Three challenges retailers will face this peak season
October 27, 2017
According to Deloitte, economic fundamentals for consumer spending are strong this year so retailers should anticipate confident spending during the 2017 holiday season. Deloitte projects e-commerce sales to increase by roughly 20 percent and expects retail holiday sales to top $1 trillion between the months of November and January.¹
As online spending continues to trend upward, so do returns. Consumers return roughly 30 percent of all product bought online and as a result, retailers must be prepared to manage and maximize value of this inventory. It’s a crucial component of business with ineffective solutions to the problem potentially impacting retailers’ profits up to 20 percent per year.²
When it comes to returns, here are three main challenges that we see retailers face during peak season:
- The proliferation of stock-keeping units (SKUs) & increasing product variation: The increase of product variation impacts complexity by adding more vendors into the mix, while adding transportation costs. While more products increase market opportunity, it naturally complicates operations at the facility level by impacting shelving, pallets, space allocation, workforce requirements and conveyance. The supply chain challenges that arise with SKU proliferation are certainly not limited to this time of year, but the added urgency during the season magnifies the importance of effective reverse logistics management during the holidays.
- Consistent quality control & fraud prevention: E-commerce fraud attempts from Thanksgiving to Christmas Day registered a 30 percent increase in 2015 and another 31 percent from that in 2016 while overall transactions increased 16 percent for that same time period. Quality control and fraud prevention can directly affect a brand’s reputation. Retailers must implement a returns strategy that includes a strict return authorization process, best-in-class preparation for restocking and thorough employee training to help ensure each consumer experiences is identical.
- Low inventory visibility and high consumer expectations: Consumers are increasingly interested in and expect multiple options to make, pick up and return their purchases. Purchasing online and returning in store is emerging as a core consumer preference which is driving retailers to implement omnichannel approaches to foster a better brand experience. With an omnichannel strategy in place, inventory visibility becomes more critical than ever. Retailers often use innovative technology systems to understand where items are within the network, and if they meet quality standards, leverage returns as inventory — using returns to fulfill new orders, maximize value, lessen costs and meet consumer demand.
FedEx Supply Chain works closely with our customers, at various growth stages, to prepare for the holiday peak season by leveraging our experience, innovative technology and the global FedEx network. Our expertise in value-added warehousing and transportation services is based on decades of experience. In addition to serving many Fortune 500 companies, FedEx® Fulfillment is our all-in-one solution for small businesses. Ask how we can help your business grow while delivering a differentiated customer experience.