With Great Volumes Comes Great Uncertainty: A Guide to Navigating Peak Season 2021

Retailers across North America were looking forward to this year’s back-to-school season with eager anticipation. In June, as more citizens got vaccinated and the number of cases dropped, it seemed that consumers were ready to shop in stores again.

That all changed with the subsequent rise of cases due to the Delta variant in the US, and the Centers for Disease Control and Prevention (CDC) recommendation that even those who have been vaccinated should wear masks in public indoor spaces where cases are rising.

There is no denying it: A year and a half into the coronavirus pandemic, we are still not out of the woods yet.  Negotiating uncertainties is still the name of the game, and in a quest to meet the same-day delivery expectations of customers, retailers rolled out omnichannel capabilities in record time last year.

This was a necessary step amid falling footfalls to retail stores over health concerns. A Forbes report quoted data stating that store traffic in 2020 fell by 30% as compared to 2019. The report also quoted Walmart CEO, Doug McMillion saying that the total transactions from retail stores in that year fell 14% as shoppers made fewer trips to stores. 

E-commerce is among the most promising omnichannel retail strategies. According to a McKinsey report, the year-on-year growth of e-commerce sales as a percentage of total sales was 3.3X for the United States in 2020.  Some countries such as the UK saw close to 4.5X growth last year.  According to estimates cited in another McKinsey report, the increase in e-commerce deliveries that was expected in 10 years, took place in a matter of eight weeks last year.

And the popularity of e-commerce is likely to sustain for the foreseeable future. According to McKinsey Consumer Pulse surveys undertaken by the firm, close to 75% of people that are using digital channels for the first time will continue to do so even after normalcy is restored. Forecasts by Ascential Retail Insight show that e-commerce will secure a 34.8% share of chain retail sales by 2023, up from 30% in 2021. These estimates suggest that the growth of e-commerce sales has been accelerated by at least two years as consumers changed their spending patterns in 2020. 

Peak season is coming

As the shopping season of November and December looms near, despite planning well in advance, retailers are realizing that simply rolling out e-commerce capabilities is not enough as uncertainty has struck the last mile delivery space.

Fuelled by e-commerce, leading carriers are expecting a massive crunch in capacity to meet the overwhelming demand expected in 2021. A Supply Chain Dive report quoted UPS CEO Carol Tomé projecting that delivery demand will outpace its capacity by 5 million pieces a day during the 2021 holiday shipping season.

The report also noted that as a result of this capacity crunch, volume caps and surcharges are being placed by carriers. Such conditions can severely impact the revenues from e-commerce sales, which according to a McKinsey report, is a high growth channel with relatively lower margins as logistics and transportation form a significant chunk of the costs. 

Orchestration: The go-to platform for last-mile delivery optimization

In such a scenario, how can retailers meet the surge in demand during the peak season and keep their delivery costs in check? In the past few years, retailers have seen the mushrooming of a variety of alternatives to outsource their deliveries, ranging from carriers of smaller scale to crowdsourced shipping. 

These carriers vary across the spectrum in their shipping charges and service level agreements (SLAs). Many of these carriers might also have been untested by retailers, making it difficult to find trustworthy carriers to handle the high-stakes volumes of the peak season.

Enter Orchestration: The one-stop platform by Locus that meets all of a shipper’s last-mile delivery needs through an intuitive interface. From finding the right carrier at the optimal price to ensuring that parcels reach a customer’s doorstep on time, Locus Orchestration empowers retailers to maintain cost-effective operations and deliver to their customers on time; regardless of same-day delivery, one-day or two-day time frames. 

On the basis of 50+ business variables ranging from order type to the logistics resources available, Locus Orchestration’s intelligent order allocation engine recommends a list of the most suitable carriers from its extensive and trusted carrier network in real-time.  Its centralized order dashboard also provides visibility on real-time delivery quotes and capacity availability. From this platform, retailers and shippers can even choose to allocate thousands of orders to a captive fleet, outsourced fleet, and a crowdsourced fleet in a hybrid manner to optimize deliveries.

Locus Orchestration also allows for the automated pushing of orders through a custom rule engine and provides seamless carrier management through pre-negotiated rates, minimum guarantee, and automated payments and reconciliation.

Have eyes on the ground, always

Once the orders have been assigned, retailers can track their status across multiple carriers on a dedicated Locus Orchestration dashboard, thanks to its integration with Locus TrackIQ. Retailers can get proactive alerts for potential SLA breaches and keep customers informed of delays. Once the order is completed, they can even reach out to the customers for feedback to ensure their customer experience remains top-notch.

The peak season is a trial by fire for retailers, and staying on top of last-mile deliveries in a capacity crunch is foundational to success. To know how you can make the best of the peak season, click here to sign up for a demo with Locus today.