It’s Not Too Late to Optimize Inventory and Logistics Ahead of the Holidays

This holiday season will bring some unusual stressors for brands, especially those that don’t wield the same negotiating power as the biggest retail names. And with the peak season fast approaching, brand decision-makers need to prep quickly to make sure their inventory plans and logistics operations are synchronized and primed to ensure a seamless customer experience. The good news is that it’s not too late to prepare to maximize profitability this holiday season.

What’s Unusual This Year?

What isn’t?

First, the calendar is more challenging for retail because Thanksgiving is a week later this year, leaving brands five fewer days to fulfill and deliver 2024 holiday orders. In addition, Amazon.com announced that merchants using its Fulfilled by Amazon service should get their inventory to its fulfillment facilities in August and September to ensure they have enough product in stock to make it through the peak season. The company set an Oct. 19 deadline for Black Friday inventories this year, which is a week earlier than last year.

Also, freight costs have risen again after dipping from record highs during the pandemic. Geopolitical risks, including attacks on shipping lanes in the Red Sea, and the East Coast dockworkers’ demands for significant wage increases are among the current cost drivers. In an attempt to mitigate those risks and avoid tariffs that went into effect on August 1, many of the largest retailers imported holiday inventory early, driving July volumes at West Coast ports to new highs.

And third, there’s still significant uncertainty about the state of the economy, consumer demand and the labor market. Although the rate of inflation has cooled and consumers are more optimistic than they were earlier in the year, they’re still looking for value and spending cautiously, wondering how quickly the latest Fed rate cut might benefit them and uncertain how the outcome of the presidential election will affect their wallets.

Holiday Projections Are Positive But Muted

Despite these challenges, many still expect to see single-digit holiday sales growth this year. Salesforce predicts November to December retail sales growth of 2 percent (the company said last year’s sales increased by 3 percent year-over-year vs. the same period in 2022) and Customer Growth Partners’ preliminary holiday retail sales estimate calls for 2.5 percent to 3.5 percent YoY growth.

Action Steps for Brands

Supply chain visibility and predictability will be key to profitably navigating this year’s peak season complexities. With inventory typically being brands’ biggest expense and shipping and fulfillment not far behind, managing these costs is crucial, especially if consumer holiday spending doesn’t turn out to be as strong as hoped.

Brands should act now to ensure they're working with flexible, agile logistics partners who can help them do the following:

1. Optimize inventory management.

Allocating and moving the right volume of inventory to the right place at the right time is vital for maximizing sales and guaranteeing on-time holiday delivery. But that means managing complex multichannel logistics across online marketplaces, direct-to-consumer channels, stores and wholesalers. Brands can’t afford to have inventory stuck at any point this season — it needs to be moved quickly from port to warehouse to the optimal store or fulfillment location.

Even brands that had the foresight to order early to avoid tariffs and higher freight costs may run into bottlenecks, such as excessive overstock in certain locations. Versatile third-party logistics (3PL) partners that can turn on a dime and have the agility to manage geographical and timeline logistics challenges can help ensure there are no lags when inventory is just sitting idle, waiting to be moved to the right place.

2. Optimize shipping costs by negotiating rates and diversifying carriers.

Choosing a well-established logistics and fulfillment partner that has the scale to shop the best rates in real time and achieve the best prices is another key to ensuring a profitable peak amid this year’s pressures.

3. Sync advertising and supply chain management.

Connecting marketplace and feed advertising initiatives with supply chain operations is critical to improving efficiency and reducing costs, especially during high-volume periods like the holiday season.

The right 3PL partner can mean the difference between a highly profitable holiday, with customers delighted by reliable, on-time delivery or a reputation- and revenue-draining quarter marked by disappointed customers whose loved ones didn’t receive their gifts in time. For brands whose 3PL partners aren’t delivering excellent results, it’s not too late to switch — but they need to move quickly to be able to compete with the biggest retailers this holiday season.

Joe Barth is chief logistics officer at Cart.com, the leading provider of comprehensive omnichannel commerce and logistics solutions that enable B2C and B2B companies as well as public sector agencies to unify commerce, from discovery to delivery.