A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
Identifying the right technologies and procedures now can help retailers avoid potential pitfalls during the hectic holiday season.
With both the holiday shopping season and the subsequent wave of returns in the rearview mirror, it's time to start planning for the 2014 holiday season. Savvy retailers know that holiday planning starts in February, when the lessons learned from the previous holiday season are still fresh in their minds.
Preparing a holiday 2014 strategy can require looking at nearly every area of the retailer's business. By starting now, retailers have plenty of time to implement and test technologies and tactics so that when November and December roll around, they're ready.
"It takes a lot of planning and testing to properly prepare for the holidays, because any changes retailers make to their web sites have cascading effects that impact their performance downstream," says Elizabeth Scott, director of technical services for Tenzing Managed IT Services, a provider of hosting solutions for e-retailers. "Identifying the areas where upgrades are needed now means retailers can use the selling seasons leading up to the holidays to audition and fine-tune those improvements."
One area that's particularly critical for retailers is to improve their supply chain technology. Accurate supply chain forecasting is increasingly important because retailers can source products from suppliers in multiple countries. Underestimating the time it takes for a supplier to fill and ship an order to the warehouse and have the contents of that shipment moved to the warehouse shelf for picking can result in a merchant lacking the inventory it needs to fill orders. And any delay in fulfillment during the holidays can lead to unhappy shoppers, since most holiday shoppers have hard deadlines for when they need to receive an order.
"Retailers need to review historical data for working backward to determine how long it takes each of their suppliers to fill orders and then talk to their suppliers months in advance about what kind of volumes they expect and their projected timetable for filling holiday orders," says Perry Belcastro, vice president of fulfillment services for Saddle Creek Logistics, a provider of fulfillment, warehousing, transportation and packaging services.
The sooner retailers have a handle on their suppliers' expected timetables, the sooner they can complete their inventory forecasts and place orders to avoid delays, he says.
A holistic view
Improving their visibility into inventory across sales channels can help retailers fill orders more efficiently, say experts. For example, if a shopper orders a sweater after the cutoff date to receive items before Christmas, the retailer can scan its in-store inventory to locate the item and offer the shopper the option of picking it up in one of its stores.
Any omnichannel fulfillment strategy, however, needs to be well thought out. Some retailers that sell through stores and online may want to fulfill web orders from certain stores, lest the new responsibilities overtax locations not equipped to handle them efficiently and in a timely way, according to Saddle Creek's Belcastro.
"While some retailers want to fulfill orders from their stores, extending that capability to every store can be challenging," he says. "Managing that capability through one or two strategically located stores can provide better control. However, outsourcing fulfillment to a provider with an extensive network can provide optimal flexibility, while easing the logistics of managing it."
Whether they're shipping from a store or a dedicated e-commerce fulfillment center, retailers have to pay attention to order accuracy. Shipping an order without an item or with the wrong item can sour a consumer's opinion of a retailer.
Evaluating their order-verification processes can help spare retailers from making fulfillment mistakes next holiday season, especially when temporary personnel are used. Deploying experienced personnel rather than inexperienced seasonal employees in key quality-oriented areas like pick and pack prior to shipping can help a retailer maintain its high service quality standards.
Technology also plays a key role in order verification. Having systems that can support paperless operating environments will also drive accuracy, according to Belcastro.
"Order accuracy is always important, but even more so during the holidays, so retailers cannot compromise their standard processes," he says. "Retailers should also expand operating windows where possible and add resources accordingly to meet peak volume projections."
A good experience
Of course, e-retailers won't face fulfillment challenges if they don't entice shoppers to click and buy. And a site that is slow to load can lead consumers to click away to a competitor's site. While site performance issues may be linked to a sudden surge in visitors, shoppers are only concerned about their own experience. That means online retailers must prepare now to handle higher-than-expected traffic.
Gathering real-time data on page download times that occur as traffic spikes can help retailers determine the server capacity they need to keep their web sites running at peak performance. "This data can tell retailers how many additional servers they need to handle projected holiday capacity so those servers can be pre-staged and ready to go as needed," says Tenzing's Scott. "Retailers should also be thinking about an emergency plan for adding capacity in case the volume they planned for gets exceeded."
She recommends that retailers evaluate the performance of applications from third-party partners, such as payment processors, to be sure they too can handle expected spikes in order volume. "Understanding how volume affects performance at each customer touch point is critical to overall site performance," Scott says.
Tenzing works with retailers to evaluate their web storefronts to make sure they are optimized to handle expected loads. As part of this evaluation, Tenzing assigns risk scores to retailers that indicate if they need an emergency plan to handle slowdowns when site traffic exceeds anticipated volumes. Tenzing recommends e-retailers identify potential problems, assign a risk score and develop a plan and use this process for each business element that touches their web storefronts. The plan should include after-hours contacts so it can be quickly put in place if problems occur outside regular business hours, says Scott.