Christmas business challenges traders

Four billion packages

This year, the Christmas business in Germany could surpass the magic 100-billion-euro mark – the turnover has been growing steadily for years. No wonder, because the Germans order more and more online. By 2021 it will be more than 4 billion packages. How do traders prepare for this challenge? We take a look at different approaches.

According to the Christmas survey by the dealer federation, the challenges for traders in the Christmas rush lie in three core areas: the overloading of delivery services, the high rate of returns and customer complaints. The three challenges are related – because what the customer does not like and what does not arrive on time is sent back or at least criticized. The result is bad valuations, new orders and an increasing load on the supply chain. All three challenges of the dealers are thus based on a central function: logistics.

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How retailers tackle this essential issue depends very much on their size and focus. With larger investments, wholesalers such as the Otto Group are adapting to the high order volume: they fill up the warehouses at an early stage, hire more staff on a selective basis and ensure that sufficient packaging material is available. The deliveries are again handled by larger service providers.

Things are different for medium-sized traders. They rarely have the same resources, but they, too, are preparing for the Christmas rush. In logistics, mid-sized companies like to rely on load balancing by using several suppliers. In the German middle class, there is another tactic gaining more popularity which comes from the US: Action days such as Black Friday or Cyber Monday in the fall and winter to relieve the Christmas business – and thus help dealers, consumers and logistics alike.

When is the delivery drone coming?

Logistics will remain essential for the Christmas business – and it will become even more important in the future. Because the order and package volume is rising steadily, as a study of the Federal Association of parcel and express logic shows: In 2021, there could be four billion packages. But how are the already congested traffic routes supposed to handle this rising mass of deliveries? An idea is alternative delivery routes – for example, the airway.

“At Christmas, #Logistics counts: Online orders are increasing and challenging retailers“

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The East Frisian island Juist was already supplied by drone, if only as a test run. Urgently necessary medicines were flown by Nordeich to a pharmacy on the island. However, the German aviation industry is reluctant to allow delivery drones. Because when suddenly dozens of packages fly over the city, it becomes difficult for flight safety officers to regulate the narrow airspace.

In America, things are different: In October 2019, a regular delivery drone was given its take-off license for the first time. First of all, medical goods are transported to hospitals. Later, companies and end customers are to be supplied. There are no restrictions on the size, purpose or number of drones. The deliveries may even exceed the previously planned limit of 25 kilograms.

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Sweeten the waiting time with more information

Even if traders cannot go up the air, they should, at least, prevent their customers from flying into rage. Complaints can be prevented by providing the customer with transparent delivery information. Just before Christmas, customers are quickly impatient and want to follow the status of their shipment exactly.

A solution for this is provided by the Munich-based start-up parcelLab, founded in 2014. An algorithm captures the orders and determines deviations between agreed and actual shipping performance during the shipping process. Customers are informed in real time about what’s happening with their package. Wholesalers like LIDL, Media Markt or Weltbild are already using parcelLab’s services.

Conclusion: Planning and technology help traders

In the end, it’s clear that the Christmas business in Germany is still growing. Thus, it could exceed the 100 billion euro mark already in 2919. At the same time, order and package volumes are rising steadily. Preparing the logistics well is therefore essential. While wholesalers are investing in higher storage capacities and personnel, many medium-sized companies are using different service providers and action days. Alternative delivery routes also provide a way to meet the challenges and avoid the many traffic jams on the roads. It is also worth investing in transparent communication with the customer in order to calm the mind in case of longer delivery times – and to ensure a relaxed Christmas.

Are you part of the Logistics Challenge? Do you order your Christmas gifts online?