Millions of shoppers do their holiday shopping on Black Friday and Cyber Monday. That’s great for retailers but also brings many challenges on the back end. It’s very easy for supply chains to become overwhelmed. There are smart ways for retailers to manage those potential problems.
Introduction
The National Retail Federation notes that in 2023, over 200 million shoppers took advantage of Black Friday and Cyber Monday deals. Black Friday 2023 hosted over 76 million in-store shoppers, a nearly 5 percent increase from the previous year. Cyber Monday 2023 generated 51 billion dollars in sales, with 64 percent of customers intending to shop online again this holiday season.
This presents great retail opportunities, but it also presents stressors. Balancing profits with rising costs and maintaining accurate inventory is essential. The overwhelming demand stresses the supply chain and utilizing old or inefficient management systems (like basic spreadsheets) creates unnecessary problems that can cost a business money.
Retail Reworks specializes in strategies for reverse logistics, return management services, and more to maximize retail profits.
Rising Cost of Goods Threatening Profits
Inflation is still an issue worldwide, which impacts the cost of goods. Since 2023, the cost of electronics has risen by 64%, apparel is up 47%, and home and garden goods are up 42%. Retailers are feeling these increases in their profit margins. The National Retail Federation notes that retail profits have decreased from 9.5% to 8.5% in the last thirty-one quarters.
Beyond the cost of goods, the cost of returns also eats into retail profits. In 2022, consumers returned nearly 17% of their purchases, which cost retailers $816 billion. Using efficient reverse logistics services can streamline the process and save money.
Inventory Management
Inventory management is essential in maintaining or increasing a company’s profitability. It touches every aspect, from ordering, producing, selling, storing, and restocking. Companies use systems like bar codes or radio frequency identification to track their items. These can provide information to indicate sales, order quantities, returns, and more.
Having the most efficient inventory system can better maintain customer demand and minimize costs. Analyzing inventory data can better help a business avoid supply chain problems during the busiest time of year.
Logistics and Distribution During Peak Season
Anticipating demand during the peak season of Black Friday and Cyber Monday is the most essential step retailers can take. Consumer demand and expectations are at an all-time high at this time; if a retailer doesn’t deliver on both, that results in bad reviews, lost profits, and unhappy customers.
Effective inventory management strategies include ordering stock as needed (“Just In Time” inventory), safety stock that keeps a buffer of extra inventory on hand, and tiered inventory which distributes inventory from central distribution centers to various retail locations.
As far as distribution during peak season, shipping and warehousing demands are much higher between October and December. Labor demands are also much greater, which may necessitate hiring third-party vendors. Third-party carriers can also be utilized by retailers; these use a network to assign orders and deliver them.
Outdated Supply Chain Management Systems Can’t Track POs
When retailers use outdated inventory and supply chain management systems, they risk so much regarding both their profits and their reputation. An outdated system results in inventory discrepancies, delayed shipments, and higher operating costs. Orders can’t be tracked efficiently, which leads to issues with the customer experience.
Outdated systems are also unable to “scale,” to meet the increasing demand and need for speed in today’s retail environment.
Many companies still rely on computerized supply chain management systems that are as much as 20 years old. Others use spreadsheets, even clipboards! These are not up to the needs of today’s increasingly complex conditions.
Retail Reworks offers customized software solutions to better manage workflow among your inventory and returns. It optimizes profits with strategic precision.
Conclusion
The peak season of Black Friday and Cyber Monday offers retailers so many opportunities to make profits and establish/improve/reinforce their brand’s good reputation Efficient orders, seamless fulfillment of goods, and easy returns are essential, especially at this time. To pull this off, retailers need back-end systems that can monitor their inventory, manage distribution, and a reverse logistics system that maximizes profits.
Using a basic spreadsheet or outdated software creates problems right from the start. Ultimately, these old ways prevent a business from scaling effectively so that it can grow and remain profitable.
Retail Reworks specializes in reverse logistics services, customizing the process (including a reverse logistics warehouse) to optimize a retailer’s connection to the supply chain during the peak season.
