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Meeting Seasonal Demand in 2022
In this guide, we’re going to show you how you can meet seasonal demand this year and how to manage last-mile delivery this holiday season.
In this guide, we’re going to show you how you can meet seasonal demand this year.
In fact, the holiday shopping season is already kicking into high gear.
And experts forecast that online sales will rise by 11.3% in comparison to 2020.
But do you know what will also be on the rise? Prices.
Salesforce predicts that retailers will be looking at an extra 223 billion in costs fulfilling those orders.
So if you want to know how to handle high order volumes without breaking the bank this season, you’ll enjoy this article.
Let’s get started.
What Is Seasonal Demand?
Seasonal demand is the change in consumer buying habits depending on the time of the year. This kind of consumer demand has a significant impact not only on what sells better but also on how many goods or services you can expect to sell.
Seasonal demand can be high or low. It can last from a couple of days to weeks, or even months.
Both low and high seasonal demand impact shopping habits. Depending on your industry, forecasting these events can help you to anticipate future shopping trends.
In turn, you can prepare for seasonal demand and provide enough goods and services to customers, and maintain a tight grip over costs. (They tend to rise during these periods.)
Seasonal Demand Examples
There are several well-established seasonal demand cycles. These include peak shopping sprees, as well as slow spells.
Here are a few seasonal demand examples:
Shopping Holidays (Peak Season)
Peak season is the height of the annual sales cycle.
In fact, sales volumes can grow up to 7% for this period (compared to the rest of the year), and reach up to $800 billion in net sales profit.
Typically, it lasts from the beginning of November all through to the end of December.
It includes shopping holidays like Black Friday and Cyber Monday, which people use to complete their shopping lists for the upcoming holiday season (Thanksgiving, Christmas, and New Year’s Eve). But it can also include major national holidays such as 4 July.
Read this guide if you want to prepare your last-mile delivery during Black Friday.
Change in Season
Each seasonal change comes with it’s own specific consumer demand. This switch from season to season determines what goods and services people buy.
Some shoppers anticipate new items for the upcoming season, while others buy goods from the previous season which are on sale. Think: Spring Cleaning sale offers.
Whatever the case with your customers, they provide ample opportunity to raise sales and delivery volumes before the next season.
Seasonal Sales Cycles
New season delivery sales cycles happen when you sell specific goods during a particular time. These events usually last for a few months at the most and can produce many sales.
For one industry, a specific season can be low in demand. While for others it’s the height of their sales calendar.
For example, spring and summer are peak seasons for delivery of construction materials. While the industry typically considers Autumn and Winter as the slow season.
A business can depend heavily on this kind of sales cycle. It can raise enough profit during one or two seasons to finance the budget for the entire year.
Secondary holidays work similarly to the peak sales season. But unlike the major holidays around November and December, they don’t generate nearly as much revenue.
Still, they’re a vital part of the sales calendar and can generate more sales income than the regular part of the year.
To a greater or lesser extent, these include holidays like Halloween, Valentine’s Day, or Mother’s Day.
Seasonal Demand Creates Unique Challenges
Seasonal demand can make or break a business’s top-line revenue for the year.
But when it comes to last-mile delivery, it creates a unique set of logistics challenges.
Often, they are difficult to navigate and can hurt your bottom line.
So it’s worth taking a look at what these seasonal delivery challenges are:
Greater Demand from Suppliers
One of the biggest challenges to your fulfillment during seasonal sales spikes is having enough inventory to meet the demands of your customers.
Selling out specific products before that prevents you from generating extra income. While the strain on your supply chain doesn’t allow you to ship in replacements before demand ends.
If that happens, you risk losing customers to competitors and their business.
Need for More Inventory Storage Space
Another problem is having enough space to house all of that extra inventory. For many, the solution is to rent out additional storage facilities.
But when everyone else is looking to do the same, it is difficult to expand storage during peak sales seasons.
It is also costly. Warehouse renters tend to raise the price of the lessee during seasonal spikes. While not finding a suitable location can raise the transportation costs of your delivery.
Expanding Capacity to Meet Demand
Typically, seasonal fulfillment means higher order volumes. That means you’ll handle more delivery drop-offs than at any other part of the year.
To meet this additional demand, you’ll need to raise the capacity of your last-mile delivery beyond it’s normal scope of work.
And this means getting some outside help.
Be it hiring a seasonal workforce or using outside contractors (4PL service providers), you’ll have to increase spending to raise the capacity of your delivery fleet.
That’s why it’s important to know when to use an internal fleet vs external delivery fleet. And when to raise the value of your contract.
Raising Last-Mile Delivery Costs
More supplies, inventory, manpower, storage, equipment, and vehicles means higher costs during seasonal delivery spikes.
Investing more money into delivery also doesn’t guarantee ROI and a good sales season. So there has to be a balance between reducing operational waste and investments.
But not meeting customer expectations and losing their trust is a bigger cost in the long run.
Evolving Customer Expectations
Customer expectations have never been higher. And in the chaos of peak seasonal demand, it is a nightmare to meet them, let alone surpass them.
But this has to be a priority, especially for small businesses. Learning how to build trust with customers through delivery means:
- Listening to your customers
- Providing a delivery they want
- Making good on your promise
How to Manage Season Demand?
Those were the challenges created by high seasonal demand. But the problems don’t stop there.
Due to the nature of eCommerce, you’ll face many more issues until you can overcome them.
Luckily, we’ve also included solutions that can help you to better manage your last-mile delivery during seasonal demand.
Let’s take a look:
Problems of Managing Season Delivery Demand
These are the biggest problems of managing high delivery demand during seasonal sales holidays:
Most Warehouses Require Year-Round Contracts
Due to the high demand for storage facilities from September to February, most warehouse providers can set their terms. This means requesting higher fees and yearly contracts during peak sales periods.
This is a huge problem, especially for seasonal retailers, who usually score only 5-7% of their yearly sales between February and September.
Inventory Space is Limited During Peak Seasons
With the accelerated rise of eCommerce shipments, warehouse space is scarce. In fact, it’s one of the most valuable commodities when it comes to delivery in urban areas.
That’s why Amazon continues to invest $35,046 million in their fulfillment logistics, most of it on raising its inventory limits.
And the high demand during the major sales holidays only escalates this problem.
Fulfillment Rates Spike with Demand
As demand for storage space grows during the holidays, so does the price of outsourcing fulfillment services to third-party providers.
Because of this carriers, shipping companies, and other logistics providers can all afford to pump their prices. If you don’t use their services, someone else will take your place.
And that means you can expect to spend more money on fulfillment, especially if you rely on an external delivery fleet.
Delayed Fulfillment Speeds
Everything is linked to high demand. So if you deal with large order volumes, so do your suppliers.
This automatically means that they’re forced to scale production to stock your inventory. And that’s not always an option.
In turn, this affects your own order fulfillment speeds. As you won’t be able to get products on time to fulfill order requests. All of which can gut your revenue stream during sales peaks.
Increase in Delivery Errors and Returns
With large delivery orders and the rush of the holiday season, your order accuracy can take a hit. This is especially true if you’re using multiple carriers and manually managing them and all of your delivery requests.
Human error can lead to misplaced orders, failed deliveries, and returns. This only adds to the problem, as you’ll have to manage additional tasks and unwanted costs to an already stretched out operation.
Solutions to Managing Season Delivery Demand
Now that you’re aware of all the problems, let’s take a look at the solutions:
Accurate Demand Forecasting
Accurate demand forecasting based on data is the KEY SOLUTION for successfully managing seasonal demand (be it high or low).
Demand forecasting helps you to achieve several things:
- Determine supply order volumes. You’ll be able to order enough inventory to meet demand without the need to restock supplies, or overstock and lose money if you fail to sell all of it.
- Determine the resource you’ll need to fulfill all deliveries. You’ll anticipate how many deliveries you’ll have to handle during the period, so you can effectively outsource the extra workload, expand capacity, and scale operations as you need to.
- Determine the budget necessary to meet all of the requirements. It will be easier for you to create a quarterly budget, if you know how many orders you’ll have to handle and how much money you’ll have to spend on extra resources.
- Set goals for the seasonal demand. You’ll be able to evaluate performance during each sales cycle, so you know if the returns on your investments pay off. It will also make it easier to plan your sales calendar for next year’s holidays.
Seasonal demand depends on geography, as much as it depends on the time of year.
The demand for your products may be different in city centers vs. suburbs vs. rural areas.
So you’ll have to have more stock in areas where the demand for your products is higher.
This means distributing inventory unevenly across your depots, so you reduce the distance between the hub and the customer.
In doing so, you’ll cut delivery time, as well as fuel and transportation costs.
Streamlining fulfillment means reducing operational waste. Building an agile delivery is a good way to do this as it lets you:
- Centralize the delivery process and how you manage it
- Scale up or down operations as you need to
- Dynamically take in orders and adjust plans
- Manage operations in real-time
- Handle both forward and return logistics
- Make decisions based on all available data and resources
Order Batching and Prioritization
Order batching allows you to group multiple orders into one delivery run. This makes it easier to handle multiple orders that share similar timelines or geographical location.
It’s also more cost-effective and a better way to schedule deliveries.
There is no need for drivers to go back and forth to pick-up locations after each drop-off. So drivers spend less time, consume less fuel, and can handle more deliveries.
Prioritizing orders on the other hand enables you to maintain a high customer experience.
Doing this can let you know which orders to outsource to a third party provider, or which orders to push back in the schedule, based on their value or the importance of a customer.
Raising Visibility Over External Partners
Visibility over external partners is one of the key points of seasonal demand last-mile delivery.
Visibility equals control. Control over your drivers. Control over your inventory. And control over your delivery schedules.
With the help of last-mile delivery software, you can raise the visibility that you need, and work smoothly with your external partners.
If you’re wondering if you should outsource your e-commerce fulfillment, check this article.
Providing More Accurate ETAs
Giving customers the chance to track orders and see estimated times of arrival (ETAs) of their deliveries reduces the chance of missed or failed deliveries.
In turn, this lowers the number of returns and the driving time to fulfill all of your orders.
It also saves you a lot of time. Because in most cases, the customers will be waiting for the driver to arrive, which lowers the service time at the customer’s doorstep.
But for all of this to happen, you’ll need to embrace a digital transformation of your business.
And that’s where Delivery Software like eLogii steps in…
How Delivery Management Software Helps Meet Seasonal Demand?
Complete Fulfillment Automation
Complete fulfillment automation means using software. The technology enables you to plan, manage, and optimize all operations and processes associated with your delivery.
Typically, you can achieve this by using:
- Order management system: to automatically handle how you receive order requests from customers;
- Warehouse management system: to automatically manage storage facilities and inventory;
- Delivery management software: to automatically plan deliveries and route and dispatch the entire fleet.
Using these three tools can centralize your delivery operations.
In turn, you speed up how you plan and manage fulfillment. Which means you’ll have more time to focus on other tasks, such as marketing sales offers for the peak season.
These tools also optimize your processes as you plan them. That lets you uncover waste, which lowers operational costs.
At the same time, it also improves efficiency and raises output performance. You’ll be able to do more with the same resources, as you do during the rest of the year.
Check this article to find out how to build a strong B2B delivery through automation.
Fast and Easy Delivery Scalability
Delivery management software is a SaaS (Software-as-a-Service) solution. This means that the software works on the cloud.
That enables multiple users to access your account on multiple devices and from locations. And, depending on your contract, the system can handle a limitless number of tasks, drivers, and routes.
So even whenever you encounter high order volumes, you’ll quickly scale how you manage operations at a moment’s notice.
Real-Time Delivery Tracking
Delivery software works in real time. Yes, you can plan deliveries ahead of time. But it also relies on GPS and geo-coding technology. So you can track and monitor individual drivers or shipments as they move along the last mile.
This means you two things:
You no longer need to rely on manual reporting to get information from the field. And that ensures a more seamless delivery to your customers.
If something happens during the rush of peak sales season, you’ll be aware of the problem and fix it almost as soon as it happens.
Using Data for More Accurate Demand Forecasting
NOTHING is more important than forecasting seasonal demand.
A good forecast can tell you how much supplies and inventory to order. Or how many warehouses or vehicles to rent for the upcoming season.
Simply put: It’s a powerful way of maintaining optimal capacity of your delivery service.
Delivery software helps you to make better decisions because it stores historical data.
Analyzing this data enables you to calculate key performance metrics in delivery logistics. Which you can use to evaluate operations after every seasonal demand cycle.
This can help you to better forecast demand and anticipate what you’ll need in terms of supplies and equipment with greater accuracy.
Guaranteed 2-Day Delivery
Two-day delivery is the standard in modern last-mile delivery.
Nobody expects you to compete directly with Amazon and their same-day delivery offers.
But customers do expect to receive their items 2-3 days from the moment they order them.
Ensuring this during a peak holiday season is critical. And making good on that promise even more so.
However, this is a problem with such high order volumes, especially during Black Friday and Cyber Monday.
In fact, 54% of shoppers wait until after Black Friday and Cyber Monday to purchase holiday gifts.
Ensuring your customers receive their purchases two days from the moment they place an order online is proven to raise their satisfaction.
And during the next sales spike, they’ll be more likely to order their goods from you.
We can help you with that beyond this article.