The last quarter of the year is a time of increased operations for trade. This applies to both traditional trade and online sales. It is often pointed out that the last quarter accounts for more than 30% of the total annual trade turnover, and December alone accounts for 50% more turnover than the monthly average [1] . This is undoubtedly a period in which logistics proves to be particularly challenging. The strength of any e-shop at this time is the efficient handling of orders and the promise of the fastest possible delivery of parcels. It is worth knowing how to do this efficiently even during the busiest period.
Peak season in traditional and online trading
In traditional trade, the number of customers is fairly predictable and locally limited. The lion's share of the work in this case is done by the consumers themselves, as they are in charge of picking (collecting goods from the shelves to the basket) and logistics (taking the products home themselves). Shopkeepers mainly have to provide extra people to put goods on the shelves and for the checkout staff.
E-commerce, on the other hand, feels this increase in turnover much more strongly, as increased resources are required at virtually every stage:
- increased commitment forces to accept deliveries of goods and packaging materials
- increased demand e to the storage site (often from early autumn)
- increased and often unpredictable demand for staff to collect orders and pack parcels
Although the spring and summer of 2022 in e-commerce has been marked by some declines, the latest forecasts indicate that the the last quarter of this year, internet sales can look forward to some rebound. As representatives of the fashion industry and companies providing IT solutions point out - the end of the third quarter already indicated a reversal of trends, and the end of the year may bring the expected increases [2] .
Experts see the origins of the weaker period in inflationary pressure, which is forcing consumers to look for the best possible deals. The Internet still appears to them as a place where they can hunt down the Christmas gift they are looking for at an attractive price. However, this poses a huge logistical challenge for e-shops.
Storage space - difficulty of scaling up
With order volumes expected to increase, online retailers need to prepare adequate resources in advance. Unfortunately, the same inflationary pressures that are driving consumers to look for deals online are also presenting sellers with the challenges of increased operating costs and limited scaling opportunities.
In addition, the internet sees a greater condensation of sales due to a shorter period of operations than traditional retail. In regular shops, customers often fight for a bargain until the last day before Christmas, whereas e-commerce practically ends operations around the 20th of December due to the time required for delivery of order packages.
"Vendors with their own warehouse, while operating in an industry with a spike in peak order volumes, are struggling to manage space efficiently." - says Łukasz Wysokiński, Managing Director, InPost Fulfillment . "In the case of trade in products of national or EU origin, it is still possible to count on an increase in the frequency of deliveries, but with imports from abroad, one has to choose: either to fill the space that is unused for most of the year or to limit the volume of goods to the optimal size for standard stocking." - He adds, describing the challenges faced by retailers in the hot season.
It is worth noting, however, that even with local supply, commercial products often need to be stocked in large quantities ahead of the season, whether because of possible later availability problems or possible and expected price increases that will negatively affect the profitability of the business
However, even with local supply, commercial products often need to be stocked in large quantities ahead of the season, whether due to possible later availability problems or possible and expected price increases that will negatively affect the profitability of the business.
Additional manpower in the warehouse
It becomes even more challenging to ensure optimal staffing levels for operational staff. The hectic pre-Christmas period brings challenges on two different levels:
- seasonal amplitude : an increase in orders of 100 or 200% in the last months of the year precludes the possibility of fulfilling them with a permanent team. This in turn means hiring people in advance on short-term contracts and training them at a high cost. In this case, we are often faced with 2-3 weeks of overstaffing in relation to needs and increased costs. These costs are generated by the new employee, who is not adequately productive for the first period, and the permanent employee, who spends part of his or her time implementing and supervising the new employee.
- daily amplitude : very large variations in the number of orders placed on particular days of the week, especially on promotional days (Black Friday, Cyber Monday) or holidays. Consumers expect rapid delivery, and the small warehouse is not able to cope with the surges with its normal staff. The situation can be rescued on an ad hoc basis with staff from an employment agency, but their effective operation requires the support of a good warehouse system, and on top of this, the amount of space in a small unit will not allow double the staffing.
High customer expectations in terms of speed and accuracy of delivery are a huge challenge for e-tailers with their own small and medium-scale logistics operations during this hectic period. Due to premises, technology and staffing limitations, they are often unable to meet them.
As a result of these constraints, either real lead times are lengthened in relation to declarations (causing customer dissatisfaction), or the vendor declares longer delivery times - thus losing some customers already at the offer review stage.
Potential solutions for e-commerce
For businesses sensitive to high seasonality, it may make sense and be cost-optimised to use a logistics operator offering professional fulfilment services for e-commerce. Such services - such as InPost Fulfillment - are usually run by large, professional entities and have a number of characteristics that are difficult for smaller units to achieve:
- large storage areas running into thousands of metres
- Adequate storage infrastructure (pallet racking, shelving, internal transport systems) to enable highly efficient use of storage space
- IT systems to manage both the work in the warehouse and to communicate with the systems of customers (e-tailers) and courier companies
- a relatively large permanent workforce, which allows staff to be allocated efficiently between projects
- cooperation with efficient temporary work agencies, which, combined with an advanced warehouse system, allows for the rapid deployment of a person who comes to work even for one or two days.
Thanks to these features, a logistics operator providing fulfilment services for e-commerce can launch a new customer service very easily.
With popular shop engines (a question of integration) and bar-coded products (a question of product identification), so-called 'boarding' (the introduction and launch of a new customer service) can be completed in a maximum of a few days. For the retailer, this in turn means, among other things, a much better alignment of revenue and costs:
- storage fee per unit of time - pallet-day, half-day; paying only for the space actually occupied at a given time instead of paying for the entire warehouse, regardless of how full it is
- activity fee - Per order, per line in delivery, per return; sales-related costs, more orders = more costs, fewer orders = less costs, all in lieu of the fixed costs of in-house FTEs
Other advantages of such a solution include the much greater potential for scaling up operations:
- a large operator, with a workforce of dozens or even hundreds of people, can easily allocate resources to the few projects that have an exceptional order "peak" on a given day, which is rather impossible to achieve in a small team of a few people
- a large partner also means a large warehouse with professional storage facilities, making it much easier to receive and store additional goods for sale to some customers during this most important trading period of the year.
A flexible approach to outsourcing logistics operations
Outsourcing your logistics operations does not automatically mean putting your entire operation in someone else's hands. Some operators, such as InPost Fulfillment, will only take on board part of the goods and a selected stream of operations without a problem.
"At the same time, it is worth emphasising that, from the point of view of high quality requirements and tight lead times, it makes the most sense to hand over to a fulfillment operator the handling of sales channels linked to the marketplace, such as Allegro or Empik." - explains Łukasz Wysokiński , thus identifying specific groups of sellers operating on platforms enjoying high peak traffic. "The SLA (service level agreement - an agreed level of quality and quantity of operations) specified in the contract will ensure that orders are shipped within the marketplace's expected timescales and that shipment statuses are reported promptly." - he adds.
An additional attribute for InPost Fulfillment is a very late cut-off time (next day dispatch of orders placed even up to 20:00 ). This makes it possible to offer customers lightning-fast shipping, and for orders placed by early evening, the customer can take advantage of collection methods such as Parcel Machine or InPost Courier, with a real guarantee of next working day delivery or even Saturday delivery. The speed of delivery will guarantee consumer satisfaction, which will translate to a large extent into consumer loyalty.
It is therefore worth taking advantage of the hot sales peaks not only to optimise internal processes, but also to create an even better shopping experience for customers. With fulfilment, you can count not only on these, but also on a number of other benefits.
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