Planning for Peak Season 2021: What to Expect
Yes, the summer may be in full swing, but every fulfillment professional we know already has an eye on planning for peak season.
Even with a return to some semblance of normality after 18 months of pandemic conditions, the 2021 holiday season is likely to present some unique logistics challenges.
This article examines how last year changed the landscape of holiday shipping, what brands can expect to see when order volumes start to surge again at the tail end of 2021, and how to make plans for a peak season that will again test many sections of the supply chain.
What to Expect as the Holidays Approach
Planning for peak season 2020 proved to be an interesting task. Although supply chains were stretched in some verticals and accelerated eCommerce shifted the focus from physical retail at its most important time of year, many brands were prepared.
With six hectic months under their belt spent adjusting to online shopping, even previously hesitant retailers were on a much better eComm footing heading into the holidays than they were 12 months earlier.
Nonetheless, challenges remained and the dominance of established online retailers like Amazon, Walmart, and Target loomed large. Amazon successfully extended the holiday season by holding its delayed Prime Day sales event in October, while others maneuvered to add their own early specials. All of this congested a month that would normally contain few special offers, leaving retailers to ponder how much potential spending remained for the traditional promotional period and whether or not consumers had much more energy for seasonal shopping as the year drew to a close.
Understandably, the 2020 peak looked unlike those that came before it.
The result was a mixture of generous holiday gifting and online shopping fatigue, as order volumes looked similar to early pandemic spikes and consumers spread their spending over an extra month.
For 2021, the main question will be how many of the strategies employed last year make it through to the next peak?
Planning for Peak Season 2021
From forecasts and sufficient staffing to shifting sales and adjusted purchase habits, planning for peak is equal parts standard practice and annual course correction. That means taking the learning points from past holidays and applying best practice to what you expect to see during your next seasonal spike.
With that in mind, here are some of the key areas you need to consider when planning for peak season 2021:
-- Supply Chain Bottlenecks
-- Remove Distractions
-- Hiring and Help
-- Shipping Surcharges
Let's break down each of these to better understand how they can help you plan for this year's holiday peak.
The Importance of Forecasts
If your 3PL sounds like a broken record right now, it's because understanding what's coming down the pike is the cornerstone of planning for peak season. So when your ever-diligent account manager sends a third or fourth request for your Q4 forecasts, please don't hold it against them!
It's not as early as it seems and that information is key to unlocking the resources you'll need from them before things get too busy. Forecasts don't have to be set in stone and can often be adjusted as you get closer to Q4, but sharing such essential information at this stage sets a foundation and gets everyone on the same page.
Here are a few best practices we've picked up from our most meticulously crafted client forecasts:
- Where possible, break forecasts down to product level and factor in the year to date performance of individual product lines.
- Align with your promotions. If you're planning to push a certain offer or promotional channel for a limited time, whether early or late in the holiday period, make sure your forecasts reflect this.
- Align with surcharge dates. As we cover below, peak season surcharges can significantly increase shipping costs. If promotions shift to avoid these fees, make sure your forecasts are adjusted as well.
- Take into account your annual growth. Learn from previous holiday periods but don't fail to factor in the great work you've done to build your brand over the past 9-12 months!
Allow for Bottlenecks
One of the core lessons of the pandemic is that supply chains can't simply pivot to another product source or transport route when primary channels go down.
While companies can shut off quickly, ramping up again and reestablishing shipments of key components takes time and resources. Look no further for proof than stock outages of your favorite food and drink items or the production delays of new vehicles due to semi-conductor shortages.
The takeaway for peak season planning is to identify the bottlenecks that have occurred in your sector's supply chain over the past 18 months and add contingency plans for your best-selling products, where possible. Even if your brand wasn't impacted by a bottleneck the first time around, it doesn't necessarily mean you're protected from the next one.
Working with a 3PL partner can help you confirm current inventory levels, examine inbound shipments vs. forecast order volume, and highlight any opportunities to circumvent potential bottlenecks.
Pause Discretionary Projects/Focus on Your Core
Depending on the size and scope of your team, the holiday season can be a smart time to put a hold on projects that don't need to be delivered in Q4 (or early in the New Year).
As many of our clients serve dynamic sectors that thrive on new technology and innovation, we know that such projects can't be overlooked. Where these initiatives pull resources from the core effort of planning for peak season and getting products to holiday shoppers, however, it's worth considering the opportunity cost of delaying discretionary projects by a month or two.
If the price of continuing a project is distraction from peak season activities and the possibility of disappointing customers at a crucial time of year, you might want to press pause for Q4 and start things up again in January.
Plan Additional Hiring Early (But Have Everyone Help Out)
It's no secret that warehouses, parcel carriers, and distribution centers staff up heavily for the holidays. The seasonal hiring surge is almost a rite of passage for our industry at this point, but that doesn't mean it's a simple process.
This is especially true this year, as hiring proves challenging across most sectors and workers reconsider their options as companies ask them to return from remote roles. Even at this late stage, plans for in-person workforces are being reviewed and revised due to the uncertain nature of the country's recovery from COVID-19.
In terms of planning for peak season 2021, this means we all need to be ready to bring all hands on deck. This goes beyond pausing discretionary projects, as mentioned above, and could extend to enlisting every experienced member of the team.
The Capacity team has no trouble answering this call, as it has become part of our culture to have everyone from the CEO down roll up their sleeves and sign up for some holiday shifts. Besides being a show of solidarity, it also gives our dedicated pickers and packers an opportunity to show the office folks what true stamina looks like!
Shift Sales to Avoid Surcharges
Peak season surcharges are another familiar sign of the holidays, but they have been particularly sharp over the past 12 months. Many brands that stuck to traditional holiday sales strategies in 2020 were left with eye-watering shipping costs, as their deliveries occurred in windows that parcel carriers had deemed especially burdensome.
In a bid to avoid adding those extra costs to their order fulfillment expenses, brands may shift more of their holiday business to October. Even if Amazon doesn't activate another buying frenzy with an off-season Prime Day, we're likely to see another extension of sales promotions earlier in the season.
Although this can complicate established media buys and advertising campaigns, there will be more scope to plan and execute revised marketing schedules in 2021.
The potential to keep shipping expenses down and avoid passing costs onto the customer is likely to tempt many retailers, which means our sector will again see much more action in October than during pre-pandemic peaks.
While we know every industry is unique, the considerations above should apply to most brands in the sectors we serve. Planning for peak season is a challenge every time the holidays roll around, but learning the lessons of past years and understanding how labor/consumer habits have changed will give you a better chance of successfully navigating the next four months.