The coronavirus pandemic has caused countless problems for many of us, but has also created opportunities to better connect with each other, reach out to new people, and design better systems. Matt Guffey, President of UPS’s Global Strategy, shared his insights and learnings for planning for the peak 2020 holiday season with NetElixir at our Connecting the Dots: Holiday Readiness Summit for Retailers event.
Guffey explored how 2020 has delivered significant insights that we can use to better inform our holiday strategies and restructure our future business models. To prepare for the unpredictable holiday season, retailers and marketers should have a Plan A and Plan B in place, to be able to adapt to changes and opportunities that arise.
The COVID customer is constantly changing. The needs of your existing customers have changed and the coronavirus pandemic has caused new needs to emerge, such as a heightened sense of security and transparency. By constantly learning and understanding how new and existing customers evolve, retailers are building out their future success stories.
Excelling in the new normal relies not only on effectively engaging with customers, but having strong and reliable partnerships to better navigate new demand generation. Guffey explains that the right partners with the right logistic aspects cultivate a last mile opportunity to “create loyalty with customers to drive an experience and to really improve your impact or your current channels.”
We need to adopt a new, critical thinking mindset to continue to overcome the coronavirus pandemic to seize unique opportunities that may arise.
The Delivery Experience Represents a Market Opportunity for Peak 2020
With less in-person meetings, it may be hard to gauge customers responsiveness; however, Guffey notes that there is still critical importance to the last one miles. Delivery becomes a pivotal component of the customer experience: the customer journey expands from first website visit to receiving their package. Increased touchpoints and understanding digital body language – such as frequency of website visits, social interactions, and time of purchase – become crucial aspects of effectively engaging with and reaching customers.
Guffey stresses the importance of being as close to the customer as possible. The realignment of fulfillment centers put products closer to the customer.
UPS leverages their own warehouse space to help businesses be closer to their customers. Guffey explains, “Speed is important; also, reliability is a big component of that, but how do you get closer to the customers to be able to fulfill orders?”
The answer to that question includes ground next day service instead of strict reliance on air travel. By being closer to the customer, retailers can consolidate their supply chains to prioritize value and aim for targeted next-day delivery. Close proximity to your customer base can improve costs as well as customer satisfaction because of quicker deliveries.
The coronavirus pandemic prompted the rapid growth and maturation of ecommerce. There are opportunities to tap into the digital acceleration and new customer channels. Leveraging mobile and digital platforms can drive different and unique customer experiences to reach new demographics and cultivate loyalty.
Guffey says, “Producing new market-responsive products has really fast-forwarded to enable new businesses to move to the forefront.”
Opportunities Created by the Coronavirus Pandemic
It is no secret that new customers are buying online for the first time. Guffey discusses new individuals and demographics who are online because they have been forced to shop online. Now, these customers are discovering new brands, new digital experiences and realizing that the online shopping experience is secure and convenient.
But existing customers are also undergoing their own digital transformation. Existing customers are increasing their frequency of online purchases. Guffey says that we are “quickly transitioning to a primary online experience.”
Across the board, online shoppers are discovering the benefits of quality, convenience, and security of the ecommerce world. Retailers and marketers should ensure that their products, business, and ads reflect these tenets to continue to encourage shoppers to their websites.
Businesses are reinventing themselves to adjust to the new online shopper experience and digital demands. Creative avenues keep the brick-and-mortar store as a critical hallmark of the retail experience, as BOPIS and curbside pickup gain popularity. Logistics becomes not just about moving a product from point a to point b, but also moving information around. By keeping the customer in the loop of shipping expectations, retailers can create a satisfying last mile experience that elevates the entire shopping experience.
The Peak 2020 Holiday Season
Consumers are planning to spend more on essential items, while cutting back on non-essentials buys, detailed below:
However, product demands and inventories are shifting month to month, so this list may look very different come the end of the holiday season. Guffey emphasizes that just because people are planning to spend less on non-essential goods does not mean that demand has dropped for those products. There is still significant growth for non-essential items, but there is a more dramatic rise in essential goods because of the necessities to safely navigate the coronavirus crisis.
By being nimble and continually monitoring changes in consumer behavior and demands, marketers and retailers can quickly respond to the ever-evolving digital landscape. Creating a successful holiday season strategy comes from making a Plan A for what is known and a Plan B for known unknowns.
For the knowns, consider the importance of ecommerce and digitization, last mile capacity challenges, pre-holiday inventory, and agility of manufacturing and supply chains. The holiday season calendar also looks different this year; last year, the peak period was compressed into about 17 days. Peak 2020 will most likely be longer, especially as businesses may run sales earlier to kick off the holiday season sooner to recapture lost sales in Q2.
Unknown knowns to consider for your Plan B include questions of consumer behavior and if the socially distanced holidays will drive more gift exchanges seen at the onset of the pandemic, what will the consumer outlook be post-election, and what will officially kick off the holiday shopping season?
For UPS, peak planning typically starts in January to ensure network reliability and support throughout the year; 2020, however, has upended all known plans. It is important to cultivate a different shopping experience, especially within that last mile.
Key Takeaways
- Businesses that rely on products must be diligent about their supply chains, both inbound and outbound.
- ECommerce demands are creating significant pressures on last mile logistics, which will only worsen during critical peak seasons. Having a main Plan A and backup Plan B will help keep your business nimble.
- The coronavirus pandemic is a digital catalyst, increasing the rate of change and creating new customer demographics that are likely to continue to play a prominent role in the future of retail.
- Joint planning with quality logistics partners will pay significant dividends in the level of preparedness for peak 2020 and beyond.
- UPS has immense logistics capacity and capability throughout the year and especially during peak seasons to help out small and medium businesses.
