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Peak season can be a make-or-break time for businesses, especially those in the retail and e-commerce industries. With increased demand comes a greater need for timely shipping, and effective inventory management is during this time. According to GreyOrange, one of the most common challenges is the sudden, often drastic, increase in demand. 

To ensure profitability, companies must strike a delicate balance: ensure that they have enough stock to meet customer demand without overstocking. Poor inventory management can lead to stockouts, overstocking, and ultimately, lost sales. Plus, warehouse space is already at a premium, a circumstance that is only amplified by the need to increase stock before and during peak season.  

However, many companies struggle to keep up with the pace and deliver products on time, leading to customer dissatisfaction and loss of revenue. Retailers can take advantage of the optimistic outlook and spending inclination of consumers during peak season by prioritizing optimization, and the delivery of value-oriented offerings.

In this blog, we will discuss the main inventory management challenges during peak season and strategies for optimizing inventory levels.

Inventory Management Challenges
During Peak Season

During peak season, businesses face several inventory management challenges that can impact their operations and profitability. The challenges that accompany peak season include:

1. Increased demand

One of the most common peak season challenges is the sudden, often drastic, increase in demand. Companies must strike a delicate balance between ensuring that they have enough stock to meet customer demand without overstocking during peak season. By analyzing sales trends and historical data, forecasting demand accurately, and implementing effective inventory management strategies, businesses can optimize their inventory levels and meet customer demand during peak season.

✅ 2. Shipping delays

With increased demand comes a greater need for timely shipping. However, many companies struggle to keep up with the pace and deliver products on time, leading to customer dissatisfaction and loss of revenue.

McKinsey reports that when delivery times are too long, almost half of omnichannel consumers will shop elsewhere. More than 90% of US online shoppers expect free two- to three-day shipping. Roughly 75% of apparel, hard goods, and specialty retailers intend to build out network capabilities that offer two-day or faster delivery, and 42% are aiming for one-day click-to-customer lead times.
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3. Inventory management issues

Poor inventory management can lead to stockouts, overstocking, and ultimately, lost sales. Plus, warehouse space is already at a premium, a circumstance that is only amplified by the need to increase stock before and during peak season.

According to GreyOrange, poor inventory management can lead to lost sales, and warehouse space is already at a premium, which is only amplified by the need to increase stock before and during peak season. One of the most common peak season challenges is the sudden, often drastic, increase in demand. To ensure profitability, companies must strike a delicate balance.

4. Experiential expectations

Whether it’s a result of the Amazon effect or the on-demand services that fill our daily lives, consumer expectations are clear: waiting more than two days for order delivery is simply unacceptable. Forbes reports that 90% of consumers expect two- or three-day shipping to be standard, and 32% of global shoppers will abandon their carts if an estimated shipping time was too long. Rising standards are forcing companies to step up their game.

Businesses face several inventory management challenges during peak season, including increased demand, shipping delays, inventory management issues, and experiential expectations. However, by implementing effective inventory management strategies such as demand forecasting, network optimization, and liquidating obsolete inventory, businesses can optimize their inventory levels and meet customer demand during peak season.

Strategies for Optimizing Inventory Levels

Strategies for optimizing inventory levels during peak season are crucial for businesses to meet customer demand and avoid stockouts or overstocking. To overcome these challenges, businesses can implement the following strategies:

1. Demand Forecasting

Accurately forecasting inventory needs for peak season is a daunting task. Spikes in buyer behavior around this time of year are always present, and yet can be unpredictable all the same. In order to avoid order fulfillment woes, businesses can leverage data from previous peak seasons and even previous sales in general to gauge the stock they’ll need to keep buyers satisfied.

According to NetSuite, accurate inventory forecasting ensures businesses have enough product to fulfill customer orders while not tying up cash in unnecessary inventory. Getting forecasts right requires a mix of data analysis, experience in current inventory levels, outstanding purchase orders, historical trendlines, forecasting period requirements, expected demand and seasonality, maximum possible stock levels, sales trends and velocity, and customer response to specific products.
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2. Effective Inventory Management

Businesses must ensure that they have the right stock at the right time, in the right place, and in the right quantities to meet customer demand. This requires effective inventory management, which can be achieved through automation and AI.

According to Deskera, leveraging technology and automation is pivotal in harnessing the full potential of demand forecasting for improved inventory management. Innovative tools, such as inventory management software, artificial intelligence (AI), and machine learning applications, provide businesses with advanced capabilities to enhance accuracy, efficiency, and adaptability in their forecasting processes. 

3. Network Optimization

Network managers can use data to improve inbound movements to manage inventory ahead of the peaks to handle consumer demand. Managing supply and demand is the key to successful peak season inventory management and fulfillment.

A key to the success of any supply chain is to figure out ways to decrease the level of safety inventory carried without hurting the level of product availability. Businesses can use data to improve inbound movements to manage inventory ahead of the peaks to handle consumer demand.

According to Deskera, leveraging technology and automation is pivotal in harnessing the full potential of demand forecasting for improved inventory management. Innovative tools, such as inventory management software, artificial intelligence (AI), and machine learning applications, provide businesses with advanced capabilities to enhance accuracy, efficiency, and adaptability in their forecasting processes. 

4. Liquidating Obsolete Inventory

It is widely recognized that regularly reviewing sales data and proactively addressing slow-moving products can help reduce the impact of obsolescence. By identifying slow-moving products and taking action to address them, businesses can reduce the risk of inventory obsolescence and improve their inventory management processes. Analyzing sales data, conducting regular inventory audits, and monitoring product life cycles, businesses can minimize the risk of accumulating obsolete inventory and maintain a competitive edge.

Case Study:
Ware2Go’s Inventory Strategy

Ware2Go is a company that helps businesses navigate seasonal demands on inventory and fulfillment without increasing off-season storage costs or over-extending internal resources at peak season. According to Ware2Go CEO, Steve Denton, businesses can lower their peak season fulfillment costs and make room for their incoming seasonal inventory by following these tips:

1. Re-allocate slow-moving inventory
Businesses should re-allocate their slow-moving inventory to make room for their incoming seasonal inventory. This can help reduce storage costs and free up space for more in-demand products.

2. Prioritize demand forecasting
Accurate demand forecasting is crucial for effective inventory management. Businesses should analyze sales trends and historical data to forecast demand accurately and adjust their inventory accordingly.

3. Liquidate obsolete inventory ahead of peak season
Regularly reviewing sales data and proactively addressing slow-moving products can help reduce the impact of obsolescence. Businesses should liquidate obsolete inventory ahead of peak season to make room for more in-demand products.
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Struggling with Inventory Management During Peak Season?

Businesses can epitomize their levels during peak season by implementing strategies such as allocating slow-moving inventory, prioritizing demand forecasting, and liquidating obsolete inventory ahead of peak season. By planning ahead, analyzing sales trends and historical data, and using inventory management software, businesses can strike the right balance between inventory, service, and costs to meet customer demand and avoid stock outs or overstocking.

Schedule a Call with our E-commerce expert to improve inventory management for your online store.

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