As the holiday season approaches, retailers are gearing up for what is often the most lucrative time of the year. While the festive season brings joy and cheer to both customers and retailers, it also presents a unique set of challenges, especially when it comes to fulfillment, delivery, and returns.

In this blog, we explore some of the common issues that retailers face during the holidays and offer recommendations to address these three problems:

  1. Unexpected bursts in demand. No matter how planned a promotion may be, retailers can never predict the specific days or times when demand is strongest. Therefore, staffing call centers, fulfillment centers, and stores is tricky because labor costs are often at a premium. While overstaffing can crush profitability, understaffing will lead to delayed shipments and frustrated shoppers.
  2. Accurate inventory management. Guessing what gifts are likely to be best sellers is a decades-old challenge for retailers, and no matter what AI exists, there’s still no crystal ball that consistently predicts surprise hits. The holiday period has always been and will continue to be a game of best guesses.
  3. The pain of returns. Gifts mean that many purchases in November and early December will be returned in late December and January. Returns that result in exchanges are the best outcome, but many returns are just old inventory that is ultimately marked down.

To address these challenges, it’s critical that retailers do four things:

  1. Spread out offers over the holiday season. Unexpected bursts in demand strain a retailer’s fulfillment infrastructure and disappoint shoppers. While sales around key dates such as Black Friday are unavoidable, try midweek sales or sales earlier in November to pull forward demand and allow more time to fill orders. Your customers are already shopping anyway! Last year, 39% of US online adults started shopping for the holidays before November 15, and Amazon’s second annual October event has “primed” shoppers for the 2023 season.
  2. Ensure that all the necessary tech is up, running, and pressure-tested. This means ensuring that order management systems are well set to support store fulfillment, that any warehouse automation is running smoothly, and, most importantly, that any new additions to the website have been stress-tested so that heavy demand doesn’t crash the site.
  3. Invest in returns management. Returns are inevitable, but how you handle them can make a huge difference in customer satisfaction. In fact, 43% of US online adults said they’d feel more negative and their willingness to shop with the retailer in the future would decrease if they were charged a fee when returning an item to a physical store. Avoid customer frustration by streamlining your returns process, offering store returns for online orders (including though programs such as Happy Returns), and encouraging exchanges whenever possible. Additionally, as porch piracy grows, returns fraud is also likely to grow. Data and analytics are now often tracking fraudulent transactions like this and incorporating them into fraud algorithms.
  4. Use generative AI to reduce the cost of shopper support. Holiday shopping often comes with increased inquiries and concerns, and 43% of US consumers’ preferred way to get help is via chat. Strengthen your customer support team to provide quick responses and resolutions. Utilize chatbots or virtual assistants to handle common queries, freeing up your staff to handle more complex issues. Remember, a positive customer experience is a key driver of repeat business and referrals.

Embrace these recommendations along with the upcoming advice in our holiday series to not only survive the holiday rush but thrive and build long-lasting customer relationships.

Want to discuss these issues and solutions further? Please schedule a guidance session or inquiry with me!