August 4, 2016, 2:27 PM

Handbook for the Holidays: Fulfillment and returns

Planning and clear communication are required

Lead Photo

E-retailers have a lot of control over how they market to consumers, acquire customers, woo them on their website, and pick and package their orders. But when it comes to the final leg of transactions—delivery—they must entrust shipping carriers to get orders delivered as expected. Package volumes for carriers surge during the peak season and there simply is a finite number of packages that can be delivered by Christmas.

That’s why planning and clear, frequent communication before and during the peak season between e-retailers and their delivery carriers is critical. At AccessoryGeeks.com, those conversations start internally in July, and get more earnest in late September and early October. That’s when the e-retailer of smartphone accessories and small electronics makes appointments with its shipping representatives at DHL, UPS Inc. and OnTrac Inc. to go over its seasonal forecast and associated shipping requirements. “We look at the previous years’ performance, and if situations arose where there were delayed shipments to certain states,” says David Byun, president of CGETC Inc., Accessory Geeks’ parent company. “We have a conversation about how we are going to handle the holiday season.”

For most shipments departing from its 22,500-square-foot Los Angeles-area fulfillment center, AccessoryGeeks uses DHL Global, with final delivery being made by the U.S. Postal Service. It also uses UPS for some shipments and OnTrac for shipments in that vendor’s eight-state coverage area. It uses Fulfillment by Amazon for orders placed on Amazon.com Inc., a quickly growing part of its overall shipping volume.

But despite planning and forecasting, Byun says there are always delivery delays to contend with. “We have a good automated system in place to get the orders out of the doors, but once it goes out, there’s so much we can’t control. It’s an everyday thing we deal with.”

Shipping carriers acknowledge delays have happened that are in their control—like accepting more packages than they can handle as promised, which is what happened during the 2013 holiday season—and out of their control, like bad weather. To avoid peak season delays as much as possible, carriers say they are reaching out to shippers for forecasts. UPS says it began reaching out last month to e-retailers that ship more than 5,000 packages daily to learn about the cadence of their planned holiday promotions and shipping volume projections, including the size of packages. “We are working with them to understand what capacity there is in the network, and what they are doing from a promotional standpoint and what the impact will be [on their shipping needs],” says Louis DeJianne, director for consumer goods, apparel and retail marketing at UPS. As the holiday season gets closer, DeJianne says UPS will be in daily contact with high-volume shippers so it can adjust how packages enter its network. It may, for example, recommend UPS pick up outbound orders on a Saturday or Sunday instead of waiting for Monday, when packages will have piled up over the weekend at e-retailers’ warehouses.

Newgistics Inc. says it began seeding with retail shippers during the second quarter the need to prepare a holiday forecast. It wanted initial forecasts to start rolling in between July and September, says Alexi Takvorian, vice president of network strategy at the shipping consolidator that carriers packages through its ground network and hands them off to the U.S. Postal Service for final delivery.

“By September we have a good idea what clients will ship, and then we have a series of internal meetings to plan what we are going to do,” he says. That includes talking to transportation providers to make sure enough tractor trailers and drivers will be available to handle extra loads, and additional pickups and routes. Newgistics says peak season volume last year was up 15%, and the daily volume change from nonpeak to peak is about 50-60%. Takvorian says Newgistics will have daily calls with big clients during its peak, and at least weekly calls with smaller clients.

E-retailers also need to nail down just how late into the season they will take orders with the expectation that carriers will be able to deliver on time. Last year, Accessory Geeks’ took orders for two-day paid shipping through Dec. 22. Its cutoff for free shipping was Dec. 18. Byun says the e-retailer hasn’t decided when its cutoffs will be this year, but it will post that information on AccessoryGeeks.com where shoppers will be able to see it once the season gets going.

With Christmas Eve falling on a Saturday this year, e-retailers and carriers will have a few extra days to get products under the tree. UPS, FedEx and the USPS delivered 60 million packages on Christmas Eve 2015, according to estimates from ShipMatrix Inc., which tracked shipments from more than 1,000 retail shippers.

Allison Enright
@AEnrightIR

When it comes to holiday season planning, much of the focus is on getting the right inventory and figuring out how to sell and ship it cost-effectively. The tail end of the season can sometimes be overlooked.

It shouldn’t be. 45% of U.S. online shoppers returned a product bought online last year, according to UPS Inc., and experts estimate returns of goods bought online range from 10% to 40% of holiday sales volume, depending on the merchandise category. E-retailers need to have a plan that accommodates gift givers and recipients, and their own bottom line.

With some consumers shopping for holiday gifts well ahead of Thanksgiving, an e-retailer’s standard 30- or 45-day return policy may not hold up. Shoe and apparel manufacturer and e-retailer Deckers Outdoor Corp. extends its usual 30-day return policy to allow for returns for up to 90 days after the holidays, says Jesse Cartens, the retailer’s senior operations manager of e-commerce. Deckers owns six brands, including Ugg, the shearling boot brand that’s been near or at the top of the most searched-for gift items list since 2012, according to Google search data.

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