Online holiday shopping has become a fixture for consumers getting into the holiday spirit. But it's not just because your target markets are spending more time on their mobile devices and enjoying the convenience of browsing through products without in-person crowds. It's also because of indirect benefits like shipping gifts directly to far-off friends and family. In 2021, 49% of shoppers chose more online shopping with that logistical perk in mind.
But whether your shoppers want the convenience of online shopping, the convenience of hands-off shipping, or all the personalized promotions and perks eCommerce can offer over brick-and-mortar stores, it's important to prepare for the abrupt increase in shipping demands you'll see all throughout Q4.
In this quick guide, you'll learn some strategic tips that can help you create a solid foundation for your holiday shipping plan and some tactical insights to wow your customers and get more sales. We'll start by looking at how all your holiday season efforts need to be oriented around demand and some shipping-related constraints that can catch you off-guard if you aren't ready. Then we'll get to some of our team's favorite tips for thriving during this year's holiday shopping—and shipping!—season.
The Two Key Elements of the Holiday Shopping Season: Demand Generation and Demand Fulfillment
While the holiday shopping season can be incredibly complex, especially if it's the season when you make most of your sales, most of your efforts will fit into two broad categories:
- Demand generation: Marketing, product pages, paid advertisement campaigns, brand awareness efforts, referral and loyalty programs, etc.
- Demand fulfillment: Ordering inventory, managing warehousing and distribution, shipping out customer orders, and more
Both of these elements are essential: you need to incentivize demand to make money, and you need to fulfill those orders on time and with reliable accuracy. However, during the holiday shopping season especially, these two objectives are inseparable.
You must plan for and implement steps around both objectives simultaneously throughout the rest of the year. Here are some key ways they intermesh with each other—and why taking this perspective can increase your Q4 revenue and customer loyalty:
- Holiday shoppers have strict deadlines: For most shoppers, a package that arrives on December 26 is incredibly frustrating; they'd rather have never placed the order in the first place, and it's a permanent shadow on your relationship with that customer. So your marketing efforts and shipping efforts need to align with their timeline.
- Competition is fierce for suppliers, not just for shoppers: While you might be competing for customers all year long, you're facing something else entirely during the holiday season. Shoppers are hit by a deluge of enticing ads and promotional offers, so you need to be ready to serve any customer that looks your way. However, vendors, suppliers, and manufacturers are incredibly busy. Unless you've adequately prepared your store with a robust supply chain network, you might not be able to handle all the demand you get. You have to balance demand generation with what you can actually fulfill.
- You have to put the money cart before the horse: Typically, past sales and revenue fuel future growth. Your store will grow, build momentum, and continue to serve a larger number of customers. But that approach doesn't work during the holidays. Instead, everything is happening all at once. You need money now to manage marketing, inventory, and shipping for all the orders you'll receive this season. If you just rely on past revenue (especially since most retailers get a disproportionate volume of sales later in the year), you're putting a hard stop on how many sales you can make. Instead, many eCommerce stores get growth capital and financing to fuel sales so they can thrive without disrupting cash flow or savings.
Consider These 4 Fulfillment Constraints on Your Marketing and Planning
While marketing may seem like it should be your primary focus in both the preparation and implementation stages of your holiday sales strategies, it might need to play second fiddle to your fulfillment strategies. Here's how your supply chain can—and should—shape your marketing:
- Out-of-stock goods: Tell shoppers when products are out-of-stock and won't be back in time. You can gray out products (or product variations) and send out emails regarding top sellers. This can disappoint shoppers, but it's better than having them make a purchase you can't fulfill.
- Shipping prices: Whether you absorb the cost of shipping into your product prices or leave it as a line item for your shoppers, it's going to shape buyer behavior. Pick the right strategy and options for your store.
- Trendy buys: Some products are going to be the "it" purchase this holiday season. They might be a temporary fad, or they might remain sellable in 2024. Gauge this carefully, and prepare your inventory accordingly. You don't want to be left with a large stockpile of unsellable goods, even if it may mean ceding some sales to a competitor willing to take that risk.
- Money: You'll need to pump some money into your fulfillment engine before sales start rolling in. This includes pre-ordering inventory, buying up packaging materials, and getting contracts for 3PL, warehousing, and distribution services. Merchant financing or growth capital can help.
How to Prepare for Holiday Shipping: 4 Tips for Fulfilling Orders Across All Your Stores
Putting together your fulfillment strategy is a lot of logistical, detailed work. But we recommend ironing out the details before holiday shopping starts in earnest. Use these tips to make it easier, so you can focus on sales and service once the clock starts.
Tip #1: Know the Dates and Deadlines
FedEx, USPS, UPS, and even Amazon's diligent FBA services will have deadlines on when the last packages can go out and still reach shoppers by Christmas Eve. Your team needs to know those deadlines—and so do your customers. Publish a helpful blog with 2023's numbers. If you can, add those deadlines to your product pages, Shopify website, and social media accounts so shoppers can clearly see how much time is left.
Tip #2: Make Free Shipping the Standard this Holiday Season
Free shipping is already the default practice for many eCommerce stores (and for the online shopping sites of major brick-and-mortar retailers). If you can, make shipping "free" for your shoppers this year. You can do this through a couple of different mechanisms, but the end goal is to simplify customer experiences and make them feel like they're getting a fair deal. Ultimately, if the key difference between you and a competitor is that one offers free shipping, the customer will likely shop there.
Build the Cost Into Your Pricing
An excellent strategy is to build shipping costs into your pricing. This makes the initial price higher, but that's actually far less of a disincentive to shoppers than suddenly seeing a shipping markup appear on the purchase page. This takes a bit of extra math, but it's a well-performing tactic.
Offer Free Shipping for Big Enough Carts
If you can't back shipping into the price and still remain competitive, restructure your shipping deals to offer free shipping for carts that reach a certain threshold. For example, if your $5 products are popular sellers, absorbing the shipping costs yourself is hard, and customers won't pay a $5 mail fee for a $5 product. Instead, offer free shipping on carts that reach $25 or $50—this will tempt shoppers and increase overall cart size.
Keep Track of Your Break-Even Point
Whenever you're considering discounts or free services, make sure you know the break-even point for product sales. Add in the unit price of the product, the marketing costs you can attribute to the sale, and the shipping and handling fees. Unless the product is a loss leader, the sale price needs to at least cover that amount.
Tip #3: Use Shipping Partners, 3PL, and Software That Can Keep Costs Low
Chances are that you aren't handling shipping and logistics directly. Instead, you may have a variety of 3PL service providers, go-to shipping partners, and software platforms that automate as much of the fulfillment process as possible. Develop that infrastructure now.
If you have stores on Walmart and Amazon, investigate their on-platform fulfillment and warehousing options. These options may be faster or have seasonal deals in place to ensure sales go through as smoothly as possible.
Related: How Ecommerce Lending Can Affect the Financial Health and Sustainability of Small Businesses
Amazon sellers, in particular, can see a lot of success by leaning on Fulfillment by Amazon (FBA). This comprehensive service includes warehousing, picking and packing, shipments, and even returns. In 2022, 94% of Amazon store owners used FBA to streamline fulfillment. While you're ceding a bit of control over the customer experience, it can help you focus on growth and marketing instead of order management.
Tip #4: Get Financing So You Can Frontload Your Inventory and Fulfillment Options
One of the big limitations you'll hit this holiday season is cash. You need to pre-order a lot of inventory and have money in your accounts for logistics and fulfillment services. There are a lot of different avenues you can use to secure this funding.
Alongside conventional credit cards or bank loans, which offer significant downsides, online programs can forward you a lump sum of cash upfront. Both Amazon and Walmart offer financing programs for their sellers based on sales performance in each separate platform. Third-party growth capital services can be even more flexible by offering you an advance based on your total sales performance across all your stores.
Organize Your Strategy, Tools, and Financing Now for the 2023 Holiday Shopping Season
As holiday shoppers begin to get ready for the start of the season, your fulfillment strategies already need to be in place. At Onramp, we offer upfront financing so you can get all your preparations in order.
We measure your sales performance holistically so you can get the lump sum of cash you need to make the most of the season, and you can spend it on warehousing, inventory, products... whatever makes sense for your business. Then, you repay later at a rate of 1% of your sales volume, so you don't jeopardize your 2024 cash flow. Apply today so you can start the 2023 holiday shopping season with the financial resources you need.