It’s no surprise to anyone that the supply chain is in utter chaos right now. Each day record numbers of cargo ships are being bottlenecked around U.S. ports from coast to coast. Regional carriers are banding together to make up for the lack of resources larger carriers are experiencing. And that’s just the tip of the iceberg.
Thousands of products are currently floating in the ocean or stored on warehouse shelves with no expected date as to when they will hit retailers or be available for consumers to purchase. Instead of capitalizing on the most profitable buying season of the year, retailers are canceling customer orders due to a lack of inventory and uncertainty that they’ll be able to deliver in time for the holidays.
To put it plainly, consumers simply don’t care that there is a larger issue at play. Emerging from a pandemic-driven 2020, consumer expectations were at an all-time high for the last holiday season, looking for brands to deliver a better, stronger, and faster experience. A recent survey showed that nearly one in four (23%) consumers received incorrect items last holiday season, and 42% said their packages were delayed.
Consumers have shifted their holiday buying approach. They hoped to alleviate the stress of purchasing gifts for the holidays while leaving enough room for potential error by purchasing earlier. Unfortunately, this strategy hasn’t worked. Now, more than ever, the supply chain is riddled with complexities and challenges. Instead of being strengthened from the shift online during the pandemic, it’s failing to meet expectations.
People who made purchases months ago are just now receiving updates for increased delays or even cancellations. This has left customers stressed and retailers scrambling to figure out how they can salvage their relationships with them. While there is no black-and-white solution to the problem, retailers should look for ways to build trust. Trust can differentiate your business, especially during times of distress, when people are craving reassurance and transparency.
Looking ahead to Black Friday and Cyber Monday, a time of the year consumers typically plan their holiday purchases around, this could be a complete nightmare for retailers who aren’t well prepared. With half of American consumers indicating Cyber Monday as their final day of holiday shopping and consumer confidence at an all-time low, it’s crucial that retailers find ways to connect with their customers. If they can’t, it could shift the way people approach this sales-driven holiday or even deter them from engaging with it.
We also see two possible scenarios playing out. The first is consumers shopping locally by buying online and picking up in stores. BOPIS is appealing because it eliminates the delivery process, which we know was a major pain point for holiday shoppers in 2020. Because of this, even Amazon launched a program dedicated to in-store pickup options for local businesses. This forces retailers to stay competitive using the inventory they have in stores. The second tactic is to default to tried-and-true retailers like Amazon, Target, and Walmart who are operationally set up for success. People will shy away from being first-time customers during a high-stakes holiday season and instead turn to these retailers as a last resort.
Unfortunately for everyone, it’s not projected the supply chain will be back up and running anytime soon, and these challenges will continue into the new year. We’ve already seen increased shipping rates well into 2022, and while it’s difficult to determine what the long-term effects of this will look like, we can be certain that customer frustrations will continue, especially as the returns season approaches.
During the pandemic, people formed new loyalties as they shifted to online shopping. What’s going to matter going forward is finding avenues to build back trust. Trust opens opportunities to drive sales. And while it’s going to be challenging, my question for you is how can you build trust, so your customers come back again and again?
Tobias Buxhoidt is the CEO and cofounder of parcelLab. Tobias leads the team’s global mission to bring brands and people closer together through transforming operational complexity and data into compelling, relationship-building moments.
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