The Top 6 Supply Chain Holiday Season Trends in 2021

US holiday retail sales in 2021 will rise 2.7% to $1.093 trillion, while the season’s ecommerce sales will rise 11.3% to $206.88 billion. Ecommerce will account for a record 18.9% of total holiday season retail sales. – US Holiday 2020 review and Holiday 2021 Preview, Emarketer Insider Intelligence, Feb 2021.  

With Covid-19 creating numerous disruptions, uncertainties, and volatilities, businesses are counting on peak season sales. Being the busiest time of the year, they are eyeing to make their logistics operations more effective and efficient. Like the 2020 holiday sales, this year’s peak season sales are also expected to be longer. 

Many businesses are still struggling from inflationary pressures on goods and inventory not meeting peak season demand. There has been an enormous shift in consumer behavior that will change the way businesses are conducted. Before preparing themselves for peak season sales, businesses should know the upcoming trends so that they can devise effective strategies. 

Businesses have to work with a narrow timeline to prepare for the 2021 peak season sales. This is both bad news and good news. The bad news is that the narrow timeline ends now, and the good news is that it is not too late to build your logistical abilities for this holiday season sales. The first step towards building your logistical capabilities for peak season is knowing the recent trends. Here are the top six trends that businesses can expect during the 2021 holiday season.

Top 6 Supply chain Trends to Expect This 2021 Holiday Season for Businesses

Businesses that want to gain the most out of this holiday season should prepare themselves to respond quickly to changing shopping behaviors. With consumers prepared to begin shopping earlier this year (August), it is necessary for them to bolster their planning and forecasting capabilities. Without knowing the upcoming trends for this holiday season sales, it is difficult to plan for it. 

Here are the six most crucial trends that businesses can expect this 2021 holiday season: 

Emergence of Pop-up stores and Pop-Fulfillment Models 

The pop-up fulfillment model is an alternative fulfillment setup that brands use when a majority of their distribution centers are geographically dispersed. They are also known as micro-fulfillment centers.

Before the pandemic, retailers had separate fulfillment centers for physical store operations and e-commerce operations. After the pandemic, their e-commerce fulfillment struggled to find products as their inventory was stocked in the wrong warehouse. Also, their store replenishment channels were not equipped enough to fulfill e-commerce orders. This is where the pop-up fulfillment model helped retail businesses add e-commerce capability to their already existing inventory. 

Retail brands have started to set temporary storefronts or fulfillment spaces during holiday seasons called pop-up stores. Big brands like Walmart started using this trend during the 2020 holiday season to improve their sales and maintain high service levels for speedy deliveries. To set up these pop-up stores, Walmart turned their own distribution centers into smaller fulfillment spaces. 

The advantage of the pop-up distribution model is that it offers flexibility to fulfillment capabilities of companies. It is a temporary setup that enables companies to increase their product capacity when they are experiencing peak-level volume of demand.  

The Rise of D2C Business Model

In 2020, direct-to-consumer (D2C) e-commerce sales in the United States reached 111.5 billion U.S. dollars. In 2021, D2C online sales were projected to surpass 129 billion U.S. dollars. – Statista, Direct-to-consumer (D2C) e-commerce sales in the United States from 2019 to 2023, June 2021. 

For the CPG (Consumer Packaged Goods) industry, Direct-to-Consumer is a relatively new business model. It helps brands to produce, market, distribute and sell their products to consumers directly without any involvement from the intermediaries. With in-person shopping hit by the Covid-19 pandemic, the adoption of the D2C business model has increased. 

US ecommerce sales are projected to continue to grow by double digits, up 17.9% in 2021 to $933.30 billion. Ecommerce penetration will continue to increase, more than doubling from 2019 to 23.6% in 2025. – US E-commerce Forecast 2021, July 2021. 

D2C benefits consumers a lot as they get better deals, offers and discounts. Directly interacting with a wider audience base helps businesses work on their brand loyalty and reputation. 

For many brands, succeeding in D2C business requires 

  • Strong fulfillment strategy 
  • Effective distribution networks
  • Ability to scale quickly
  • Error-free delivery process

A network optimization solution is the foundational setup for businesses that want to step into the D2C zone. Its AI algorithms help them build an effective distribution network based on business goals, constraints and consumer demands. The combination of network optimization solution and delivery logistics software can help brands in D2C businesses reduce their upfront logistics costs. 

Increasing Focus on Sustainability and Green Logistics 

Two decades back, if businesses were asked whether their customers were interested in paying more for green products, they wouldn’t have considered it. With time, businesses included greener products and services as an added option. 

After the onslaught of the pandemic, sustainability has become essential for customers. The 2021 IPCC (Intergovernmental Panel on Climate Change) report has provided a reality check for the global population and businesses. Customers have turned more conscious about their businesses and their impact on the environment. 

Major buyers could see a hike of US$120 billion in costs in the next five years, due to these environmental risks in their supply chains. – Transparency to transformation: A chain reaction, CDP Global Supply Chain Report 2020, Feb 2021. 

Sustainability is crucial in retail supply chains because of the sudden uptick in demand for essentials. Retail businesses during this peak season hold an added responsibility of carrying out their businesses with green logistics. The trend of green logistics is rapidly growing and it helps brands generate goodwill and boost brand loyalty. 

In retail, the supply chain emissions are 28.3 times higher than the operational emissions. -Transparency to transformation: A chain reaction, CDP Global Supply Chain Report 2020, Feb 2021.

Businesses are turning their logistics eco-friendly by: 

  • Using micro-fulfillment centers to move closer to consumers in dense urban areas
  • Using sustainable transportation options like autonomous ground vehicles, e-Cargo bikes, drones and electric vehicles.
  • Leveraging delivery logistics software to save their fuel emissions etc.

These measures help shippers reduce the carbon footprint and minimize their last-mile delivery costs. This 2021 holiday season has given the supply chain businesses a much-needed push to focus on green logistics and support green consumerism. 

Improved Efforts Towards Optimizing Last-Mile Logistics

One of the biggest challenges faced by the retail supply chain is the last-mile delivery. Last-mile logistics is the final phase of the fulfillment process that ensures the goods reach the end consumers. It is the most essential part of e-commerce logistics that connects the fulfillment centers to the final touchpoint—the customer. This is the delivery process that determines customer satisfaction, delivery experience and brand reputation. 

One of the core focuses for a majority of businesses this 2021 holiday season is streamlining the last-mile logistics. 

As the demand for online shopping has skyrocketed, any inefficiencies in the last-mile delivery can heavily cost the retail business. In an effort to optimize last-mile delivery, many businesses face different constraints like traffic restrictions, Hours of Service (HOS), customer delivery preferences, governmental regulations etc. Accounting for these constraints is crucial to optimize last-mile delivery and build a delightful delivery experience for customers. 

A delivery logistics software helps businesses to crack the nitty-gritty of the last-mile delivery. It factors numerous business and logistical constraints and solves all last-mile scenarios with its optimal route recommendations. With instant notification messages and optimal route suggestions, it helps businesses to effectively counter last-mile inefficiencies and devise strategies for a faster delivery. 

The tech assistance of a delivery logistics software helps fleet drivers to complete the maximum number of deliveries by covering minimum distance. Whether a business wants to manage its ad-hoc delivery requests, or reduce its logistics costs, delivery logistics software is one of the most essential go-to-tools for it. 

Adding More Return Options 

The biggest challenge for a majority of businesses during this holiday season is to manage their reverse logistics. Retail businesses will be looking to add more choices and improve the convenience in return options this peak season. They will implement safer and economical return options like curbside returns. 

Curbside return is a simple and convenient return method that reduces the cost of returns. It does not require any labels or shipping cost for the consumers. This method helps retailers to save money on bulk returns from warehouses. Curbside return and pickup helps them immediately process the return flow and put the product back into the store’s available inventory.  

The Omnichannel Edge for Businesses 

Omnichannel presence of retail businesses will heavily contribute to the acceleration of e-commerce activities this holiday season. Many retailers will interact with their consumers online, but they will provide convenience through their physical store networks. They will leverage physical stores for offerings like Buy Online Pickup In Store (BOPIS), curbside pickup, curbside returns, etc. 

With a significant part of customer interaction happening online, businesses will dedicate more than one-third of their store space for online fulfillment. Using both distribution centers and stores as fulfillment centers, they can increase their savings and add efficiency in the post-purchase experience for the customers. 

By 2023, 34.8% of global chain retail will be online, up from 30% in 2021, rising to nearly 40% by 2025. – Research from Edge by Ascential, July 2021 

E-commerce, already on the rise when it was propelled by the pandemic, could lead stores worldwide to dedicate as much as a third of their space to online order fulfillment, according to research from Edge by Ascential, July 2021 

Conclusion 

This 2021 holiday season sales will open a host of new opportunities for various businesses to improve their e-commerce and omnichannel capabilities. The success of this holiday season depends entirely on how businesses balance their in-store foot traffic and online shopping channels. But the acid test lies in how they manage the last-mile delivery operations. 

Locus delivery logistics solution helps brands manage their last-mile logistics operations successfully. Whether it is brands carrying out their last-mile deliveries with in-house staff, or third-party logistics service providers, this tech tool helps them balance their standard and express delivery demands. It guides fleet managers to build effective delivery schedules and enables drivers to execute on-time delivery requests without burdening them.

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Delivery FulfilmentE-commerceLast Mile Delivery CostsOmnichannel