Top 4 Peak Season Challenges – and How to Tackle Each

Warehouse space and labor are still at a premium. 

Supply chain disruptions are impacting every sector. 

Two-day shipping is considered to be the bare minimum by the majority of online shoppers.  

And while Black Friday, Cyber Monday and the traditional peak season are months away, many consumers start their holiday shopping much earlier. In 2022, 56% of US consumers started shopping in October instead of waiting until later in the season. Early preparation for the increased demand can help retailers ease the overwhelming pressure to deliver products on time, manage inventory effectively and keep customers happy during the busiest time of the year.

Ahead, we discuss the common challenges faced by retailers during peak season, the proactive measures they can take to mitigate these challenges, and how AI and automation are helping leading retailers address common pain points during high-volume periods.

The challenges that accompany peak season

1. Increased demand

One of the most common peak season challenges is the sudden, often drastic, increase in demand. To ensure profitability, companies must strike a delicate balance: ensure that they have enough stock to meet customer demand without overstocking (and the risk of losses due to unsold inventory).

2. Shipping delays

Whether it’s a result of the Amazon effect or the on-demand services that fill our daily lives, consumer expectations are clear: waiting more than two days for order delivery is simply unacceptable.

With increased demand comes a greater need for timely shipping. However, many companies struggle to keep up with the pace and deliver products on time, leading to customer dissatisfaction and loss of revenue.

3. Inventory management issues

Effective inventory management is crucial during peak season. Businesses must ensure that they have the right stock at the right time, in the right place and in the right quantities to meet customer demand. 

Poor inventory management can lead to stockouts, overstocking, and ultimately, lost sales. Plus, warehouse space is already at a premium, a circumstance that is only amplified by the need to increase stock before and during peak season. 

4. Experiential expectations

The role of the in-store experience has become critical in determining whether consumers are willing to return to in-store shopping following the pandemic. A well-crafted, engaging environment that captivates the consumer and cultivates a positive mood can significantly influence their inclination to purchase from your brand. During peak seasons, when the “holiday spirit” is often a shopping consideration, the in-store experience becomes even more significant.

Proactive measures that help mitigate these challenges

Retailers can take advantage of the optimistic outlook and spending inclination of consumers during peak season by prioritizing automation, optimization and the delivery of value-oriented offerings.

• Plan ahead: Companies should prepare for peak season by forecasting demand and ensuring that they have enough stock to meet that expected demand. This can involve increasing production, stocking up on inventory and identifying alternate suppliers.
  

RELATED READ: How to Plan for Ecommerce Peak Season

• Streamline shipping processes: Lean on past peak season experiences to find the best ways to streamline shipping processes. By analyzing data and identifying patterns, you can proactively address potential bottlenecks. Taking a data-driven approach helps optimize the fulfillment process and ensures a smooth and efficient holiday season for your customers.
  
  Retailers may also want to consider software that can automate shipping labels, manage tracking information and integrate with carriers for real-time shipping updates.
  
• Optimize inventory management: With inventory management software that can track inventory levels in real time, retailers benefit from insights into inventory movement and analysis to drive more informed decisions.
  
  However, it’s important to choose a system wisely, as a lack of integration between in-store and online inventory can lead to consumer disappointment and hinder sales. The key to resolving this issue lies in advanced fulfillment orchestration software, which harmonizes data between store and warehouse systems. Retailers can fulfill online orders using their in-store inventory, facilitate in-store returns for online purchases and allow customers to make purchases in-store using warehouse inventory.
  
• Adapt to your consumer: Consumers vary in their experiential and channel preferences, and retailers should customize their strategies to target specific demographics. Younger consumers tend to shop online or visit stores with smart fitting rooms and AR experiences. Millennials often opt to buy online and pick up in-store (BOPIS) while more mature consumers may want to shop in brick-and-mortar locations, but with the added convenience of selecting home delivery for sizes or colors that are not available in-store. Lastly, recognizing consumer tendencies to postpone their purchases, retailers should concentrate on fulfillment speed to ensure that next- or two-day delivery is possible for last-minute ecommerce purchases.

By the numbers: How leading retail brands benefited from peak season preparation

Fulfillment automation can help retailers avoid common pain points during high-volume periods. Intelligent warehouse orchestration takes that automation one step further, driving the highest-yield decisions in real time and adapting to different business rules, requirements and SLAs over time. Here’s how a few of our customers were able to maximize peak season sales and boost customer satisfaction.

• During a peak period three times the typical volume, an American lifestyle apparel company successfully ensured omnichannel fulfillment continuity by implementing several strategic measures. They proactively communicated the correct PPS strategy and queue sizes, effectively controlling congestion and reducing return to replenishment (R2R) time. To increase picking productivity and improve material flow, the company adopted multiple single Item Order (MSIO) logic, utilized parallel batch picking,  implemented bin tagging and optimized storage location utilization. These strategies collectively allowed the company to successfully process 83K ecommerce units in a day and manage an 86% increase in average outbound throughput compared to pre-peak, all with 99% software uptime.
  
• Fulfilling a variety of SKU types with stringent order SLAs and multiple waves 24 hours a day, one entertainment company wanted a new fulfillment strategy to manage volumes 4-5x during peak season. With ecommerce orchestration, the company yielded impressive results, including improved pick throughput and the complete elimination of post-pick value-added services (VAS). Fulfillment speed and inventory accuracy increased by leveraging MSIO logic, bin tagging and order prioritization, among other optimization strategies. As a result, the company achieved 100% high-yield fulfillment, picking a remarkable 4.04 million units in just 90 days during the peak season, with a staggering 66,000+ picks accomplished in a single day. Furthermore, the company delivered twice the combined throughput of two other client warehouses and doubled peak capacity from approximately 2.2 million units to approximately 4 million units in just the second year of operation, highlighting the scalability and growth potential of the system.

• When a leading global retailer of athletic footwear, apparel and accessories was looking to adapt fulfillment processes for high order peak volumes (5x+), they deployed intelligent warehouse orchestration software. The solution executed real-time decisions around MSIO logic, bin tagging, parallel batch picking, storage strategy and order prioritization to improve productivity, throughput and customer satisfaction. With the new operational strategy in place, throughput increased to 45K during peak periods, as compared to the pre-peak average of 30K.

Peak season poses significant challenges for retailers, including increased demand, shipping delays and inventory management issues. However, by taking proactive measures, such as streamlining fulfillment processes and optimizing inventory, retailers can effectively tackle these challenges. Automation, driven by AI and intelligent warehouse orchestration software, can greatly enhance fulfillment capabilities and customer satisfaction during high-volume periods. By learning from successful case studies, retailers can maximize peak season sales, boost operational efficiency and ensure a seamless holiday shopping experience for their customers.