Report from Shop.org Annual Summit

Few retailers have a robust plan ready for the “shortest runway to Christmas since 2002”.

I have had hour long meetings with 9 retail firms in the last 20 hours at Shop.org (Chicago). One thing that strikes me as surprising as well as concerning is the lack of preparedness for a very short holiday season (3 week time between Thanksgiving and Christmas). Most retailers that I met with are still unable to fully fathom the “impact of one less week – 25% less time” on online demand.

There are many reasons why retailers need a very strong Plan A as well Plan B this holiday season. Here are my top 5 –

1. Y/Y Online sales has grown by around 20% (YTD August 2013). Assuming that this pace of growth continues (in my opinion it should actually increase) through the holiday season… retailers will have to be ready for 20% extra sales in 25% shorter runway. That’s a BIG IMPACT on each and every aspect of your ecommerce engine – whether it be marketing or shipping or inventory management and forecasting. Big Question for you: When is your “last ground shipping day”?
2. The pressure will be as much on online shoppers. We all know that online shoppers have a habit to delay their purchases (quite literally till the last minute). I shudder to think of the “mad rush to buy online” between 12/15-12/19. This will lead to an unprecedented high load on most ecommerce sites. Website crashes will increase! Big Question for you: What’s the incremental load bearing capacity of your ecommerce site?
3. Daily sales forecasting and tracking actuals vs. forecasts is necessary during holidays. Even more so this holiday season. Any daily forecast – actual gap will need to be “bridged” immediately. It will be impossible for merchants to close the gap for anything beyond 3 days of missed sales. Big Question for you:Do you have a realistic plan to bridge the sales gap in place before the holidays?
4. Product stock outs will be more frequent. Because of a very simple reason – most retailers “do not have the ability to accurately forecast” for a holiday season that barely has a precedence in terms of number of days, volume of transactions, changing buyer preferences, etc. Back order management will have to be efficient. Big Question for you: Do you have a product stock out communication plan for your customers (to minimize “brand dissonance and brand switch”)?
5. Huge market share swings will happen. A shorter holiday season will be a brutally powerful force in driving significant market share shifts. You are either a WINNER or a LOSER. A clear divide is imminent. Big Question for you: How are you tracking market share shifts?
6. (BONUS REASON) Your call center/customer service support will be subjected to unprecedented pressure. Their servicing abilities will be stretched to the limit this holiday season. Big Question for you:Has your customer service center been made aware of the pressures they can expect and are they prepared?