Thanksgiving weekend triggered a surge of online holiday shopping. Cyber Monday was the biggest day ever for online sales in the United States, according to Adobe Analytics. Black Friday and Thanksgiving Day also recorded their highest online sales ever. These buying surges followed a November in which big retailers launched holiday events for weeks as they anticipated shoppers buying earlier and shipping gifts to loved ones during the pandemic. But with all this shopping comes new challenges for retailers: shipping.
The News
- As the pandemic continues, holiday shoppers are increasingly buying gifts online and having them shipped to loved ones. In addition, shoppers are using services such as curbside pick-up in cases where they prefer to pick up a product at the store without going inside. Walmart reported that U.S. e-commerce sales rose 79 percent in the third quarter, as customers continued to shop online during the coronavirus pandemic. As reported in CNBC, Walmart “customers are embracing the new ways of shopping they adopted during the global health crisis. As the holiday shopping season begins, instead of browsing store aisles, more of them are shipping purchases to their homes, getting groceries dropped off at their doors or picking up online purchases by the curbside.”
- In addition, retailers such as Home Depot, Target, and Walmart redefined Black Friday by holding multiple Black Friday sales online throughout November rather than focusing on the Black Friday event occurring on November 27. According to Walmart Chief Financial Officer Brett Biggs, spreading out Black Friday deals affected how retailers manage their supply chains. “Think about how you supply stores,” he said. ‘It certainly takes pressure off of a system that’s typically geared toward a few days or a Black Friday weekend.”
- Extending Black Friday throughout November stoked shopper demand for buying and shipping, culminating in a significant uptick in online orders during Thanksgiving weekend. In addition, brick-and-mortar stores saw a 52-percent increase in curbside pickup during the weekend.
- At the same time, retailers and package carriers are making additional hires in anticipation of “Shipageddon,” or a surge in orders for delivery as people avoid seeing each other to avoid contracting COVID-19 during the holidays. According to a recent New York Times article, retailers face two challenges: 1) a surge in orders for delivery, which puts a strain on their supply chains; and 2) inventory shortages resulting from retailers having less merchandise stocked up than usual for the holidays because the pandemic disrupted their typical inventory planning. This strain was magnified on Thanksgiving weekend.
Retailers are coming up with ways to manage the complexity of product delivery. For instance, Best Buy and on-demand delivery business Instacart announced a partnership in which Instacart will manage same-day delivery of Best Buy products across the United States.
Why This News Matters to Businesses
- The evolving holiday shopping season underscores why businesses need to be more agile and resourceful with supply chain management. As Gartner reported recently, “Some consumer/retail supply chains are exploring creative fulfillment models such as nano-hubs and shared omnichannel spaces in shopping malls paired with gig workers for last-mile delivery.”
- As we blogged recently, unexpected changes in consumer shopping behavior in 2020 have created unpredictable surges in demand, leading to widely reported product shortages and delivery delays. According to a McKinsey survey, 85 percent of supply chain executives have struggled with insufficient technologies to support the supply chain. Decision makers lack real-time visibility into changes in demand. They’re usually working off forecasting models created before the pandemic changed everything.
What Businesses Should Do
- Improve their supply chains with real-time intelligence that provides complete transparency, which is what powers convenience. To do that, businesses need complete data transparency, supported by AI to provide real-time insight rooted in machines that teach themselves how to react and act on changing consumer behavior — not insight based on old forecasts, which many AI models still do, unfortunately.
- Focus on improving the last mile of delivery, as Best Buy and Instacart. The last mile is an opportunity to humanize convenience with more personal service.
- Conceive of better business models and technologies that adapt to changing behavior.
- Our offering, Human-Centered Intelligence, helps businesses transform their supply chains by supporting decision makers with intelligence. As a result, businesses improve their speed to market and humanize convenience. Reach out to learn more.
For More Insight
“Why Brands Need to Humanize Convenience,” Mike Edmonds, November 3, 2020.
“How Target and Walmart Build Moats through DTC,” Mike Edmonds, August 28, 2020.
