Black Friday has long been a shopping phenomenon across retail industries, and the COVID-19 pandemic is proving to make this holiday-shopping-season-kickoff even more interesting.
Historically marked by unruly crowds and steep one-day in-store discounts, Black Friday must be reimagined for the world we now live in. This year, we’ve seen promotions start earlier, seasonal discounts spread out, and — most importantly — an overwhelming focus on e-commerce.
Growing Online Sales
According to Adobe Analytics, online sales this November and December are forecast to grow 33%, totaling a record $189 billion. They also predict there will be nearly 20 days where e-commerce spending reaches $3 billion over 24 hours (last year, there were only three such days outside of Thanksgiving weekend). This amounts to about two years’ worth of online shopping growth jammed into one holiday season, meaning that e-commerce is something every single retailer should prioritize if they want to emerge successfully from this busy, uncertain period.
Retailers know that artificial intelligence (AI) and machine learning (ML) can enhance retail supply chains and give them more control over their online shopping experience. AI and ML provide key decision-makers the background and information they need to meet unprecedented e-commerce demand and keep their organizations on track. This translates to seamless and transparent supply chain operations.
Here are three ways retailers can use AI and ML to successfully navigate the holiday e-commerce boom in 2020 and beyond:
1. React in Real-Time
Annual retail planning will never completely go away, but the ability to plan for rapid, unexpected changes in consumer behavior is more important than ever. This means planning must evolve into a real-time process where retailers can react as quickly and profitably as possible. Planning must also become an interconnected process across the supply chain — from manufacturing to distribution — to ensure the right actions are taken at every step.
Intelligent supply chains powered by AI and ML allow retailers to respond to ever-changing trends in consumer behavior in real-time, producing extremely accurate forecasts based on thousands of data points that can illustrate exactly what is driving customer demand at any given moment. By understanding the interrelationships between many complex factors, retailers can turn the data into actionable insights and react accordingly.
For example, imagine a snowstorm ravages the northeast days before Black Friday. AI and ML can help retailers answer questions like “How much added cost will there be to get my shipment to location X by November 27? How will expediting deliveries during the storm impact the rest of the supply chain?”
2. Optimize Pricing
Accurate, efficient pricing strategies are crucial for retail profitability, especially when it comes to e-commerce and its associated costs. Efficiently managing margin is one of the most important elements of creating a profitable e-commerce business, as too-high prices could repel customers and too-low prices could eat into profits.
Retailers can certainly use promotions to drive more sales, which is extremely common around the holidays, but they must find the right times to run them. They should also factor in returns, one of the biggest logistics challenges associated with the holiday. For instance, both branded and luxury attire retailers have historically experienced strong holiday season peaks, as people tend to buy such items as gifts for others. However, these retailers suffer later from huge post-Christmas return peaks.
With AI and ML, pricing processes can be completely automated, providing retailers with intelligent pricing recommendations designed with the organization’s best interest in mind. This gives decision-makers control over exactly which inventory to discount — and which inventory to push at full-price — at any given moment. This level of agility ensures merchandise is perfectly priced to match up with fluctuating consumer demands, and it allows retailers to pivot quickly and profitably.
3. Streamline Last-Mile Fulfilment
Fulfillment speed and efficiency are key to keeping online customers happy, and transportation infrastructures will need to change fundamentally to keep up with overwhelming order volumes around the holidays. In a world where consumers increasingly expect one- or two-day shipping, technologies such as IoT and robotics will undoubtedly play a growing role in meeting increasing demands for ultra-fast delivery — from autonomous flying drones to driverless semi trucks.
Retailers must also move e-commerce products closer to their customers to cut down on shipping times (and costs). Solutions like micro fulfillment centers and dark stores have been booming alongside e-commerce and can keep online inventory as close as possible to consumers, allowing retailers to get orders out rapidly. Additionally, offering fulfillment options such as curbside pickup and buy online, pick up in-store (BOPIS) puts last-mile in the hands of the customer, cutting down shipping costs and exposing consumers to brick-and-mortar locations.
The COVID-19 pandemic has emphasized just how crucial it is for retailers to prioritize their e-commerce operations. With online shopping continuing to grow in popularity, retailers must enhance their supply chains with cutting-edge technologies like AI and ML to keep up with consumer needs and demands. The 2020 holiday season will be a true test of retailers’ strength and resilience, and online shopping will only continue to flourish as time goes on. That’s why retailers must ensure their organizations are prepared for what’s to come.
For more information on Blue Yonder’s solutions for retailers, visit blueyonder.com.