Preparing supply chains for Christmas

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It may seem a little early to be thinking about Christmas, although a couple of days ago a friend of mine was putting her Christmas tree up for a photo shoot of her 2022 Christmas products. It’s definitely the time of year you should be thinking about this year’s peak season if you’re not already. Today Enda Breslin, EMEA GM at ShipBob, discusses what you should be considering and how to go about preparing supply chains for Christmas:

Preparing supply chains for Christmas

Although it may be early for The Pogues and Little Drummer Boy, it is never too soon to be thinking about the logistics of the festive season.

This year in particular calls for extensive forward planning by small merchants.  Many larger brands eager to avoid a repeat of last year’s shortages have overloaded themselves with stock and are now racing to sell in a saturated market. Peak shopping season is set to be a battleground as these big players cut prices to offload as many items as possible.

In some ways this is good news for small merchants – fluctuating stock cycles will likely see bigger competitors buy less for 2023 and the inevitable shortages will offer opportunities for more nimble brands to win customers. But they’ll need to get Christmas right first. This will be particularly challenging at a time when consumer expectations for fast shipping, frictionless returns and share-worthy unboxing moments are sky-high.

So, how can small brands start planning for festive success now?

Extended sales periods

With many larger retailers grappling with excess stock, 2022 may see the earliest ever start to Black Friday discounting. These companies will be eager to offload products before the end of the year to avoid cutting prices even further in January sales and whoever blinks first may kick-off a chain reaction, with others following suit swiftly afterwards.

Smaller businesses will need to be aware that these sales will start early and prepare accordingly. Although some may choose not to compete with the larger retailers on price, spreading the sales over a longer period reduces the strain on logistics by avoiding the sharp spike in demand that can overwhelm fulfilment. 

Carrier relationships

Engaging multiple carriers ahead of the festive period is crucial to ensuring smooth delivery. Relying on one carrier may seem like the straightforward option, but all carriers experience peaks which test even the most trusted partners to their limits. Even if you may be considering expanding your network, this process can take time so making these changes well in advance of the busiest shopping period of the year is wise.

Getting these relationships in place ahead of time means that merchants won’t need to pivot at the last minute, especially when competitors will also be scrabbling to onboard new carriers. Ironing out issues and understanding limitations and pinch-points ahead of time is crucial to avoiding disappointing your festive customers.

Know your deadlines

Final guaranteed delivery dates will drive plenty of decisions for your brand – you’ll tailor marketing and carrier conversations around this date to ensure you’re converting shoppers ahead of this date with purchases that are certain to reach them ahead of Christmas. Communicating this date to consumers is a crucial step in expectation management, so it’s worth beginning your calculations as early as possible to ensure you give a date that can be relied on.

Christmas falls on a Sunday this year, so it’s likely that many brands will settle on Monday 19th December. You may be able to go later than this, but be conservative with the date you communicate to customers. It’s better to extend guaranteed delivery than have to apologise for missing an ambitious target.

Forecasting peaks

Knowing when demand will peak is crucial for planning. Typically, there are spikes in orders around Black Friday and Cyber Monday sales, but another less obvious peak is around 10th December. This is because people tend to buy for themselves at Black Friday and gifts more so as we get closer to Christmas.

Every brand’s customer base is different though and it is crucial to look at previous years to inform when spikes are likely. Although inventory forecasting is never 100% accurate, there are steps to take to get estimates closer to actuals:

  • Look at historical data and seasonality
  • Think through planned promotions and anticipated spikes
  • Closely monitoring stock levels and sell-through rates against your forecasts

Once these peaks have been predicted, sharing estimates of order volume ahead of time with manufacturers or suppliers will help avoid potential stockouts during the holiday season.

Constant communications

Connected to the previous point is the importance of communications. When time is of the essence, ensuring there is a direct line between those running marketing campaigns and those that are fulfilling orders is crucial.

If there are delays, a customer is going to be frustrated by seeing an advert from your brand while they are still waiting on delivery. Equally, if there are potential backlogs on the horizon, informing the marketing team to hold fire on pushing for sales can avoid the fulfilment team being overwhelmed.

The peak shopping season is always crucial for retail, but Christmas 2022 will be key in deciding the future for many small brands. Implementing proper planning and coordination now will help these businesses avoid supply chain disruption throughout a particularly competitive festive season.

It’s highly likely that many larger competitors that have over-bought this year will be grappling with their own supply chain issues and stock fluctuations by the second quarter of 2023. Those small brands that win loyal customers during Christmas will be well-placed to cater to consumers who are seeing plenty of ‘out of stock’ warnings elsewhere.

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