With the holidays fast approaching, shoppers won't have the luxury of last-minute, late-night shopping this year. Globally, inventories are at an all-time low, making it nearly impossible to get your hands on the gift of your loved one's dreams before the holidays arrive.
So what's causing the supply chain problem, and what can businesses do to keep shelves stocked and customers happy this holiday season? Also, how might diverting energy away from assembly and supply line issues and turning attention to the customer ultimately mitigate this problem versus exacerbate it?
Where’s my stuff?!
Since vaccinations were made readily available in the United States and social distancing restrictions lifted, consumers returned to shopping full force. With the holidays approaching and the ease of online shopping, goods are being ordered for delivery faster than makers and suppliers can produce them.
At the front of the backlog are countries with less direct access to vaccines. Mandated lockdowns continue in countries like Vietnam and Indonesia, where large brands like Nike make most of their goods. This has been a massive hurdle for the company, whose delivery time jumped from 40 days to 80 days.
Surely once it’s shipped, it should get to customers quickly… right?
Not quite! COVID isn't the only key player in this supply chain nightmare. Once the products are made, getting them onto a shipping container is the next issue. The cost to book shipping containers from China to Europe increased 600% this year, and the cost to buy containers has nearly doubled. After navigating how to budget for the massive price increase, containers are loaded at their home port, only to wait in a giant queue for days or weeks before they have a space to pull into port and unload.
When it comes time to unload the cargo, the long-haul trucking workforce isn't there to move it. For roughly every 16 truckloads of shipments, there is only one truck available to ship the goods. Long-haul truckers are waiting for hours at congested ports making it more difficult to turnover trips efficiently. Pay in this industry has increased, but rather than gaining more drivers, trucking companies are finding that some drivers are using the increased income to cut back driving hours or are jumping from one company to the next, looking for bigger paychecks. Regardless of the situation, drivers are still logging long grueling hours to keep up with American consumer demand. Though President Biden recently directed the Port of Los Angeles to function 24/7, this bottleneck affects everyone from big-name retailers to your neighborhood taco stand. Limited demand means higher prices, which can be extremely difficult for smaller businesses that just barely made it through the last two years.
Ok, my products are on shelves - my customers will be happy now!
Well, even when products make it to store shelves in time for the Holidays, small businesses and private parties are finding hiccups and price hikes with national shippers, including USPS, FedEx, and UPS. Recently, USPS decided to slow down first-class mail, raise prices, and use more ground transportation than air, stating that it will ultimately boost their revenue while increasing the on-time delivery rate from 88% to an expected 95%. Yet, most experts predict this change will discourage people from using USPS and result in slower shipping times than in the 1970s. In addition, UPS and FedEx have also had to raise shipping costs to deal with high demand and their supply chain bottlenecks.
So how can retailers navigate these treacherous waters? Let's take a look.
Step up your communication game
If people feel heard, valued, and like their situation matters to you, they will give you and your company more space and time to get things back on track. If you respond to their frustration with, "I'm sorry I can't help you," you will surely lose that customer. So have a department or branch ready when the calls start coming in. If your business is smaller, pick a point person who can handle these concerns with care and consideration. Remember that not every consumer is up to date on the latest supply chain news. It will become your team's responsibility to gently and professionally educate buyers who might have no idea what's going on.
Check your social channels. Customers regularly bring up concerns across different social media platforms about online retailers they purchased from. Conversational commerce is becoming a popular way to shop on Instagram, Twitter, and Facebook. Be on the lookout for comments or issues that show up on these channels and unintentionally fall through the cracks. Address your customers on social media in the same professional way you would in person, and take it offline if things escalate.
Keep your policies and procedures for managing communication with clients consistent across the board. This will help your staff fully understand their role as a team, what they can help resolve, and what might need to be handled by management. Put yourself in your customers’ shoes -- have you experienced retelling the same story to the customer service reps you were transferred to? That’s a terrible customer experience! Internally document customer concerns accurately to alleviate your customers from the burden of getting your team up to speed.
Remember to maintain accurate and transparent inventory. Showing "one in stock" online can be misleading. The item could be stolen, misplaced, or not available by the time the customer hits "buy online and pick up in-store" or in the time it takes them to drive to get the items. Businesses have to be forthright and proactive in clarifying delays and expectations. It's better to paint a clear picture of what will happen instead of telling someone what they want to hear. Be proactive instead of reactive with your communication.
The most important tip? Ask your customers how you can help them make this situation better. People want to know that you hear them and will help in any way you can.
Make late delivery dates look sexy
Brands offering increasingly higher discounts based on delayed shipping options would be beneficial for retailers large and small. You can encourage customers to spend by telling them they will pay less if their shipment is delayed. In addition, giving an upside to delayed delivery can soften the blow of not having that gift in time for the big day. This also relieves your fulfillment operation, which will get a chance to breathe by spreading shipments out over a few months.
It may not always work with shopping for others, but offering discounts can help smooth out the kinks in a backed-up supply chain for anyone buying personal items this holiday season.
Navigating customer satisfaction with no inventory
Think of complementary products in your catalog that you can offer. A fitness company can provide water bottles or resistance bands. A kitchen supply company can send cookbooks and recipes in advance of a back-ordered appliance. If your item includes an online membership, offer free access to online classes until your product arrives. For example, Peloton offers customers membership access to apps and their custom library of on-demand or live streaming classes until the bike is delivered and set up at home.
Some retailers like Nordstrom, Kohls, Target, and Walmart have started offering Black Friday prices for early shoppers rather than just the day after Thanksgiving. This allows them to keep up with inventory more efficiently and reduces the sudden influx of large crowds, taxing retail staff who may already feel overworked. In addition, Target also decided to offer price adjustments on any products that are discounted after purchase, as well as a price-matching promise for early-bird shoppers.
Lululemon has chartered cargo planes to help move products outside the current supply chain backups, but what can smaller retailers do if they don't have the capital to charter shipping containers or cargo planes?
Support brands that aren't yours... Don't freak out. It's only temporary.
Stock items similar to yours from third-party retailers. This might seem like a lot, but the service and support you provide to your customers when they need you will ensure that they will trust you with future purchases. If you cannot offer an option that satisfies your customer, then be prepared to refer them to your competitors. For highly sought-after items, help the customer locate the stock even if it is not at your stores or within your chain.
Build anticipation and excitement with placeholders
Giving customers the option to purchase gift cards allows them to still gift a coveted holiday item even in the face of supply chain challenges. In addition, after-holiday sales often offer deeper discounts than pre-holiday sales. Better deals and they get to pick out precisely what they want! What's not to love?
Consider offering customers a "picture in a box" kit. This takes the pressure off of the gift giver to craft something on their own in the absence of the actual gift on the big day. A picture of the present, a small gift box, and the arrival date, along with a coupon, could go a long way!
No matter which road you choose during these stressful times, remember these three things; communicate, ask, and listen. If you are struggling to find the best solution to your holiday season struggles, contact The ExperienceBuilt Group today to chat about how we can help.