Creative Commons License  (Flickr user William Warby)

Holiday 2014: How to Avoid Last Year’s Disaster

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Creative Commons License  (Flickr user William Warby)

It’s no secret that Holiday 2013 was a disaster for final delivery. The debacle was the result of the perfectly brewed storm, combining forces from inadequate delivery capacity, lack of discipline at several points in the supply chain, over-promised delivery times by retailers, and poor weather conditions across the U.S.

Are we fully prepared to tackle Holiday 2014 in a better way? Well, to put it simply, I’m not certain. Consider where we stand as of today:

  • Delivery capacity: E-commerce has continued to grow in the double digits this year. The Alibaba Effect(watch the video here) is resulting in even more e-commerce growth, and additional capacity added by national parcel carriers does not even cover last year’s shortcomings. The final delivery capacity problem for Holiday 2014 does not result in a solution to the Holiday 2013 problem. Unless the rest of this “perfect storm” subsides, the problem will repeat this year.
  • Lack of discipline: There is hope that nationwide parcel carriers have better discipline in 2014 than 2013, but this is not yet clear. Parcel carriers need to say no sometimes, rather than accepting parcels that cannot be delivered to fulfill the customer promise.
  • Over-promised delivery times by retailers: We are hopeful that retailers have better control over this issue for Holiday 2014 than last year, but it remains unclear.
  • Bad weather: Unfortunately this is out of everyone’s control, so we cannot make any kind of educated prediction at this time.

It is unclear whether we have adequately addressed the Holiday 2013 disaster, so what can retailers do at this point to avoid a Holiday 2014 disaster?

The path forward is different for pure play online retailers than it is for omnichannel retailers. But the solutions both have to do with not over-promising. More specifically, pure play online retailers must adopt an order entry cut-off date for Christmas delivery that is realistic. The date that works depends upon how well the retailer has “gotten local” to the customer’s location. Of course, all order entry cut-off date scenarios are dependent upon distance.

If the retailer has only one fulfillment center in the U.S., the cut-off date for delivery on Christmas Eve must be Friday, December 19. If the retailer has two or three fulfillment centers, the cut-off date can be Saturday, December 20. If the retailer has four or more fulfillment centers, the cut-off date can be Sunday, December 21.

Omnichannel retailers fall into two categories, both of which depend on how “local” they have gotten with their fulfillment. The first category is retailers who do a good job with store fulfillment. For products that are picked from the store, the cut-off for click-and-collect is December 24 at noon. For products that are picked from stores and shipped to customer, the cut-off is December 22 or 23 at noon, depending upon the local carrier. Products not picked from the store but picked up by click-and-collect, the cut-off is one day quicker than for the pure play retailers. Product not picked from store but sent to the customer has a cut-off that is the same as for pure play retailers.

The second category is retailers who do not do a good job with store fulfillment. They follow the same as pure play online retailers.

If you are a retailer, it’s critical to recognize the importance of getting local. For omnichannel retailers, it’s all about store fulfillment. This will be true in dictating cut-offs going forward into Holiday 2015 and beyond. But for retailers who have not done well with getting local, the only tactical solution that can be impactful for Holiday 2014 is to select certain products for store fulfillment and place sufficient inventory of these products into the stores to approximate getting local. I’m crossing my fingers for good weather this Holiday 2014 for the people who have not adequately planned for being local and store fulfillment.

What is your Holiday 2014 plan? Tell me in the comments or tweet me @jimtompkins.

Other Resources:

If you’re interested in learning even more about same-day delivery, check out the whitepaper The Next Big Battleground for Retailers.

Jim Tompkins