Are your retail fulfilment operations ready for Black Friday?
The US phenomenon, Black Friday, was adopted by many UK retailers in 2014 but with mixed results. How did it go wrong for so many, and what can retailers do to prepare their fulfilment and delivery operations for this year’s event?
Black Friday, which is the day after Thanksgiving, originated in the USA and launches the festive shopping season. It was introduced into the UK by Amazon in 2010, and has now been adopted by many UK retailers.
How did Black Friday 2014 go wrong for so many retailers?
It is fair to say that the retailers and marketers probably had not anticipated the demand or envisaged the impact on their business of this one single day of sales.
Other problems that developed within hours were the impact on inventory, fulfilment operations and the last mile carriers who took the full brunt of the event and then struggled to recover in time for the Christmas orders. This in turn had an impact on customers awaiting for their orders to be delivered or collected in store; with some carriers having to declare that they could not collect any additional orders or announcing delays of a further 10 days. The largest service provider reported a 26% increase in volumes against their forecasts over a four day period. The overall impact of Black Friday was exceptional.
So, how can retailers prepare for this year’s Black Friday?
Retailers need to ensure there is greater involvement across the retail functions, specifically within the operational fulfilment areas. Retailers need to consider the following:
- Engage with the commercial and marketing teams to assess forecast order levels
- Adopt more detailed planning, even down to the category SKU
- Relax the delivery promise to customers (for example, withdraw next day delivery and extend standard delivery to up to seven days)
- Reaching this point can be eased by determining the true cost of operation during this period; relaxing delivery timeframes makes a compelling business case when comparing increased operating costs against possible lost sales
To ensure the correct levels of infrastructure are in place and in time for this year’s Black Friday, retailers need to start planning now:
- Assess the capabilities of the existing fulfilment operations
- Adopt detailed capacity planning, volumes, cube throughput (package dimensions)
- Ensure rigorous process design of added value services (e.g. gift wrapping), which are labour intensive
- Enhance recruitment and training by developing and implementing the right strategy to cope with the peaks (e.g. use agency staff effectively and redeploy staff elsewhere as opposed to recruiting just for a short time period)
- Assess inventory locations and utilise the entire estate (this may include picking and shipping from store, and needs to be enabled through appropriate technology)
- Identify core products and establish different handling approaches
- Move stock to depots so it’s ready to ship
- Consider increasing white label and drop ship
- Move bulk stock out to increase processing space
- Develop localised technology requirements (e.g. stock picking)
- Engage with multiple carriers and develop a more flexible approach to the delivery network
- Adopt a joint planning approach with the carriers, allowing them to resource the depots with earlier recruitment of seasonal staff
- Develop flexible IT solutions to enable access to wider partners
Black Friday is on the 27th November 2015. It’s January, but now is the time to prepare.