With the important and busy holiday season around the corner, we asked 13 shipping and eCommerce experts about what to expect this year.
The last two years were affected by the Covid pandemic, creating shipping chaos in 2020 and a record season in 2021 that mostly ran pretty smoothly.
So, what will the 2022 holiday season bring?
2022 Holiday Season
In short, it’s a very different year again. Online inflation has stifled sales growth throughout 2022, and many consumers have tightened their pocketbooks, a trend that will likely continue into the peak season.
This could cause online retailers to offer deep or earlier discounts to drive sales and move inventory, shrinking gross margins.
Add higher peak season shipping surcharges and higher labor costs as well; the 2022 holiday season could be a stressful time for online sellers and merchants.
Having a plan and understanding the challenges will be key for small businesses to succeed during the 2022 holiday season.
We believe that this year is primed to be the biggest yet for secondhand gifting, in part because logistics challenges can play directly into secondhand’s strengths.
As with last year, shoppers can expect that traditional retailers will be affected by logistics challenges and unpredictable timelines during the holiday. Alternatively, consumer-to-consumer marketplaces – like Poshmark’s – can often mean quicker shipping.
For example, last holiday season, most Poshmark sellers shipped their sales within two days, and most shoppers received their order within 5 days. Buyers are also guaranteed a wide, diverse selection of in-stock inventory coming directly from people’s closets across the country.
PoshPost, Poshmark’s no-hassle shipping service established in partnership with USPS, provides sellers with a simple shipping option for holiday sales. With PoshPost, sellers are delivered a pre-paid, pre-addressed label that allows for quick and easy fulfillment.
PoshPost has garnered positive feedback from both buyers and sellers – its convenience makes it easier for people to shop each other’s closets and contribute to a more circular fashion system. With PoshPost, there are no peak season fees, ever; our buyer shipping fee remains the same – making for a simple, straightforward holiday shopping experience.
This holiday season will be drastically different from what we experienced last year and in 2020. For the first time in two years, consumer sentiment toward spending is shifting downward.
To capture their attention during holiday season ‘22, SMBs must prioritize the customer experience over all else. Shipping costs and delivery remains a conversion tipping point for consumers.
SMBs should use communication tools to their advantage by clearly articulating shipping updates to customers. If rising costs are impacting business, offer free shipping over a threshold versus eliminating it altogether.
If stockpiled inventory is creeping up, they can use it to their advantage with customer promotions (such as BOGOs for items that might not be selling well). Speaking of promotions, honor the return customer by granting them discounts…they’re likely to return again.
2022 peak season is poised for continued supply chain turbulence, higher prices for both merchants and consumers, and decreased consumer demand.
SMBs should prepare now for these holiday speed bumps. Consumers are done with revenge-travel, and are now preparing for holiday shopping.
Due to the current economic landscape, they’ll be on the hunt for deals, and early. Retailers will likely run promotions well before Black Friday and Cyber Monday to capture early deal-seekers. Shipping deadlines for all carriers are going to come up faster this year.
SMBs should pay close attention to these deadlines to avoid high next-day shipping costs. Even though consumer demand could decrease this holiday season, they’re still going to expect the best online shopping and delivery experiences.
SMBs should continue to invest in their online platform, provide free shipping and streamline their returns processes to preserve customer loyalty.
The impact of inflation and economic uncertainty is weighing on consumer demand and ecommerce sales as we head into the 2022 peak shopping and shipping season, but online merchants who plan ahead and employ a few fundamental best practices can still make this a successful and profitable holiday. Here’s our advice:
- Diversify your carrier base—it’s not just about lowest cost; look at reliability, value-added services, and strong account management as critical factors to help reduce risk this peak.
- Regionalize your (most popular) inventory—lower shipping costs and improve speed.
- Get smarter about parcel forecasting—look at your historical forecast accuracy and figure out where you might be consistently over- or under-estimating. Many carriers are structuring peak surcharges around forecast accuracy and volume consistency.
- Don’t forget about returns—returns peak starts December 26. This isn’t just about cost reduction in transportation or processing—think about how the returns options you make available to customers drive specific behaviors. Home pickup is a great to offer (and free if using a postal returns provider) to create a sense of convenience and optionality for the consumer, but actually doesn’t drive significant incremental returns because most high-frequency online shoppers don’t have or don’t use home printers to create shipping labels.
The lasting effects of the pandemic mixed with supply chain strains and rising inflation will force US-based SMBs to reevaluate their holiday strategies significantly.
In the last few years, we’ve seen a flattening of ‘peak season’ retail spikes that were previously tied to major shopping events like Black Friday and Cyber Monday.
Instead, shoppers and merchants are kicking off the holiday shopping season earlier than ever, with Christmas decorations being marketed in early September.
Online merchants should expect to see big sales events drop as a percentage of overall holiday sales as shoppers start making their purchases earlier than ever.
Additionally, last year’s supply chain concerns sent many shoppers out into physical stores instead of buying online as customers were anxious about extended delivery times and lack of inventory.
Online merchants should expect similar behavior this year and – if driving customers to e-commerce is important to them – highlight services like free shipping, free returns, large inventories, and quick delivery, as a subtle cue for shoppers to spend more heavily in online merchants again.
There’s no one-size-fits-all approach here, but promoting such services is an effective way to redirect traffic to online merchants versus brick-and-mortar stores.
After several years of uncertainty, many SMB online merchants are asking themselves what lies ahead for their business in the 2022 peak season. This year we’ve seen surges in inflation and a continuation of supply chain challenges, which will surely impact shoppers and carriers alike during the holiday season. With all of that in mind, the best advice I can offer is to plan early.
With only weeks to go before the holiday rush, it’s time to set your peak season up for success. You’ll need to nail down your logistics operation so you can easily navigate any hurdles that come your way. This means having a strong understanding of your shipping routes, estimated transit times, and capacity. You should also have a plan B (and C) to mitigate any unexpected shipping challenges.
Downtime and delays are the enemy. Stay ahead of the game by developing a solid plan that will help you successfully navigate peak season under any circumstances. This might include adding additional carriers to your network or upgrading your technology to increase reliability.
At EasyPost we’re dedicated to building a premium peak season experience for our users, and we’d love to help you optimize your shipping at this critical time as well. Our 99.99% historical uptime means that businesses can ship without interruption, even on the busiest days of the year.
While I hope the pandemic-related unpredictability is behind us, now is not the time to let your guard down. Use the next few weeks to fully prepare your shipping operation for peak season so you’ll be well prepared for any stressful surprises that come your way.
Expect lower sales but a higher returns rate compared to last year. Consumers are no longer receiving Covid subsidies, and they’re also not stuck at home anymore. In fact, we know that consumers are spending more money on travel than they are on shopping.
This, coupled with inflation and an economic downturn, is having a negative effect on the number of consumers who are shopping. Overall, people will change their mind about products, so retailers should expect to see an increase in returns.
Brands will increase their focus on post-purchase retention. The cost of acquiring new customers is not decreasing. Therefore, brands will need to shift their focus to retaining customers post-purchase. It is crucial for brands to consistently engage with customers after the purchase, where they can focus on better shipment visibility and provide hassle-free return experiences.
Top brands will eye shipment on-time delivery rates. Historically, brands rarely monitored their shipment on-time delivery rate or proactively resolved delivery exceptions before customers reached out to them.
But with top brands focusing more on retention, they know it is critical to meet customer expectations during the holiday season. Leading retailers will also be working with post-purchase platforms like AfterShip that can predict estimated delivery dates (EDDs) at the product and check out pages (like Amazon).
This allows brands to set reasonable delivery expectations from the start. Top retailers and SMBs rely on our platform, because our artificial intelligence leverages more than a billion tracked shipments to portray accurate EDDs.
Sporting disruption on top of unprecedented challenges. This year, Black Friday (November 25) clashes with an important World Cup match – the USA goes head-to-head with England in the group stage of Qatar 2022.
With one of the world’s most popular sporting events taking place during the holiday season, consumers could very well be distracted from online shopping, causing a potential loss of traffic.
Retailers should plan their marketing and logistical strategies accordingly, watch the competition closely, and liaise with their parcel shipping partners to have delivery capacity and contingency plans in place.
It will be a peak season like no other in terms of cost pressures on businesses, low consumer confidence, and likely supply chain delays.
To maximize sales opportunities and meet delivery expectations, we’re advising retailers to kick off holiday promotions as early as possible, and to really focus on price competitiveness.
Switched-on brands began stocking up for Christmas in July to beat the supply chain backlogs that have dogged the market all year.
We recommend merchants offer the choice of express or standard delivery, and be clear and honest about estimated delivery dates, particularly where cross-border parcel shipments are concerned.
At Asendia USA, we specialize in international shipping for e-commerce parcels and are well prepared for peak 2022. We operate a global network, have invested in new hubs and sorting facilities, and can offer enhanced package handling and delivery capabilities for both large and small parcel volumes.
We instigated peak season volume forecast planning with our retail clients earlier than usual this year and are committed to getting their festive orders out to customers in a timely, yet cost-effective manner.
With school back in full swing and the holiday season fast approaching, retailers are preparing for another busy peak shipping season. This year will be a little more predictable than the last two years, but the pandemic has certainly left its mark on the global economy and retailers are still feeling its effects.
As we head into Q4, the biggest issue on retailers’ minds is how inflation will impact their customers. With the prices for basic necessities like gas and groceries still at record highs, many consumers are tightening their purse strings and may have less discretionary income to spend.
Many consumers will continue a trend set in the pandemic and start shopping earlier to avoid shipping delays. In fact, according to a shipping trends report by UpStart Commerce, nearly 60% of consumers aren’t going to wait until Black Friday to start their holiday shopping this year.
For retailers, setting deals and discounts as early as October will have the best chance of enticing consumers and capitalizing on savings. Another pandemic trend we’re seeing at ShipHero is the rise of BOPIS: Buy Online, Pickup in Store. This trend rose sharply during the pandemic, and consumers say it’s improved their overall retail experience.
When it comes to shipping and logistics, the challenges set during the pandemic are here to stay. What’s changed is consumers’ willingness to put up with shipping delays. Free shipping remains one of the best deals retailers can offer consumers, no matter the strain on the global supply chain.
Faced with lingering supply chain disruptions and economic uncertainty this holiday season, ecommerce retailers should focus on turning fulfillment challenges into competitive differentiators to build a loyal customer base that will drive revenue long after the New Year’s sales.
Solid demand planning is crucial. Retailers must know exactly what’s on hand in order to plan holiday campaigns and execute on fulfillment; they need to identify fast and slow movers in order to restock the right items and quantities.
With recent inflation rates and widespread rising costs, retailers should leverage cost efficiencies in operations (e.g., technology to increase productivity in warehouses) and shipping (e.g., reduce shipping costs with automated rate shopping).
Consumer frustration with retailers’ delivery performance is real, with three out of four consumers experiencing delivery issues. In order to keep the delivery promise to customers during the time-sensitive holiday season (and keep them coming back for repeat purchases), online sellers should:
- Sync inventory with sales channels in real time to prevent overselling
- Automate order picking prioritization to ensure items ship on time
- Know their pick and pack productivity metrics in order to have enough staff onsite to cope with holiday spikes in order volume
Retailers should also take advantage of the growing importance of sustainability to consumers this holiday season. By offering ‘green’ and carbon-neutral delivery options and digitizing internal (e.g., pick, pack) and customer-facing (e.g., email or text status notifications) processes to reduce reliance on paper, retailers can differentiate their brand and boost sales, during the holidays and beyond.
DHL eCommerce Solutions, Americas
Each peak season is unique, and for this year, we expect a softer peak than last year. Nevertheless, this
holiday peak season may shape up to be above pre-COVID levels in terms of e-commerce volume, but
we can expect a few variables that may impact online merchants this year.
Several national carriers have announced peak and fuel surcharges, some of which are higher than in previous years, given the rise in transportation and labor costs. With global economic uncertainties looming, we can also expect consumers to be more cautious in their holiday spending, with many bundling their purchases and looking for reduced or free shipping.
Additionally, some shoppers are eager to return to brick-and-mortar shopping, while others have grown accustomed to buying online and picking up in stores.
This unpredictable consumer demand and purchasing methods can create uncertainty and planning challenges for some online merchants when forecasting and sharing their volume predictions with their logistics carriers, possibly leaving some scrambling for capacity at the last minute.
With softer parcel volumes, merchants can expect good shipping performance this peak season. However, it is still recommended to adopt a multi-carrier approach as capacity shortages may occur unexpectedly in certain areas or on certain days due to demand volatility.
This holiday season will be harder to predict than years past. Will it be another record-breaking year for online sales? Will the recession take its toll on consumer spending? The verdict is still out, but the best thing that small businesses can do is think about how they can build resilience and be ready for anything that comes their way.
Costs: One of the first things a business can do to prepare to cut costs. It may seem obvious, but many business owners don’t take the opportunity to eliminate unnecessary expenses or make sure they have enough saved for a rainy day.
It’s hard to know how long a recession will last, and even if businesses aren’t immediately impacted, their suppliers and vendors could be, leaving them in a tight spot with delayed inventory.
Choice: Small businesses can build resilience by making sure they have multiple options to rely on when it comes to their operations.
By working with multiple vendors and shipping partners, they can really set themselves up for success by having more control over their ability to serve their customers. Last year’s shipping capacity shortages really showed everyone how important it is to have a backup plan.
Customer values: Another important way to build resilience is to understand customer preferences and values – and importantly, how those may change over time.
In a recent Decartes study Retailers: Sustainability is Not a Challenge, It’s an Opportunity, 54% of respondents said they’d be willing to accept longer shipping times for an environmentally friendly delivery option. That’s a great opportunity to build a stronger connection with customers and to reaffirm a business’ commitment to sustainable practices all at the same time.
The past few years have taught small business owners that they should be prepared for anything, especially as the holiday season approaches.
The ongoing supply chain issues over the past year have thrown curveballs at businesses both large and small, and the recession is another hurdle that they will have to face ahead of the busiest time of the year.
When it comes to shipping and delivery during peak season, there have been several obstacles that put the stability of traditional shipping solutions in jeopardy, like potential worker strikes and conflicts with contractors.
These conflicts underpin just how important it is for businesses to diversify their shipping partners and have backups in place. Diversifying also allows for businesses to maintain more control over these operations and ensures that customers receive their deliveries on time.
Huge Thank You!
We thank our industry insiders and experts for providing great insight into what small business merchants and online sellers should expect from the 2022 holiday season. This would not have been possible without their participation.
- AfterShip (SaaS platform with an end-to-end suite of post-purchase tools for retailers, marketplaces, and DTC brands)
- Asendia USA (International parcel delivery solution)
- Descartes (Logistics technology platform)
- DHL eCommerce Solutions (Parcel carrier and on-demand fulfillment and warehousing solutions / 3PL)
- EasyPost (Online shipping platform)
- Pitney Bowes (Shipping platform and parcel delivery solutions)
- Poshmark (Online Marketplace)
- Sendle (Parcel carrier)
- ShipHero (On-demand fulfillment and warehousing solutions / 3PL)
- ShippingEasy (Online shipping platform)
- Shippo (Online shipping platform)
- ShipStation (Online shipping platform)
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