The peak season, or the holiday season, opens up new opportunities for all businesses alike. It also turns out to be profitable for online businesses that offer big discounts during this season. Seasonal promotions are offered during the Black Friday Sale, Christmas Season, Cyber Monday, etc. Along with increased profits, this period can also remain subject to various challenges such as warehouse congestion, additional labour requirements, higher carrier rates, and increased return-to-origin costs. While shipping orders at a large scale, companies should also be able to keep their costs under control.
Modern e-commerce businesses have been able to achieve this through the implementation of various strategies such as automation, proactive planning, inventory positioning, better forecasting, and carrier diversification.
Strategies to Scale Ecommerce Shipping
Forecasting the Correct Demand
The peak -season logistics cost can be controlled if companies are able to forecast the right demand beforehand. By analyzing the previous data of sales, they should be able to judge customer behavior, SKU-level performance, and geographic demand. This will help them estimate how many orders need to be generated. Companies would be able to focus on various order scenarios rather than delivering a single order volume. They would be able to prepare the capacity for extreme surge cases without paying the extra cost for transportation, labour, or warehouse space.
With the aid of modern forecasting tools, companies would be able to predict demand based on location and SKU level. In this way, they are able to position the inventory even before the peak season begins.
Multiple Shipping Carriers
During the peak season, it can become risky and expensive for a business to make use of a single carrier partner. Businesses might be forced to use premium shipping services if the single carrier partner experiences delays or reaches its capacity.
With multiple carrier partners in place, companies will be able to decide on the shipping partner based on the destination, weight of the package, speed of delivery, service level, and cost. Therefore, they would be able to pick the most suitable option, keeping the cost in mind.
Positioning the Inventory Close to the Customers
Distance is the deciding factor for shipping costs. Businesses nowadays do not need to send all the orders through a single warehouse. They can make use of strategically located hubs and multiple fulfillment centers. In this way, the distance between the inventory and the customers is reduced, and businesses are able to improve the speed of delivery and reduce the cost of transportation. When companies face high order volumes, it can also reduce the pressure on a single warehouse.
The use of distributed inventory does not mean that every product should be available everywhere. It means that companies should identify the best-selling products and place them where their demand is the highest. This can help strike a balance between the cost of transportation and the inventory carrying costs.
Optimizing the Packaging
The shipping expenses can be significantly reduced if companies are able to optimise their packaging. When the carrier partners estimate the shipping charges, they might take into account the dimensional weight. This might be more weight than the actual package occupies. These extra-large packages lead to increased shipping expenses.
Therefore, businesses need to optimise their packages and reduce unnecessary space. They need to make use of automated packaging, standardized packaging options, and protective lightweight materials. This can help reduce the cost per shipment. It would create additional savings as the material consumption and the warehouse storage requirements would be reduced.
Automated Shipping
As the order volumes rise, it can become difficult to conduct the shipping processes manually. The employees would have to decide which warehouse, carrier, and service level would be required for each order. By using shipping automation, they would be able to make use of predefined rules set for each destination, cost, carrier capacity, and inventory availability. This would allow the businesses to handle large order volumes without requiring significant human intervention.
Using Third-Party Logistics Providers
By employing this strategy, companies can get access to extra warehouse space, transportation capacity, and labor. They would not be required to invest in heavy infrastructure, and they can also make use of predefined carrier relationships. This can be especially useful during seasonal fluctuations. Companies would not be required to maintain a large infrastructure and workforce throughout the year.
Companies are required to estimate the total cost rather than the fulfillment fee. They should be able to compare and assess pick-and-pack charges, shipping rates, storage, and technology fees before selecting a carrier provider.
Reduced Number of Failed Deliveries
A successful delivery does not just mean getting the order out of the warehouse. They mean that they are safely delivered to the customers. The handling costs and the transportation charges can increase significantly due to factors such as COD refusals, failed deliveries, incorrect addresses, and unreachable customers. These costs can multiply during the peak seasons.
Companies can avoid these circumstances if they are able to provide the correct addresses and accurate tracking information. They should send delivery notifications and contact the customers proactively when any discrepancy happens. Companies also need to have clear return policies and an efficient reverse logistics process. All of these efforts together can help reduce unnecessary expenses.
Reviewing the Performance
After the peak season, they should be able to analyse the performance of the carrier partners, which can enable them to plan efficiently for the next sales cycle. They should be able to identify the bottlenecks for different warehouses, assess the performance of each carrier partner, and examine which products incurred the highest shipping cost. This peak season data will help them form better contracts, position their inventory in the best possible manner, and forecast the sales strategy for the next season.
The Road Ahead
If a company needs to scale its operations during the peak season, it does not necessarily have to mean a higher logistics cost. Rather than simply adding capacity, companies should be able to work on the flexibility and the efficiency of daily operations. They should make use of multiple carrier networks, accurate demand forecasting, the right packaging decisions, automated shipping, and effective returns management. In this way, companies would be able to protect their margins while increasing their order volumes.
Therefore, companies should not treat their busiest season as an emergency. Instead, it should be treated as a logistics planning exercise. If they are able to prepare their networks in advance, they will be in a position to deliver more orders, control the cost per shipment, and maintain the standard for deliveries.
FAQs (Frequently Asked Questions)
1. How can ecommerce businesses scale shipping during peak season?
By improving demand forecasting, diversifying carriers, optimizing packaging, automating fulfillment, and planning capacity in advance.
2. How can businesses reduce peak-season shipping costs?
By negotiating carrier rates, using multiple logistics partners, optimizing packaging, and reducing failed deliveries and returns.
3. Why is demand forecasting important for peak-season shipping?
It helps businesses plan inventory, warehouse capacity, labor, and transportation before order volumes surge.
4. Can multiple shipping carriers reduce logistics costs?
Yes, using multiple carriers allows businesses to select the most cost-effective option based on destination, package size, and delivery requirements.
5. How does packaging affect ecommerce shipping costs?
Right-sized and lightweight packaging can reduce dimensional-weight charges, material costs, and storage requirements.
6. How can automation help manage peak-season orders?
Automation can route orders, select carriers, allocate inventory, and streamline fulfillment without requiring a proportional increase in staff.
7. How can businesses reduce RTO and failed-delivery costs?
Accurate addresses, proactive delivery notifications, reliable tracking, and better customer communication can reduce failed deliveries.
