Whether we like it or not, Peak Season has returned. While 2022 has proven to be a bit more predictable than 2021, the fact remains that some of the changes we saw as a result of COVID-19 and its impact on the global economy are here to stay.
To prepare you and your teams for Peak Season 2022, we’ve assembled some facts regarding what happened last year, what we can expect to happen this year and how some of the lingering effects of the pandemic continue to impact shipping and consumer sentiment this holiday season.
What We Saw During Q4 2021
The last few months of 2021 were not quite as dire for eCommerce as people predicted. In fact, retail sales grew.
During November and December 2021, retail sales grew by 14.1% for a total of $886.7 billion in sales. And in the last two weeks of 2021, sales increased by 23%. By contrast, retail sales during the last two weeks of 2020 only grew by 11%.
What Does This Tell Us?
Even in the face of economic uncertainty and supply chain delays, people still shopped in Q4. The end of the year surge could account for folks finding alternative items if the ones they truly wanted were unavailable in time for the holidays. The growth earlier in the season could account for people getting more shopping done early to avoid shipping delays (we’ll talk more about that in a second).
While supply chain disruptions most definitely impacted consumers more in 2021 than 2020, it didn’t gravely impact their holiday spending. The growth in sales for the end of 2021 proves that people were still willing and able to spend.
What We Can Expect to See During Q4 2022
This year, the biggest ongoing concern for most consumers is inflation. It is true that the cost of goods has risen and these increased costs have impacted everyone. With higher costs for necessities like gas and food, there is a chance that discretionary spending will decline as people keep their wallets closed.
However, the overriding belief is that the 2022 holiday season will offer growth in retail sales. It is also predicted that shoppers will continue a trend that started 2 years ago and shop early to avoid shipping delays or products being sold out. In fact, 57% of consumers stated they aren’t going to wait until Black Friday to start their shopping.
What Does This Tell Us?
Primarily this means that the retailers that offer deals and discounts as early as October might see an influx of dollars. In 2021, Black Friday pricing started early and many shoppers capitalized on the savings. We can expect more of the same this year.
We can also expect that m-commerce (or mobile-first commerce) will continue to grow at a rate of about 15%, and with it, Buy Online, Pickup in Store (BOPIS) and Buy Online, Pickup at Curbside (BOPAC). Services like BOPIS rose sharply during the pandemic and the impacts will be long-lasting. Seventy percent of consumers surveyed said that BOPIS has improved their overall retail experience.
Shipping Delays & Strategies
Shipping is still an issue and it’s not changing. Many industry experts believe that a lot of the shipping challenges that were part of the pandemic are here to stay. Brands have been trying to find strategies to overcome shipping delays and rising costs.
Despite the hope that shipping delays between China and the United States would lessen as we distance ourselves from 2020, in fact, those delays have quadrupled since March of this year. These delays will continue to challenge retailers to keep warehouse and store shelves full.
And while the world is aware of the challenges faced by businesses and carriers to get packages delivered quickly, 70% of respondents in a recent survey published by UPS, stated that free shipping at checkout is the most important factor when making an online purchase. And 54% said that an estimated or guaranteed delivery date is the most important.
What Does This Tell Us?
Primarily this tells us that people’s willingness to forgive delays or rising costs due to the pandemic has waned. Also, when faced with rising costs in other sectors, consumers will look for somewhere to find a deal. Free shipping is still considered one of the best “deals” in the marketplace, regardless of its toll on retailer bottom lines and transportation carrier bandwidths.
Load Balancing On the Rise
Load balancing your warehouse has proven to save up to 25% on shipping costs. That savings alone is worth the effort; however there’s also evidence that load balancing can reduce your total costs by up to 13%.
This tactic has been growing over the past few years as more strategic inventory placement has proven to result in cost savings. Getting the right products closer to the customers that will order them is just one way to cut down on shipping costs, and also a way to improve customer satisfaction with quicker delivery times.
Load balancing is not without its challenges though. It does take coordination and a warehouse management software system that can support moving your products across different warehouse locations.
Rebound with Better Returns Management
Returns are again taking center stage as online purchases were returned last year at a rate of 17.8% which was an increase over the rate at the end of 2020. Research has also shown that return rates for online purchases in general are twice as high as returns of goods purchased in-store.
Additionally, more than 80% of shoppers have stated that a bad returns experience has resulted in them abandoning the brand for good.
What This Tells Us?
Buttoning up your returns process and making it easy on the customer and your warehouse team is key to rebounding from revenue lost to returns during this time of year. Research has shown that 30% of all returns can also be converted into a new purchase, so there is a chance to recoup some of those dollars.
Working with partners that specifically manage returns (Loop Returns and Returnly both have direct integrations with ShipHero) can make this aspect of the holiday a little less stressful. Tracking items, knowing when to expect returns and having the proper capacity to process them when they arrive in the warehouse are all ways to manage returns right.
It’s also possible to find Warehouse Management Software (WMS) that has native returns management, like ShipHero. However you choose to manage returns it should be two things: easy for the customer; and easy for your team.
Peak Season is Here
The time has come for Peak Season 2022. At ShipHero, we’re excited to see what will happen in the wide world of eCommerce this year. eCommerce as an industry has continued to grow and often outpace most people’s expectations. We’re expecting the same this year as well.
No matter how you get through Peak, don’t forget that there are partners that can help. ShipHero’s Warehouse Management Software sets up your warehouse with the end-to-end solution you need to keep everything running smoothly and packages shipping on time every time.
Talk to our software experts today and learn more about how our warehouse software is built for eCommerce brands to stay safe and optimized for the modern supply chain.
Aaron Rubin, Founder & CEO
ShipHero
About the author: Aaron Rubin is the Founder & CEO of ShipHero. He is responsible for planning and executing the overall vision and strategy of the organization. Rubin’s greatest strengths are leadership, change management, strategic planning and a passion for progression. He is known for having his finger on the pulse of ShipHero’s major initiatives, his entrepreneurial spirit, and keen business acumen. His leadership of ShipHero is grounded in providing excellent customer service that drives improved business operations. His passion for ShipHero comes from the culture and his ability to have an impact on the lives of employees, customers, partners, and investors.
