Deck the fulfillment centers with boughs of inventory.
It’s that time of year again—2020 is (thankfully) coming to an end and the holiday season is upon us. Online marketplaces are busy preparing for increased holiday shopping demand in a year marked by a boom in online shopping and the resulting supply chain chaos.
Two of the biggest ecommerce marketplaces, Amazon and Walmart, have been focusing on spreading out holiday demand and increasing their physical capacities to fulfill orders. Let’s talk about some of the unique challenges marketplaces face this year and what Amazon and Walmart are doing to handle them.
Overcapacity is always a challenge for Amazon and Walmart this time of year, but we anticipate this season to be especially taxing as more people than ever shop early and online as a result of the ongoing pandemic.
Pairing this year’s supply chain challenges with record-breaking ecommerce holiday sales makes for a perfect storm. Seasonal stockouts and shipping delays, which aren’t uncommon in a typical holiday season, will likely be exacerbated this season.
Salesforce anticipates global online holiday sales to grow 30 percent year-over-year, with demand exceeding shipping capacity by 5% and up to 700 million packages potentially facing shipping delays.
We also anticipate a high rate of online returns this year, which will create even more complications for marketplaces. Amazon has announced that all purchases made between October 1 and December 31 are eligible for returns until January 31. Walmart has also expanded its return policy, with some holiday items being eligible for returns as late as February 23.
Online shoppers, who can’t try on clothes or see products in person, will likely buy several different sizes and colors and return unwanted items. It will be interesting to see how marketplaces deal with this increase in online returns, especially with seasonal items.
Amazon’s holiday strategy started early this year—if not entirely intentionally—when it was forced to move Prime Day from July to October because of the coronavirus. Even though this decision was primarily made because of the pressure the pandemic put on Amazon’s supply chain, it had a side effect of kicking off holiday shopping one month earlier than normal.
Despite the delay, Prime Day 2020 was record-breaking. Amazon didn’t disclose total Prime Day sales, but it did announce that third-party sellers surpassed $3.5 billion, marking a 60% year-over-year increase.
This is especially noteworthy considering that Amazon primarily featured its own inventory during Prime Day, as it has done historically. The Echo Dot was the best-selling Prime Day item, Alexa-compatible devices sold in record numbers, and customers bought more Fire TVs than in any previous Prime Day.
Less than 2 days after Prime Day ended, Amazon initiated its Holiday Dash event with daily “epic deals” throughout November. By moving Prime Day to November and spreading out Black Friday deals throughout the entire month, Amazon has spread out its high holiday demand to lessen the load on its already-strained supply chain.
Although no one could’ve predicted this year’s unique challenges, Amazon has been building out its own massive logistics and delivery network for years, in part because of other carriers missing delivery estimates around the holidays. Now, the mega corporation handles more than half of its own deliveries.
In 2020, Amazon has expanded its fulfillment center square footage by 50% and hired hundreds of thousands of employees, including 100,000 seasonal employees to meet holiday demand. In the last month alone, Amazon has announced seven new fulfillment centers in the U.S.
Despite this unprecedented physical expansion, Amazon is still struggling to keep up with demand, and the holiday season will only intensify the problem.
Regardless of these challenges, Amazon will likely continue to have great holiday deals and price parity with products we see on Walmart, Target, and Best Buy.
While historically Black Friday is much bigger in-store than online, it’s likely to look quite different this year. Walmart—which is closing its stores on Thanksgiving Day for the first time in 30 years—is taking the lead in representing the shift to online Black Friday shopping with its month-long Black Friday offering, “Black Friday Deals for Days.”
As part of this offering, Walmart is moving Black Friday shopping from a single day to three different events throughout the month of November, creating something of a Black Friday experience. The deals will start online at Walmart.com and continue into stores a few days later with new deals for brick-and-mortar buyers.
This approach will reduce Walmart in-store traffic, addressing the concern of keeping both employees and customers safe in its 4,700 U.S. stores during the biggest and most exciting shopping event of the year. Like Amazon’s Holiday Dash event, this month-long event will also spread out holiday demand to make it easier to keep up with.
Similarly to Amazon, Walmart 1P, or Walmart-owned inventory, is facing increased constraints and will have more seasonal stock-outs than usual this year. In response, Walmart is rapidly growing the marketplace side of its business so it has less owned inventory to worry about.
Walmart announced that it would be creating “pop-up Ecommerce Distribution Centers” (EDCs) within its current Regional Distribution Centers (RDCs) and is hiring more than 20,000 seasonal employees to help meet ecommerce holiday demand. RDCs typically exist to send pallets of product to Walmart stores. With the incorporation of pop-up EDCs, these distribution centers will also have the capacity to send products directly to consumers to increase fulfillment output.
We expect that Walmart will see a lot of success this season by directly tying holiday shopping to the launch of its new subscription offering, Walmart+, an Amazon Prime competitor that launched in September. Walmart+ memberships include unlimited free delivery from stores and the Scan & Go tool, both of which may be appealing for holiday shoppers.
Both Amazon and Walmart are increasingly relying on third party sellers to fulfill holiday demand. Need help selling your products on their marketplaces? Contact us below.
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Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces.
Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.
So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.
Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products.
An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.
An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.
Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.
At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services.
It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.
It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.
The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.
Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces.
With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.
Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.
If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.
At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.
Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.
DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.
Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.
Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.
So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.
Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.
So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.
As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.
The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).
As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter.
It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.
Set up a call to get your international expansion strategy in motion.