"Back to School" or a very short and very intense harvest in the e-commerce industry
Fulfillment Dla biznesu
13 September 2022
For many e-tailers, the summer holidays are a time of declining volumes - seasonal clothing has already mostly sold out, and the calendar of events is lacking in terms of mass buying opportunities. However, there is one industry for which this period, which starts at the beginning of August and ends in mid-September, is a time of successful transactions and increased traffic. It is a busy harvest time in the school supplies industry.
"Back to school" multi-store promotional campaign
So-called 'back to school' is a buzzword that appears everywhere - both in the newspapers of retail chains and in the shop windows of independent trade shops, bookshops, as well as in every online sales channel. Promotional campaigns for school supplies are promoted not only by individual e-shops, but also by most marketplace platforms or courier operators as part of their partner campaigns.
This is a unique period because it lasts for a relatively short time and all traders want to achieve the highest possible level of sales in the same period while maintaining the highest possible trading margin. A systematic increase in sales in this sector starts as early as mid-July. Prices for school supplies are slowly climbing. For the biggest sales hits, these increases can be as high as several tens of per cent, and this trend does not apply to the basic and cheapest articles (pencils and notebooks), but to fashion products, such as backpacks, pencil cases or shoe bags. Products with fashionable designs in the form of games, films or cartoon characters are very popular. In the case of such articles, the price becomes secondary if the child insists on going to school with a backpack with an "X" character or not going at all. Due to licensing restrictions - usually one or two players are responsible for marketing a particular design, so the base price is fixed and the final price to the customer is a product of supply and demand.
Limited number of producers
Among basic materials such as notebooks, crayons, blocks or pens, the number of brands available is also limited. We are basically dealing with a few major manufacturers and brands. If you open a well-known auction portal under the keyword "crayons", you will find hundreds of offers, but basically only 2-3 well-known brands plus a little bit of no-name products (small manufacturers or importers) and premium products (for visual artists rather than first-graders). A bit of confusion in the market is created by the offers of retail chains, which, on the one hand, launch strong own brands (with increasingly better quality at a reasonable price) and, on the other hand, offer branded products at very attractive prices. As a result, consumers may end up buying a large proportion of their basic school supplies from their local supermarket or from the chain's online shop.
A difficult year for the school supplies industry
This year has been an exceptionally difficult one for the industry - a combination of factors such as inflation, supply chain disruption from China, high exchange rates and significant paper price increases mean that student layettes will be exceptionally expensive this year. E-tailers face not only competition in their own field, but also exceptionally attractive competition this year in modern offline channels and a shrinking buyer wallet.
The high level of competition and the short response time forces not only the battle for the consumer on price, but also on assets such as time and certainty of delivery. The closer we get to the magic date of 1 September, the more important it becomes to ensure that the product is available and that it is delivered to the customer as quickly as possible. Both challenges are more easily met by those who either own or use a logistics operator equipped with IT systems that ensure the correctness of information and continuously monitor the availability of products in stock. By far the best solution is for the merchant to tie up with a logistics company that, in addition to fulfilment services, also has its own package of courier services to guarantee timely and fast delivery. As part of the InPost Fulfillment service, the e-shop not only has reliable stock information directly from the WMS (warehouse management system), but also a guarantee that a large number of parcels will be packed and dispatched every working day until late in the afternoon.
The school supplies industry - a challenge for small businesses
An additional challenge is also the spike in the number of orders per day and their uneven distribution throughout the week. The smaller the warehouse with less storage and fewer state-of-the-art solutions, the more difficult it is to fulfil a number of orders that is even 100% higher than the standard, and where to dream of handling temporary increases of 300 or 500%. Only large logistics operators have the potential (large team) and the tools (support systems, warehouse automation) to handle such surges relatively smoothly and efficiently unload a large number of orders in a short period of time.
Another industry-specific challenge is the correct identification of goods. Many manufacturers of school supplies and art supplies behave as if online sales do not exist or are an insignificant margin. A large number of products come out of the factories in different designs and colour variants, but on one SKU code (stock code) and EAN code (barcode). This is a huge convenience for the traditional trade, as they do not enter 10 different indexes for 10 cover designs of the same notebook, or three different SKUs for three different line colours into their systems. The consumer walks up to the shelf and selects the product they want, and at the checkout, the stock simply comes off "XYZ notebook, pcs. 1".
In e-commerce, on the other hand, there is no such comfort - the consumer looks at the pictures and if he likes the cover with the bunny and the ruler in green, that is what he will order and that is what he wants to receive. If different designs and different colours are on the same code in the system - correct processing of e-commerce customer orders is simply not possible. The fashion industry has long since learnt this lesson - there have also been cases in the past where the same T-shirt was available in five colours and four sizes, but all on the same EAN code. Today, such a situation is unacceptable in the fashion industry; unfortunately, it is still the norm in the school industry.
How to prepare a school supplies industry magazine?
On a large scale, the correct sale of so-called "mixes" requires the warehouse to de-index the delivery at the point of entry, generate its own technical codes for each variant and sticker at least the master packs (with products sorted by variant) with the new code and description of the variant and colour. Only such a solution allows both the correct calculation of the stock of each variant and colour and the offering of the actual stock on the e-shop website. This also translates into correct picking and shipping. This is all the more important because, from the consumer's point of view, it is difficult to have a worse shopping experience if he or she has ordered a beautiful set of blocks and paints with an image of a unicorn, but only receives random designs because, at the production stage, someone wanted to save on the number of stock codes and the e-commerce warehouse was unable to meet the consumer's expectations of proper product identification.
Logistics operator - the ideal solution for the school supplies industry?
The school supplies and arts and crafts industry is extremely difficult. On the one hand, there is a certain technological debt and the ballast of traditional product thinking, and on the other hand, there is the exceptional accumulation of a huge number of operations in a short period of time. In addition, under conditions of an intense price battle for the consumer. With such a demanding business and such a short period of increased activity, it is worth considering the offer of a logistics operator, which, on the one hand, will be able to offer IT solutions to eliminate the problems of product identification and stock monitoring, and, on the other hand, will allow us to turn a significant part of the fixed costs into variable costs by transferring personnel costs, related to order packing, from fixed (own staff employed) to variable (cost of service in the form of packing one order).
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