eCommerce has been running at a peak since this time last year, placing immense pressure on supply chains and fulfillment networks.
Nearly a year on, what is the current state of fulfillment delays, and what can you do now to build your network for reliability in the future? Let’s find out.
The current state of fulfillment delays
Online shopping skyrocketed during the coronavirus pandemic, but this has caused a great deal of stress on the logistics that power the industry. Carriers like UPS, USPS, and FedEx have been backlogged by the sheer volume of orders, and this has led to fulfillment delays. Most notably, Amazon FBA suspended all inbound deliveries of non-essential goods and experienced Prime delivery delays of up to one month.
Unfortunately, 12 months later, many online sellers are still experiencing fulfillment problems, thanks to:
- More people shopping online and ordering packages than ever before
- The Christmas holiday surge in gift buying and delivery
- COVID-19 related shipping carrier absences
- Adverse weather, local lockdowns, and Brexit disruptions to shipping routes
- More expensive shipping from suppliers in China
This is causing fulfillment delays across the three leading shipping carriers:
Many packages are still facing delays of up to a month, and, according to American Postal Workers Union official Jennifer Kowalczyk, there’s “no end in sight.”
UPS has suspended its Service Guarantee until further notice. While UPS is working hard to meet delivery deadlines, it’s not issuing refunds for packages delivered later than promised.
In a similar vein to UPS, FedEx has suspended its money-back guarantee. Again, it’s working hard to ship orders on time but no longer refunds shipping charges if they miss the published or quoted delivery time.
In short, delays are being experienced across the board. Data from ShipMatrix shows that more than a million packages were delayed by more than 30 days over the country at the end of last year — across all carriers.
How to build your fulfillment network for reliability
The state of fulfillment delays has significant consequences for your online store because it directly impacts your ability to deliver orders on time.
Even if a delayed order is entirely out of your hands, it still affects:
- Marketplace KPIs: your ability to meet online marketplace shipping metrics, which could cause suspension from one of your most critical sales channels.
- Fast shipping programs: your qualification for fast shipping programs, such as Amazon Prime, which impacts your search result ranking, buy box eligibility, and customer reach.
- Customer satisfaction: your end customers’ happiness and the likelihood of them becoming repeat customers or brand ambassadors.
- Brand image: the reviews customers leave about your store and your ability to market yourself as a reliable and trustworthy seller.
However, while the state of fulfillment delays is beyond your control, there are ways to build your fulfillment network for reliability and minimize the impact of shipping delays on your business and customers.
1. Increase inventory efficiency
Inventory efficiency is the practice of balancing customer demand with fulfillment overheads to ensure you have the optimum amount of stock to meet orders without overwhelming your warehouse.
This is particularly important right now because shipping delays can affect inbound and outbound deliveries.
To enhance inventory efficiency for your business, you should:
- Stop “just-in-time” sourcing: If you usually order stock on short notice, stop immediately and start ordering in advance. This gives your suppliers more time to deliver stock and prevents you from selling out or, worse, overselling.
- Practice demand forecasting: Use historical data and inventory management software to anticipate future customer demand, and plan your stock levels accordingly. This is vital for ensuring you hold enough inventory to meet orders, but not too much that it ends up in the end-of-season sale.
- Diversify your supply chain: Reduce the impact of a delayed shipment by diversifying your supply chain using suppliers from different cities, states, and countries. Diversification means that even if one inbound shipment is delayed, you can still meet customer orders with stock from other suppliers.
2. Optimize fulfillment processes
By optimizing your fulfillment processes, you reduce the margin for error in the pre-shipping stage, giving your shipping carrier more time to meet delivery deadlines.
There are many ways to tighten your fulfillment processes, but the quickest wins are:
- Automation software: Using automation software to download orders and update inventory in real-time, maximizing the window for fulfillment.
- Real-time inventory positioning: Adopting real-time inventory positioning to calculate accurate delivery speeds based on a customer’s location vs. the product’s location, giving you and your customers greater insight into realistic delivery times.
- Distributed warehouse networks: Storing inventory as close to the end customer as possible, using a network of warehouses across the country, giving you more time and chance of meeting delivery deadlines.
3. Diversifying your fulfillment strategy
Relying on one or two shipping carriers is risky, as demonstrated by Amazon FBA this time last year. If your shipping carrier suffers delays, you have no alternative options.
By diversifying your fulfillment strategy, you spread the risk of fulfillment delays affecting your business and have a back-up option should you encounter problems.
Different ways to diversify your fulfillment strategy include:
- D2C outsourced fulfillment: Using a third-party fulfillment partner for consumer orders (where speed is of the essence), and using in-house fulfillment for wholesale orders (where time is a little less precious.)
- Centralized fulfillment: Moving away from channel-specific fulfillment options (such as FBA) towards a multi-channel fulfillment service that uses different warehouses and shipping carriers to maintain service levels.
What to do if a delivery is delayed
We recently shared our advice on what to do when a customer’s delivery is delayed. In short:
- Tell your customer as soon as possible
- Rectify the issue immediately
- Refund any shipping charges
- Consider issuing credit
- Implement lessons from why the delay occurred
The more people shopping online, the harder it becomes for shipping carriers to keep up and prevent fulfillment delays. However, with the right processes, fulfillment partner and technology, you can build your network for reliability and prevent fulfillment delays from impacting your business.