With seasonal trends heavily impacting businesses, it’s important for online retailers to not only thrive during times of fluctuating demand and peak periods, but to also accommodate significant year-on-year growth that is almost inevitable in the current online retail climate.
According to the Australian Bureau of Statistics, online retail sales accounted for 5.6 percent of total Australian retail turnover in December 2018, which is far behind the UK (19.8 percent) and the US (9.9 percent). Australia Post predicts that by 2020 in Australia, one in ten items will be purchased online. That’s a huge amount of growth that Australian online retailers can expect to share in!
I have been COO of Australia’s largest online gift hamper retailer, The Hamper Emporium, for the past five years, and we experience dramatic peaks in business during special events such as Christmas, Mother’s Day, Father’s Day and Valentine’s Day.
On our busiest days in the lead up to Christmas 2018 we sold a gift every 14 seconds, with more than 102,900 gifts dispatched. The past five years has seen a 330 per cent growth in orders, which is in part a result of our focus on accommodating peaks while continually growing and scaling the business.
Here are some of my insights for those starting out or growing their business.
Planning for peak times
Year-round I work closely alongside my sister and CEO, Emily McWaters, and am responsible for the logistics, e-commerce, and day-to-day operations of the business, always with our customer at the forefront of our minds. I’d like to say we’re all graphs and data when planning for busy periods, but really we run on experience, instinct, and a few key numbers, which have proven to be an effective combination for us.
Production numbers are based on the previous year’s sales ratios, as well as some growth, while staffing and rostering is based on data such as ticket/call volume and dispatch numbers per day.
We’re all about measuring our success by not only focusing on the top and bottom line, but by also looking at how processes have become more efficient. For example, orders increasing year-on-year but with a reduction in ticket/call volume due to setting clearer expectations and offering clearer self-service options to our customers.
Planning for our main Christmas peak, when we see about 70 percent of our annual turnover, starts straight after Christmas of the year before. Emily decides on hamper production numbers for the following year on Christmas morning! This is when it’s all fresh and we know exactly what’s worked and what needs to change.
New hampers are designed, and orders are placed with suppliers at least six months before production to ensure there are no complications in the lead up to the peak Christmas period.
Even while in the thick of the current year, I continually take notes on what needs to improve for the following year’s peak. I examine processes and how to eliminate bottlenecks, inefficiencies, and double handling. Technology plays a big part in this, although it’s not always the answer. Sometimes it’s as simple as moving a desk so that a team member takes two less steps to complete a process, resulting in a significant saving of time and energy when measured across days or weeks.
Early days we rolled with whatever was thrown at us, but now we have a finely-tuned but constantly evolving machine.
Challenges when scaling for peak demand periods
There are, of course, a number of challenges when it comes to scaling an online business for peak demand periods.
Casual staff recruitment and training is a common challenge, though the process can be refined. Five years ago, we were a team of four (including Emily and me), and we now have 25 permanent staff, and up to 100 in the team at Christmas.
We recruit and train our casual team in batches, with a well-developed series of questions that is aimed at selecting those who will be the best fit. There are no guarantees, however, and we have had our fair share of interesting characters through the door! A structured one-day trial, and clear performance expectations can help with this challenge.
Space can also be an issue. Planning ahead and knowing exact pallet spaces available and incoming pallet numbers means that additional cost-effective storage can be sourced in advance. Last Christmas we had four 40-foot containers down the side of the warehouse for extra storage and stored around 200 pallets offsite.
Another challenge is ensuring suppliers are able to produce the quantity needed at the right time, and to the level of quality required. Strong, reliable relationships with suppliers are critical.
Advice for online retailers and small businesses
For small businesses, particularly online retailers, it’s important to know your systems and processes inside out. Just because the job is getting done, it doesn’t mean it’s being done in the most efficient way.
Spending money on new technology to improve a process might not always be the best way – get in there and examine the process first. Don’t however be afraid to spend on technology that will save money in the long run.
Always go over invoices with a fine-tooth comb, including invoices from suppliers, service providers and shipping partners. Don’t assume you’re being invoiced correctly at the agreed price. You could be working really hard to get the sales, while your margins are being eaten into and your bottom line suffers.
Even if a team member isn’t customer-facing, ensure that they understand the impact their contribution has on the customer. Regularly share customer feedback, good and bad. Everything they do should be done with the customer in mind.
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