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December 21, 2018

The Holiday Supply Chain: New Expectations from Ecommerce

Written by SmartSense | Supply Chain

It’s the most wonderful time of the year. And with robust retail sales, retailers know that the success of holiday sales depends on satisfied customers and an agile supply chain to support them. The National Retail Federation (NRF) estimates holiday sales to rise between 4.3 and 4.8 percent above 2017 levels, with expenditure predictions at $717.45 billion to $720.89 billion.


Each holiday season, retailers both small and large scramble to fill orders for one of the busiest times of the year. Most retailers rely heavily on the holiday season as one of the most significant contributors to their annual revenue. But there are many things that can go wrong. Indeed, a retailer’s supply chain is vital to the success of fulfilling the many orders received.


New and Festive Expectations for Ecommerce

According to research conducted by Voxware, a leading provider of cloud-based voice and analytic supply chain solutions, there are high expectations for on-time holiday delivery. 87% of consumers have a higher expectation for on-time delivery during the holiday season more so than any other time of the year. 86% percent of shoppers believe their delivery expectations are higher now than they were two years ago. In fact, 48% of those surveyed now expect to receive their holiday purchases within two days using standard shipping, a 14% increase from 2016.


Obviously, delivery is an area of increasing focus for retailers as e-commerce has blossomed with the evolution of ecommerce. Online shopping has become so convenient, with so many products available from the click of a mouse, that most people have made a purchase online. This has only upped the ante for warehousing, distribution, and fulfillment centers as well as the transporters and supply chain professionals that manage delivery to support the online shopping revolution. With the onset of the digital renaissance, tools are now available to shippers and supply chain professionals to track and expedite shipments, much more so than in the past because of advances in IoT.


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In 1999, the toy retailer Toys"R"Us promised that orders placed by December 10 would be delivered in time for Christmas, December 25th. However, the number of orders was so sizable that they were unable to fulfill them in time for Christmas Day. It was a disaster.


Times have changed. Many new technology platforms aid in the successful delivery of goods in time for Christmas Day, particularly at a time when online and retail sales seem to be flourishing. Sales revenues from ecommerce have seemingly soared high, but expectations for prompt delivery seems to have soared even higher.


Such expectations affect customer loyalty, whether or not they are met. Voxware's research found that less than 14% of those polled will likely shop with that retailer again if the product doesn’t arrive within two days of the promised delivery date. Moreover, if the item is incorrect the first time, 31% of shoppers will abandon that retailer altogether. Clearly, if delivery expectations are not met, it will affect customer loyalty for that year and beyond.


Amazon Raising the Supply Chain Bar

What's raising the bar of holiday delivery expectations? Amazon, perhaps? In 2018, Amazon set the standard – again. Since early November this holiday season, Amazon customers have been enjoying free shipping, with no minimum purchase on their orders, to arrive in time for the holiday period. This is in addition to rapid delivery afforded by Amazon Prime (free delivery and frequent two-day delivery on items). Overall, consumer expectations for quick and on-time delivery are higher than ever. The entire equation has been changed by Amazon's ability to provide almost anything imaginable and fulfill that order in a remarkable timeframe.


In summary, retailers rely on the holidays as a crucial time for their sales success. With the genesis of supply chain technology, on-time delivery is expedited so consumer expectations can be met. But the bar is being raised higher and higher for shippers and retailers. This holiday season will challenge any retailer to use whatever technologies they have or can add to ensure a tight supply chain, strong enough to support such expectations.


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