What is shipageddon?
“Shipageddon” is a logistics term originally coined by Scott Silverman of Retail Geek to describe the anticipated delivery delays faced by carriers heading into the 2020 holiday shopping season.
Online shopping, fueled by the coronavirus pandemic, saw a spike in the volume of customer orders that resulted in capacity issues for both businesses and carriers. Shippers frequently faced insufficient capacity from carriers, and customers saw items frequently out of stock. And global supply chains were disrupted as companies rushed to fulfill orders.
With the pandemic almost a thing of the past, one of the effects it brought has stayed as consumers have warmed up to online shopping. According to Adobe, U.S. consumers spent 885 billion dollars online in 2021, up 8.9 percent from 2020 (812.8 billion dollars). This figure is expected to reach 1 trillion dollars by the end of 2022.
eCommerce businesses and carriers will likely have to take measures on an yearly basis to meet the ever-growing demands of online consumers.
In this article, we’ll discuss some of the best ways online businesses can overcome supply chain interruptions during the peak season.
Shipageddon in International Shipping
Shipageddon often refers to the domestic shortages of inventory stocks due to high demand. It is also used to describe supply chain issues beyond U.S. borders. In this case, ports and container ships are pushed to their brink and local businesses are unable to import raw materials and send out international orders.
This situation develops every year during peak shopping season when buyers face stockouts and delayed delivery times from all shipping carriers. For example, the Amazon Prime Day event in Canada and India was pushed to October from July due to the worsening wave of coronavirus cases. This resulted in an even bigger order volume for the usual-mid year event that was an unexpected problem for the fulfillment service.
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The Severity of Shipageddon Since 2020
The 2020 holiday shopping season saw people turning to online shopping to do the bulk of their shopping. The 2021 holiday season saw customers spending 204.5 billion dollars online, up 8.6 percent from 2020.
Customers got over 6 billion out-of-stock messages in the 2020 holiday season, a 253 percent increase from the 2019 holiday season. In simple terms, this means there were capacity problems for the manufacturers, sellers, and carriers, forcing businesses to turn away customers.
Driven by our need for online shopping during the COVID-19 pandemic, customers have grown more fond of eCommerce. This has resulted in an exponential and unparalleled growth in online purchases.
How to avoid shipping issues during the holiday season
Each year peak season brings new challenges and opportunities for eCommerce businesses. Proper planning for peak season can help you increase sales and boost your bottom line. Here are some of the ways you can protect your eCommerce business against supply chain disruptions.
1. Open lines of communication in all parts of the supply chain.
One of the ways you can manage interruptions in the supply chain is by increasing communication with your suppliers and fulfillment partners.
Your suppliers can give you updated information about what is and isn’t available. Staying in close contact with your suppliers year-round helps to avoid potential stockouts during the peak season. This also puts you in a better position to cope with disruptions as suppliers will likely be more accomodating.
Similarly, if you work with a third-party logistics provider (3PL), they can assist you with various logistics issues. They have the resources and expertise to handle complex supply chain challenges and predict consumer demand.
Investing in a logistics intelligence tool can help you gain visibility throughout your supply chain, enabling you to make better-informed decisions and optimize shipping costs.
2. Be transparent with customers when they place their orders.
Most online shopping stores wait for the holiday shopping season to radically boost their revenue. For retail shippers, Black Friday, Cyber Monday, and Christmas are an exciting and stressful time as they witness sharp spikes in customer orders, emails, phone calls, and customer support tickets.
Delivering great customer service is not an easy task, especially during the peak season. A great way to combat this is to proactively provide order information to your customers. This includes providing details about expected delivery date, cut off dates, and current shipping delays on your website, especially on your checkout page.
Most consumers know that holiday shipping can be a guessing game for everyone involved, but 70 percent of customers consider order tracking a top deciding factor when buying a product online. Transparency helps you keep your customers informed, avoid miscommunication, and avoid abandoned cart rates.
3. Give more options to your customers.
eCommerce stores can take the pressure off their logistics processes by offering their customers alternative shipping options to major carriers like FedEx and USPS (U.S. Postal Service). These include buy-online-pickup-in-store and curbside pickup. Store pickup options help eCommerce businesses eliminate delivery charges and speed up the order delivery process.
As an example, retailers have used free curbside pickup as a contactless delivery service during the coronavirus pandemic, and are continuing to use it to fend off competition from large online marketplaces like Amazon.
4. Monitor on-time delivery performance.
On-time delivery is a key metric that measures the ability of a business to deliver their orders on the promised date. A great way to make sure that your customers’ holiday gifts reach them on time is to monitor the on-time performance of multiple delivery providers, and choose the one that is the fastest.
Most delivery providers offer real-time tracking that lets you see when the deliveries reach the customer’s doorstep. Similarly, you can get this information from your customers’ feedback.
Sifted is a logistics intelligence software that tracks the time it takes a delivery provider to transport the ordered product from your warehouse to the end customer. This information can help you understand their on-time delivery rates and identify ways to shorten delivery cycles.
5. Consider alternative carrier options.
If you’re looking for a backup plan to handle higher shipping volumes during peak season, you can consider alternative carriers. Start by comparing rates, time in transit, and capacity of multiple carriers. Don’t just stick to the major carriers. Check out regional and LTL carriers as well.
Regional carriers offer fast, cost-effective shipping services. You can lower transportation costs and offer a wider variety of shipping options to your customers by adding regional carriers to your distribution network. As a useful alternative to last-mile delivery, regional carriers have a strong capability to deliver to remote locations in their service areas due to their local specificity.
Similarly, if your business frequently ships freight between 150 lbs and 10,000 lbs (freight that doesn’t require a full truck), you can explore working with LTL (less than truckload) carriers. This way, you’ll not have to pay for unused cargo space while getting better shipping rates.
6. Keep a close eye on your data.
Watch your KPIs daily to stay ahead of trouble. Don’t wait for loads of data to validate trends — look for concerning issues and make adjustments quickly where possible.
Of course, knowing your own data and what’s “normal” is the starting point for finding anything out of the ordinary. It will also help you when you talk to your carrier, so you can start the conversation from an educated place.
Sifted Logistics Intelligence helps you optimize your shipping processes. It streamlines the process of calculating shipping rates, identifying shipping zones, and provides a variety of carrier alternatives, enabling you to offer quickest shipping times and best rates to your customers.
Don’t miss a thing with Sifted Logistics Intelligence
Supply chain disruptions are unavoidable, especially when they happen due to factors outside your control like the COVID-19 pandemic. However, long-term planning can help you be better prepared to manage any interruptions. This includes communicating with your suppliers, ensuring transparency with your customers, arranging alternate carrier options, and harnessing data.
Sifted Logistics Intelligence gives businesses the tools they need to stay on top of shipping costs and prevent shipageddon. It collects and provides all your shipping data in real-time, enabling you to identify risks and opportunities so you can make better-informed business decisions.
Sifted helps merchants and retailers proactively prepare for supply chain disruptions. Get a free demo from Sifted!