A short holiday season, the continued e-commerce boom, and unique last mile transportation challenges make 2019 a potential perfect storm of fulfillment risks. Are you ready?
Depending on the size of your organization, holiday planning could be a year-long endeavor. You or your large retail customers might start immediately after the holidays, analyzing what happened last year. For leading retailers, merchandising is often already decided by February or March for the next year, and merchandise drives the business.
Even if your organization doesn’t start holiday planning quite that early, your sales and marketing plan is probably frozen by now and you’ll be buying and shipping within the next 90 days. That’s a good thing, because this holiday season will be especially challenging for last mile transportation.
The 2019 holiday e-commerce outlook
E-commerce is still growing at a high clip, probably by 14%—making this the 10th year in a row of double-digit growth. In-store sales are also expected to increase, but only by about 2%. But this year, the 2019 ordering and shipping cycle will be compressed to just three weeks–because Thanksgiving falls on November 28. That means that this holiday season online shippers will have to ship more product than ever with one less week to do it. The expected volume increase coupled with the shortened time frame are a huge challenge.
On Cyber Monday 2018, consumers racked up a record-shattering $7.87 billion in online sales. And according to Internet Retailer, five-days sales from Thanksgiving through Cyber Monday grew 19% YOY. Not only that, but Hitwise reports that traffic and sales showed an uptick stating the Monday of Thanksgiving week (Nov. 21) due to retailers promoting week-long Black Friday deals. So retailers are promoting earlier and shoppers are buying sooner. That in itself might be cause for concern. But transporting freight this holiday season might prove tougher than ever.
Amazon and the freight capacity crunch
The last mile transportation situation is further complicated this year because FedEx pulled away from Amazon. That means it’s going to be up to UPS, USPS, and Amazon’s Delivery Service Partners to pick up the slack. Everyone is going to want and need last mile delivery capacity. Whether you get them or not will come down to rates and relationships.
Have you done a good job this year building relationships with your carriers? Will you have to start now to build goodwill? Carriers are hungry for business throughout the year but this holiday season they may be at capacity and unable to help at all. You need to ask your carriers early if they’re prepared to meet their commitments and your projected volumes. But if you’re having these conversations the week before Thanksgiving you could be in deep trouble.
The end-to-end last mile solution
Most companies’ thinking revolves around planning for their own warehouses and people. But you’re not done just because you’ve moved your products off your shelves into a staging area. Instead, you need to take a hard look beyond that at how much freight capacity you’ll need and when you’ll need it.
Forecast now. It’s the perfect time to build a forecast if you don’t already have one in place. Your end result should be a forecast plan that translates all the way through to the carrier, including the number of trucks required as well as the number of partials. You’ll need to have firm transportation plans completed in October so that you can get commitments from your carriers by the end of October.
Not there yet? Chainalytics can help
Talk to Chainalytics now if you’d like our help reviewing your current transportation plan or developing your plan from scratch. We’ll make sure that your forecast translates through your marketing and sales plans and into your operations and transportation plan. You’ll feel confident that you have sufficient holiday capacity when and where you need it. We can also help you with transportation assessments to ensure that you have the people and processes in place to handle the holiday rush or assist with fleet design work. Let us know what you need and we’ll tell you how we can help.
The 2019 holiday season promises to be a challenging one. The good news is that it’s absolutely manageable with the right plan. If you need expert supply chain help navigating your holiday forecasting, reach out to me today and let’s get the discussion started.
A Principal in the Chainalytics’ Transportation competency, has over 20 years of experience and expertise in transportation operations, strategic sourcing, data analysis and logistics planning, as well as logistics/supply chain change management.
