strict return policies. An ideal return policy is one that accommodates customers.
- Facilitate returns: simplify the return of your customers’ items by allowing them to edit a return label themselves, which can be downloaded and printed via your website. Set up an automatic return tracking system to allow early reimbursement.
As you can see, in 2021, it’ s vital that your supply chain is agile and flexible, and that you put the right practices in place to continue satisfying your customers despite the difficulties. This period represents a good opportunity for you to improve your post-purchase experience and build customer loyalty.