Recently, we held an interview session with the Executive Vice President of OSM Worldwide, Patrick Kelley, who shared a lot of very interesting things regarding their peak season preparation which is the 2023 Holiday Season.
What are your thoughts on overall industry readiness for peak season from an eCommerce shipping perspective?
The industry is quite ready. As a result of the pandemic, the top three national carriers poured investments into capacity expansion, and most of that remains.
At OSM Worldwide, we are well-prepared for the current peak season. Our approach has always involved revisiting the previous peak season as soon as it ends, typically in January. We analyze our performance, identify lessons learned, and implement necessary changes by February that carry throughout the new year. This practice ensures we have time to test our improvements before peak hits. This year, we implemented new ways to visualize data and optimized our FIFO (First In, First Out) methods for increased package processing efficiency.
Will peak season eCommerce shipping volumes be up or down this year?
For the overall industry, we expected eCommerce shipping volumes to be down again this peak season. While volumes dipped 2% in 2022, Black Friday sales actually increased 7.5% in 2023, according to a Fox Business article. OSM’s growth has outpaced the market with more than 14% volume growth year-to-date compared to last year. We also anticipate year-over-year volume growth during peak season relevant to our business—with an increase of approximately 30% on an average day during the peak season versus a non-peak season day. Despite the surges, we are not levying peak season surcharges in 2023.
How important is same or next-day delivery for consumers at this point?
To date, it has been a race to the fastest delivery times, regardless of cost or environmental impact. We now see different sets of customers developing in the market. Some prefer same and next-day delivery and will tolerate the cost and/or purchase minimums in return for that level of speed. Others are more sensitive to cost and will accept 2-5 day delivery times in exchange for a free or lower shipping cost along with increased sustainability dynamics associated with their deliveries.
What advice do you have for brands this peak season?
Since we are so deep into peak season at this point, my advice is to continue to observe the goals you set at the beginning of peak, how you’re tracking against them and use them to improve real-time and future operations. Peak is the busiest time for many brands and will put the most stress on your operations. This makes it the best opportunity to observe, track and learn so you can enhance those operations before peak the following year and year-round. At OSM, that has led to growth opportunities.
From an internal perspective, invest in technology and customer service. Upgrading and fine-tuning the technology stack is important. This may involve optimizing websites for increased traffic, enhancing order management and/or visibility systems, and utilizing data analytics for better demand forecasting. Work in these areas is most likely already done for this peak season.
From a shipping perspective, the delivery experience is critical to elevated customer satisfaction and brand loyalty, and this is amplified around the holidays. Cost and speed considerations must be taken into account as consumers’ preferences evolve. Brands should consider offering a range of delivery costs and speeds.
Process considerations include a clear and easy package tracking system, proactive notifications of any delays, and human-based call centers with friendly, knowledgeable agents that can help solve any potential issues.
What’s the state of the multi-carrier shipping trend, and have most brands already diversified their carrier mix? Why or why not?
This issue is complex and changing. Primarily as a result of pandemic lessons learned, many brands have moved all or some of the way to a diverse carrier mix. Others remain loyal to a single carrier or have migrated to a new single carrier. Whatever the case, we’re seeing this conversation re-fire due to cost considerations as the major carriers continue to levy various surcharges and consistent annual base rate increases. Many brands are signaling concerns over those increases—for purposes of their own profitability as well as speed, cost, and sustainability options they would like to offer their customers.
One of the primary advantages of a multi-carrier shipping strategy is the ability to choose from a variety of shipping options. Different carriers have unique strengths, such as geographic coverage, cost, delivery speed, specialized services, and relative environmental impact. By working with multiple carriers, businesses can tailor their shipping methods to suit specific customer needs and wants, shipping destinations, and product characteristics. This flexibility empowers companies to optimize their operations, fine-tune required delivery times, and minimize costs associated with deliveries.
By diversifying carrier partnerships, businesses also can mitigate the risks of carrier service disruptions. By offering multiple shipping options, brands can provide customers with greater control over their delivery preferences, including expedited or eco-friendly shipping choices and the relative costs of each. This flexibility enhances the overall customer experience, leading to higher levels of satisfaction and loyalty.
What are your predictions for the eCommerce shipping industry in 2024?
On a macro level, the enduring trend for eCommerce will be growth. Our customers tell us that eCommerce is far more profitable than in-store commerce. Therefore, we believe they will continue to push customers to online channels. In addition, social commerce across social media platforms is exploding. eCommerce growth will be the prevailing trend.
For brands and from the perspective of package delivery, this translates to a need to innovate in all of the ways I’ve mentioned, and more, as consumer preferences toward speed, cost, and sustainability continue to evolve. For the foreseeable future, we believe that the cost will become increasingly critical.
