What does the online shopping boom mean for Black Friday and Cyber Monday, the most infamous shopping holidays of the year? Here’s what supply chain managers need to know.
The fall and winter months are packed with opportunities for shoppers to test their credit card limits. On Black Friday shoppers take to the streets for deep discounts on a variety of items, and on Cyber Monday they fill their online carts with electronics, small appliances, toys, and video games.
Black Friday and Cyber Monday aren’t just excuses to shop — they’re full-blown cultural phenomenons. Over 126 million consumers participate in this ritual each year, and the constant media coverage is a tradition in itself. Viewers love to see industrious shoppers camping out in front of stores for hours in the hopes of snagging a discounted flatscreen. For many families, watching football after Thanksgiving dinner has become a thing of the past thanks to doorbuster deals that start at 5 pm.
With Halloween, Black Friday, Cyber Monday, and Christmas, the last quarter of the year is a boon for retailers. In 2018, Black Friday and Cyber Monday sales alone brought in a total of $13.3 billion. Let’s take a look at how retailers can prepare for the Black Friday/Cyber Monday shopping extravaganza, and explore how e-commerce has changed the retail landscape.
Optimizing Black Friday Supply Chain Management
Black Friday is a high-pressure time for retailers — a lot of product is expected to go out during a tiny delivery window, and one misstep can set off a nasty chain reaction. A good rule of thumb is to start preparations a full year in advance to get ready for the massive flow of customers and optimize inventory management.
The first six months are for recon, which includes using analytics to forecast market demand, seeing how much your facilities can hold, and setting up realistic delivery timelines that you’ll be able to adhere to. The following three months are for hammering out details with manufacturers before finishing up and preparing for final distribution.
On a granular level, the Black Friday supply chain consists of five phases — supply, fulfillment, promotion, delivery, and system integrity. Here’s what each of these steps entails:
- Supply: Know where products are at all times and address supply issues as soon as they arise.
- Fulfillment: Know whether or not your fulfillment centers can handle the deluge of inventory. Now is the time to ensure that all systems are up to date and secure more warehouse space, if necessary.
- Promotion: Keep the lines of communication between marketing and supply open to ensure everything you advertise will be in stock. Also, be careful not to get bogged down in last-minute promotions.
- Delivery: To guarantee your customers can get what they need on time, map out a realistic delivery schedule that accounts for worst-case scenarios.
- System Integrity: During the Black Friday/Cyber Monday frenzy, everything — from order management to distribution — relies on IT. Make sure that your network systems can handle the increased load.
Savvy retailers know that preparing for Black Friday in advance is the key to ensuring the most chaotic shopping day of the year runs smoothly.
Cyber Monday and E-Commerce Fulfillment
Although Black Friday is still a popular event, sales from brick-and-mortar stores have been declining for several years. Studies show that 57 percent of consumers prefer the convenience of shopping online. Online sales make up ten percent of total retail sales in the United States already, and 94 percent of all purchases will be made online by 2040.
Cyber Monday is the perfect opportunity for retailers to appeal to shoppers who would rather stay indoors on Thanksgiving night. To get ready for the event, supply chain managers can use past analytics to estimate how many customers they can expect to serve. Depending on the estimated number, and how well the process went in years prior, this may require some adjustments to supply chain management.
Agile, innovative, and data-driven warehouse management technology empowers retailers to rule Cyber Monday and Black Friday. Across the board, the online shopping trend has changed warehouse size and design. Juggernauts like Amazon and other large retailers use mega stock warehouses with robots or employees on call to receive and ship orders at a rapid speed. And popup DCs help fill out weak zones in distribution networks—helping ensure timely delivery for holiday shoppers.
Further, warehouse simulation software can be used to identify efficiencies and introduce operational innovations. Managers are able to test new warehouse designs using a 3-D model without interrupting operations. These easy-to-use models can help identify cost-saving designs, as well as uncover hidden capacity in an existing warehouse.
The Rise of Omnichannel Fulfillment
To the untrained eye, Black Friday and Cyber Monday are competitors, and Black Friday is losing out to its trendier counterpart. However, omnichannel retailers — stores with both an online and in-store presence — don’t have to choose between capitalizing on Black Friday or Cyber Monday.
The gulf between in-store and online retail is shrinking. In fact, during the holiday rush, physical stores often function as living warehouses for curbside pickup. This mixed approach gets customers to their goods faster and helps retailers save on transportation costs.
As long as people continue to love a bargain, Black Friday and Cyber Monday will withstand the test of time. In 2019, consumers want two things — to shop online and get their orders as quickly as possible. Logistics managers who utilize omnichannel fulfillment strategies that allow customers to shop online and pick up in-store are poised to stay ahead of the pack.