For ecommerce merchants large and small, the holidays represent the biggest opportunity of the year to drive sales. In fact, most online retailers do more than 40% of their annual sales during the holidays. Last year, online shoppers spent a record $211 billion in the months of November and December alone. In 2023, even more consumers are planning to do their holiday shopping online.
Are you prepared to maximize your sales potential during this year’s holiday shopping season? Specifically, are your logistics primed for the holiday push? To ensure product availability and on-time delivery across your sales channels, you have to get your forecasting, fulfillment, and inventory management right.
Getting ahead of holiday logistics
There are two key aspects to keep in mind when it comes to logistics during the holiday shopping season:
- Product availability: Making sure your products stay in stock during the holiday season is critical. Research shows that consumers are more likely to switch retailers or brands when faced with an unexpected stockout. On top of losing customer trust and loyalty, stockouts can be detrimental to sales—at the exact time of year when you should be gaining new customers and delighting existing ones.
- On-time delivery: Delivery delays are a top concern of online shoppers, with 53% of surveyed consumers saying that they will forgo shopping with brands that don’t provide fast delivery.
Fortunately, there are resources available to help you stay ahead of the game during the holidays. Amazon Multi-Channel Fulfillment (MCF)—a third-party logistics (3PL) solution that allows merchants to leverage Amazon’s fulfillment network to pick, pack, ship, and deliver their customer orders placed on any off-Amazon sales channel—can help you keep your products in stock and deliver your holiday orders on time.
Now, let’s dig deeper into the complexities of managing ecommerce logistics during the peak holiday shopping period.
Forecasting ecommerce holiday demand
A spike in demand during the holidays is predictable, but forecasting exactly how much product you need to avoid stockouts, without incurring the costs of excess inventory, can be challenging. Finding that sweet spot has always been an algorithmic puzzle, one that Amazon has mastered over more than a decade of research.
At the broadest level, demand forecasting models incorporate a brand’s historical sales data and patterns across channels and SKUs over time, industry-specific statistics and growth predictions among competitors, any existing sales contracts, and granular data on important metrics like return rates.
With so many variables to keep in mind, demand forecasting can be a complicated task to tackle alone. So, consider leveraging artificial intelligence (AI) technologies to help. You can partner with partner with 3PLs that have access to these cutting-edge demand planning tools to generate an accurate demand forecast.
Using data from your demand forecast, you can formulate a sales plan that specifies which products you plan sell during the holidays, how much inventory of those products you will need to satisfy demand from holiday shoppers, and which deals, promotions, and marketing campaigns you plan to run during the holiday peak period.
Fulfillment that keeps up with demand
All Buy with Prime orders are fulfilled by MCF, allowing you to utilize Amazon’s world-class fulfillment network to meet holiday demand. All you have to do is ship your inventory to Amazon fulfillment centers and Amazon picks, packs, and ships your products, while offering fast, free delivery and easy returns for your customers that check out on your site using Buy with Prime.
“There were considerable shipping costs to get our products to customers throughout the country,” says David Parrish of SnS Grills, a Buy with Prime merchant. “So we realized that we really need to start fulfilling orders closer to where they originate. Using Amazon’s fulfillment services across our ecommerce channels is allowing us to scale from where we were to where we want to go.”
Delight your customers with a >97% on-time delivery ratez seven days a week for orders across your ecommerce sales channels using Amazon Multi-Channel Fulfillment.
Get the holiday fulfillment guide
Because MCF manages Buy with Prime order fulfillment, merchants get reliable, cost-effective automation that scales, access to Amazon’s best-in-class fulfillment network and resources, and automated inventory management. Amazon’s fulfillment centers can also store products closer to your customers to keep shipping costs low and help scale to meet seasonal surges. And, you can also sign up to use MCF to fulfill orders from any of your ecommerce sales channels.
Optimizing inventory for the holiday surge
To avoid stockouts during the holiday shopping season, some companies employ inventory buffers known as safety stock, but this strategy often results in higher amounts of excess inventory that can lead to increased storage costs.
3PL providers like MCF can help you more effectively manage your stock during the holiday shopping season (and throughout the rest of the year) by:
- Automatically distributing your inventory across their fulfillment network (so it’s in the right locations to meet demand)
- Consolidating your inventory into a single pool that can be used to fulfill orders across all of your sales channels
Amazon sellers that use Fulfillment by Amazon (FBA) to fulfill their Amazon.com orders can take advantage of pooled inventory for their ecommerce orders—a secret weapon for holiday success. Adopting Buy with Prime allows you to consolidate your inventory into a single pool that can be used to fulfill orders placed off of Amazon (with MCF) and on Amazon (with FBA), which can help you improve inventory turnover and reduce stockouts.
Need tips for managing your inventory ahead of the holidays?
“With MCF, we’re able to consolidate our inventory pool, reduce out-of-stocks, and increase our sales,” says Emily Lease, Director of Ecommerce at HydraLyte, a Buy with Prime merchant. “It’s been a win-win for us.”
Even during the holidays, you only want to store enough inventory to cover about 30–60 days of your sales. By exposing your single pool of inventory to multiple channels, you can increase your inventory turnover rate and keep safety stock to a minimum.
“Pooled inventory results in about 13% less overall safety stock—and less safety stock is financially beneficial for sellers as it reduces inventory storage costs,” explains Amazon Senior Product Manager Ozan Erdem. “It means you pay less in storage fees and have more free cash flow. A shared pool of inventory with safety measures built in can have a direct impact on revenue.”
Simplified logistics for the holidays—and beyond
With the holiday bump in customer orders, many merchants encounter capacity constraints. They simply don’t have the workforce or infrastructure to store and distribute the huge volume of stock needed for holiday fulfillment. Getting the right products to the right fulfillment centers at the right time is also a huge challenge. And on top of that, with the surge in shipment volume at the end of the year, the demand for carrier services skyrockets.
Buy with Prime and MCF were built for peak season performance. With click-to-delivery speeds as fast as two days, a greater than 97% on-time delivery rate, and deliveries made seven days a week, MCF provides best-in-class fulfillment for Buy with Prime orders and those across your other sales channels, including your brand website, other ecommerce marketplaces, and social media stores.
For Buy with Prime merchants, MCF helps you scale your logistics operations on demand. Buy with Prime pricing is pay-as-you-go, so you only pay for what you use and all fees, except for storage, are charged only after you make a sale. And with MCF, you can ensure that your peak season shipping needs are met, getting customers the products they want when they want them.
“How you ship wholesale orders is very different from how you ship direct-to-consumers (DTC) orders, so it’s been challenging to offer consistent, fast, affordable shipping to shoppers,” notes Alexis Beuning, sales and brand manager at Sherpani, a Buy with Prime merchant that started in the wholesale space before focusing on DTC through its ecommerce site. “It wasn’t always cost effective to offer free shipping on ecommerce site orders, but now we can for products offering Buy with Prime. Customers know that their orders will be fulfilled in a timely manner and when they can expect to receive them.”
During the holiday crunch—and every other time of year—Buy with Prime offers merchants a way to simplify operations and fulfillment and leverage tech integrations and automation to save time and resources.
Our suite of integrated apps also allow you to do things like automatically update and sync your catalog and unpublish out-of-stock products, making it easier to stay on top of operations during a season when it matters most.
For more, download our Simplifying Fulfillment eBook.