Holiday Shopping Uncertainty Leads to Ecommerce Innovation

holiday shopping online

Omnichannel had its moment in 2020, a year that taught retailers the importance of a well-defined inventory strategy. However, even with the lessons learned from last year, it has been tricky for retailers to establish their plans in 2021, especially as the holiday shopping season is now upon us and COVID variants continue to shake up customer behavior.

Still, one thing remains certain: Omnichannel operations are vital in this new retail landscape and the ecommerce channel continues to take precedence.

With the anticipation of lower foot traffic in stores coupled with inventory concerns, prioritizing your ecommerce channel from a planning perspective, even at the intentional detriment of having lower stock levels in stores, may save sales during this peak holiday shopping period.

Everyone Feeling Pandemic Implications

Retailers need a finalized view of inventory available to sell. However, supply shortages, carrier capacity and workforce deficiencies, all originally stemming from the pandemic, continue to create forecasting challenges.

Many retailers have had to come up with multiple contingency plans. According to research from Emarsys, 46% of global retail marketers have considered canceling their in-store Black Friday sales due to the ongoing uncertainty around the pandemic, with 81% planning to encourage customers to shop online.

While there was hope earlier in the year that the more traditional start to major holiday promotions after Thanksgiving would return, ecommerce is still feeling the weight of necessity. The trend of driving promotions earlier in the season, which we saw many brands and retailers do in 2020, continues to be the best approach to manage the overflow of online shopping we expect to see ongoing, especially with the concerns around carrier capacity and labor shortages.

Being Omnichannel Ready Isn’t Optional

Being omnichannel-ready is imperative as it directly assists with inventory management, carrier capacity and labor availability. With the right system in place, retailers can leverage retail locations in support of ecommerce volume, mitigating labor concerns at fulfillment centers and shortening delivery times by getting product closer to the consumer (more on that below).

Distributed Order Management (DOM) technology empowers retailers with omnichannel readiness, enabling them to route orders across multiple fulfillment points depending on a number of factors, including delivery preferences, shipping time and costs, inventory optimization at stores and even opting for more sustainable delivery methods.

Using a DOM, retailers can support a multi-node fulfillment operation as well as alternative delivery methods ranging from store fulfillment offerings (curbside pick-up; buy online, pick up in-store (BOPIS); ship-from-store; etc.) to micro-fulfillment centers or temporary pop-up DCs.

Regionalization is the Future

While most brands and retailers cannot copy the Amazon model of opening hundreds of distribution centers all around the world to get closer to customers, they can work with partners to have smaller pockets of products available in more locations, especially during heavy shipping times such as peak holiday season. Regionalized, multi-node fulfillment vs. what has historically been large distribution hubs continues to be a trend.

Along with more regional fulfillment points, carrier diversity is another trend we expect to continue. It will take a few years for international carrier capacity to catch up with the rapid ecommerce growth experienced during 2020. In the meantime, regional carrier networks have seen tremendous growth. To keep up with order demand as well as unwavering consumer expectations for fast delivery, brands and retailers will need to lean towards a more diversified carrier network and carrier relationship structures.

Ready or Not

Holiday shopping is here. The most successful brands and retailers will be the ones that respond quickly to an unpredictable market. Everyone needs to be looking to omnichannel solutions this holiday season and beyond. Are you omnichannel ready?

Jamie Saucedo is SVP, Business Operations at PFS