For most of us, the holidays are a time for family, fun, and maybe one party too many. But, if you are an eCommerce business owner, the holiday season is a time for too much work and too little sleep. The last thing you need is a holiday fulfillment center that throws a Grinch into your plans.
The test of any eCommerce fulfillment provider during the holidays is how well it serves its clients during the busiest sales months of the year. Here are five things to think about when choosing a fulfillment partner. Each should help ensure that your holidays are merry — and profitable.
Red Stag originally published this blog on November 1, 2016. We updated it with current information, supply chain changes, and recent news on November 22, 2022.
1. Holiday fulfillment center staffing
If you’ve been running an online retail business for a few years, you probably have a firm idea of the cyclical nature of your sales. Your sales history gives you an idea of how much inventory you need to carry to cover your holiday orders. You’ve planned to have just the right amount of product: enough to fill every possible order but not so much that you will have a lot of inventory left at the end of the year.
You likely started preparing for your holiday rush in the spring or summer. You tried to get inventory lined up, production scheduled, and promotions set to boost sales during crucial shopping weeks.
Barring an unexpected viral shopping hit (and wouldn’t that be an excellent problem?) or a significant supply chain disruption (a less-than-excellent problem), your inventory will be ready and on the shelves in your fulfillment center just when the orders start pouring in.
But has your holiday fulfillment center prepped adequately for the season? If your fulfillment center hasn’t added the extra staff it needs to process the surge in orders or adapt to disruption, your holiday sales planning could go to waste.
Pro tip: Share holiday sales data with your fulfillment partner
Your insights about your business can help your fulfillment company serve you better. Share sales volume and seasonality data with your 3PL to help it prepare for the holiday fulfillment rush.
Think about your typical year:
- Do your weekly sales double or triple in late November?
- Is your most significant spike usually around December 15?
- Will that come earlier this year?
A top-notch holiday fulfillment center will want to know what to expect from your business. It will plan to have enough staff to process orders on the critical days for eCommerce holiday shipping. Your 3PL will also work with multiple carriers to help get your orders out the door.
During the 2021 holiday rush, Red Stag Fulfillment shipped 99.959% of orders on time.
Fun fact: On Black Friday and Cyber Monday, Red Stag Fulfillment’s management teams join our staff on the warehouse floor. Everyone pitches in to ensure that holiday orders go out on time.
Ask your fulfillment center for an order processing guarantee and how it holds up during the holidays. There’s nothing merrier than orders flying out the door as fast as they come in.
2. Holiday fulfillment center space crunch
You have calculated the ship dates that will get your products to your holiday fulfillment center in time to be ready as your orders come pouring in. But does your fulfillment center have space to accommodate the extra merchandise?
As customers of Amazon FBA know all too well, when everyone wants to pile on more inventory in the 4th quarter, fulfillment warehouses may run out of space to store all that merchandise. Some, like Amazon, place limits on storage space or raise storage fees during the holiday season.
A shelf space shortage could leave your products sitting on pallets on the loading dock when they should be picked, packed, and shipped. Ask your holiday fulfillment partner for a dock-to-stock time guarantee to ensure no delays occur because of warehouse stocking backlogs. After all, holiday fulfillment center shelves that are chock full of your inventory and ready to ship to customers are better than a frothy mug of eggnog.
Pro tip: Outsourcing fulfillment gives you flexible warehouse space
If you manage your own warehouse, excess space that’s only used for a short period is a high cost to bear. And the logistics of renting temporary space to expand for the holidays are a hassle. But, when you outsource your holiday fulfillment to a 3PL, you pay only for the space you need, every month of the year. And a well-run fulfillment center will have a plan to manage the holiday surge without limiting storage space for its clients.
3. Fulfillment center inventory accuracy
Products may move off the pallets and onto the fulfillment center shelves, but you could still lose sales if your holiday fulfillment center inventory isn’t accurate. A 230-piece standard and metric mechanic’s tool set is an excellent holiday gift, but it won’t do you any good if it sits on the warehouse shelf, uncataloged and left out of your inventory count. You can’t sell it, and your customer gets an out-of-stock message.
Worse, you could sell items that appear in inventory but aren’t on the shelves (see shrinkage, below).
Merchandise that doesn’t make it into the fulfillment center inventory system might as well be lost. Ask your holiday fulfillment center for an inventory accuracy guarantee to ensure that every piece of merchandise you forward for fulfillment counts. As eCommerce sellers know, nothing makes a Christmas elf happier than shipping every gift to a new home.
Pro tip: The best time to verify inventory is at the receiving dock
The receiving dock is one of the most common places for inventory errors to occur. If the warehouse enters the stock count from the bill of lading without checking it against what’s actually in the container, your inventory can be wrong before your products even make it to the shelves.
At Red Stag Fulfillment, we verify every unit as it comes in, no matter how busy we are during holiday fulfillment.
In December 2021, Red Stag’s inventory accuracy rate was 99.997%.
4. Holiday fulfillment shrinkage
Most order fulfillment center contracts allow for inventory shrinkage of up to three percent. This means that the fulfillment warehouse can lose, break, or misplace up to three items for every 100 they process for you. During the holidays, when there is so little margin for error, shrinkage can hurt your bottom line and cost you sales and customers.
Pro tip: Find a holiday fulfillment center with zero shrinkage
To make your holidays happy, look for a 3PL provider with a shrinkage allowance of zero, zip, zilch. Find one that guarantees that every item you send to the fulfillment partner will make its way into inventory and out to your customers.
Red Stag Fulfillment has a zero shrinkage guarantee for its fulfillment center clients; if an item is damaged or lost in our warehouse, we pay you the replacement cost.
5. 3PL accountability
No one is perfect. You, your vendors, and your customers make mistakes. A good business relationship means giving each other some latitude, catching errors quickly, and correcting them just as fast. During your busy holiday season, however, mistakes can be costly. Your customers need their orders to arrive both accurately and on time.
How much margin for error can you give your fulfillment center? Each mistake will cost you extra customer service time as you soothe frazzled nerves and could lead to expensive returns.
Don’t disappoint Delores in Des Moines, who got the red one when she ordered the green one. Or there’s Peter in Portland, who ordered a small and got a large, so he didn’t have a gift when his niece came to visit. They’re both angry at you, not your fulfillment company.
Pro tip: What kinds of fulfillment guarantees does your 3PL offer?
A fulfillment center that compensates you for every late shipment, mis-pick, or incorrectly labeled package is a 3PL provider with a solid incentive to get it right for you every time. That’s why Red Stag Fulfillment guarantees our services, and we pay you for every mistake we make (we can afford it because we have so few fulfillment errors). Our dedicated team of fulfillment professionals takes your orders as seriously as you do.
No one is perfect. But a fulfillment center with accuracy in picking and packing that exceeds industry standards can go a long way toward making your holidays merry and bright.
So, this holiday season, may every click of the buy box at your online store end with money in your pocket and a happy customer who will buy from you again. An excellent holiday fulfillment center is your best partner to make this happen. If you’re ready for the Red Stag Fulfillment difference, give us a call.
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