Black Friday madness erupts like clockwork every year. What for consumers is a rush for long-coveted items, is preceded by many months of preparations by retailers, warehouse managers, and distribution managers. At the root of their frantic planning is sorting out the logistics for this shopping spree that sees millions spent every year. This article explores the impact Black Friday has on the logistics industry – 2023 one year after the pandemic.
In 2022, this shopping spree cost consumers a record $9.12 billion in online shopping, according to Adobe Analytics, surpassing the 2020 Black Friday sales record of $9.03 billion.
What is Black Friday?
Black Friday is a shopping holiday that originates from the United States but is fast spreading around the world. In fact, only a few countries don’t celebrate Black Friday.
Black Friday traditionally falls on the Friday after Thanksgiving in the United States. On this day, which marks the start of the holiday retail season, retailers offer fantastic discounts and amazing deals on their products.
Economists have traditionally regarded the sales results on Black Friday as an indicator of consumer confidence.
Black Friday used to be synonymous with long queues and stampedes in stores for bargains, but the e-commerce surge has changed that. These days, Black Friday is happening much more online than it does in physical stores. In fact, 69% of Black Friday shopping in 2022 happened online.
The Effect of Black Friday on Retailers and Warehouse Managers
Black Friday is both exciting and stressful for retailers and warehouse managers, and the whole logistics industry. For retailers, Black Friday has traditionally been a tremendous financial boost. In 2022, consumers spent a record-breaking $9.2 billion online according to Adobe Analytics and consumers returned to physical stores in droves.
But behind these record sales hide many challenges for retailers. The promise of huge bargains sees shoppers overcrowding stores, overwhelming staff, and creating the ideal conditions for shoplifting that go unnoticed in the chaos.
In addition, inventory remains an ongoing nuisance – retailers must keep a tight handle on their inventory. It’s a balancing act between not too much and not too little, but sufficient to meet the increased demand.
What about warehouse managers? How does the big day affect them?
The run-up to Black Friday is a critical time in the logistics industry and especially for warehouse managers, who have to juggle increased inventory with available space. Planning ahead is crucial to ensure that the warehouse and its surroundings don’t end up with trucks that can’t be unloaded due to insufficient space.
Of course, the increased inventory arriving and leaving also means a heavier workload and the need for additional workers.
During this time, warehouse managers are under pressure to ensure orders are dispatched quickly and accurately for on-time delivery.
In addition, increased order volumes can easily cause mistakes when people work under constant pressure, so stringent quality control measures need to be in place to minimize errors.
Impact on Logistics Industry during Black Friday
The surge in consumer demand during Black Friday has a significant impact on the logistics industry.
Increased Pressure to Deliver
The pressure on shipping and courier services is truly astonishing. Just for one shipping company, namely UPS, deliveries are expected to be in excess of 32 million parcels worldwide per day during the week between Black Friday and Cyber Monday. Add the pressure on courier services to deliver packages on time, and you see courier vans, scooters, and trucks clogging city traffic worldwide.
Last-mile Delivery Chaos
Last-mile delivery, which is the last stretch to the customer’s doorstep, becomes particularly challenging during Black Friday. The combination of increased orders, demands for rapid delivery, and congested traffic mean that logistics companies are compelled to turn to technology to ensure deliveries arrive at the right address in a timely manner.
Faced with endless bargains and fantastic deals, many shoppers have a reality check when they take a good look at their purchases, and buyer’s remorse sets in. For logistics companies, the large volumes of product returns mean they must have reverse logistics processes in place that can be implemented efficiently.
With increased order volumes, expectations for timely deliveries, and potential delays, effective communication becomes critical. During this busy time, logistics companies and retailers must collaborate closely to plan and execute logistics strategies smoothly.
In addition, logistics companies need to be ready with accurate tracking information and updates so they can manage customer expectations.
As with warehousing, logistics companies also need to increase their temporary staff to cope with the increased demand. In addition to deliverymen, drivers, customer service personnel, warehouse workers, ship operators and forklift drivers, logistics companies also need to hire engineers and data analytics specialists to help them leverage technology and automation to streamline their processes.
Black Friday Challenges 2023
In addition to the usual impact, Black Friday has on the logistics industry – like increased demand for transportation, a sudden spike in the number of shipments and deliveries, the need for warehouse space, and labor shortages – 2023 poses unique supply chain challenges.
Due to climate change and the resulting heatwaves experienced in some parts of the world, the cost to keep perishables and cosmetics cool will increase significantly. Both in warehouses and in transit, these items will have to be kept cool. In addition to being kept at optimal temperatures, these items must also be prioritized for deliveries.
This year, we may also see supply chain disruptions due to industrial action. The UK has seen an increase in industrial action in recent times, with strikes by the Royal Mail in 2022, which hugely disrupted deliveries. Amazon has faced a wave of walkouts in recent months – could we see more walkouts over the peak retail season?
Role of Technology in Managing Logistics Operations
Logistics companies can leverage a whole slew of technologies, including predictive analytics, artificial intelligence, machine learning, cloud computing, and augmented reality to help them cope with the impact and challenges that Black Friday shopping generates for the logistics industry not only in 2023 but also for the upcoming years.
1. Automated Sorting and Picking Systems (ASPs)
Logistics companies can implement automated sorting and picking systems in their warehouses to increase efficiency. The software can be programmed to do different kinds of pickings such as batch picking or cluster picking. ASPs include technologies like conveyor systems, robotic arms, and autonomous guided vehicles (AGVs), which can speed up the work and minimize errors.
2. Order Management Systems (OMS)
An order management system (OMS) can be used to automate order and fulfillment processes. For logistics companies, the system provides a database of carriers, billing and payment details, and order processing records, ensuring efficient coordination between warehouses and carriers.
3. Transportation Management Systems (TMS)
A TMS is a logistics platform that enables businesses to ship, move, and receive goods. The system plans, executes, and optimizes the physical movement of goods, both incoming and outgoing. The software optimizes transportation routes and helps companies to manage their fleets efficiently.
4. Warehouse Management Systems (WMS)
WMS facilitates efficient inventory management, order fulfillment, and warehouse operations. It enables better control over stock levels, picking and packing processes, and overall warehouse productivity.
5. Internet of Things (IoT) Devices
IoT devices have many applications in the logistics industry. With wireless devices, such as radio-frequency identification (RFID) tags and global positioning systems (GPS), logistics companies can track shipment location and monitor factors like temperature and humidity to ensure products don’t spoil during transit.
IoT technology is already widely used to automate inventory management via RFID tags to track where items are in the warehouse and to monitor inventory levels in real-time.
In addition, some warehouses already use exoskeletons to help their warehouse employees move heavy goods where robotic equipment can’t be installed.
Preparation for Retail Peak Season
Logistics and warehouse managers can take steps to prepare and be ready for the retail peak season 2023. Here are some ideas.
1. Leverage Technology
Logistics companies can leverage predictive analytics tools and programs to prepare for the increased demands of the shopping season. In transportation and logistics, predictive analytics leverages big data, artificial analytics, and machine learning for a variety of applications, including demand forecasting, route optimization, and supply chain management.
The technology enables companies to
- Anticipate consumer needs and demand patterns
- Avoid inventory miscalculations
- Optimize delivery routes
- Save fuel costs
- Plan and optimize warehouse space
- Predict labor needs
- Predict possible supply chain disruptions
2. Assess Warehouse Layout
Take a careful look at how the warehouse is being used currently and decide if it needs to change once inventory starts arriving. Consider inventory placement and accessibility. Inventory should be easily accessible, so warehouse staff can work efficiently. Investigate ways to improve warehouse layout flow so people and goods can move freely.
3. Maintain Warehouse Equipment
It’s essential to maintain warehouse equipment throughout the year so they work efficiently and don’t become a hazard for humans to use or suddenly stop working. Make sure all your equipment is in top condition before the rush starts. You don’t want a critical piece of equipment to malfunction amid Black Friday madness. Have your equipment ready and serviced well in advance.
4. Hire and train temporary workers
Plan ahead for staffing shortages. Companies can use predictive analytics to know how many extra workers they would need and for how long.
However, just having more hands on the premises won’t do the trick. Temporary workers obviously need training to understand the layout of the warehouse, where to find goods, and how to operate different equipment. It’s crucial to complete the training before the rush starts, so workers can hit the ground running.
Besides, a large proportion of the people you hire won’t have any warehouse experience, so training might take longer than you might expect.
5. Invest in Workforce Wearables
Workforce wearables are a type of IoT device, which includes exosuits and exoskeletons. These wearables provide vital physical assistance to warehouse employees who have to lift and move heavy items.
Exoskeletons don’t only support workers; they prevent injuries and minimize exhaustion. These devices have gained popularity because they can extend the working life of warehouse employees.
Leverage Technology to Train Your Staff
Training is key to getting warehouse and logistics employees ready for increased demands during peak season. The training solution offered by how.fm is helping countless companies prepare their employees for the deluge of Black Friday orders. The Digital Training Software enables digital onboarding and training that improves warehouse efficiency as soon as things get busy.
The training is accessible via mobile, tablet, or other smart devices whenever workers need it, in over 30 languages. So, when a Mexican worker needs to understand the processes in an American warehouse, there is no language barrier – all the necessary information is available on the device the worker carries with them.
Want to empower your workforce for Peak Season 2023?
Final Thoughts on Peak 2023
It’s undeniable that the 2023 peak holiday shopping season beginning with Black Friday, has its impact on the logistics industry, ranging from labor shortages to overstocked or understocked warehouses, equipment breakdown, and increased delivery demands.
Companies can leverage a whole range of technologies to predict labor needs, avoid inventory miscalculations, and optimize delivery routes. As technology and automation continue to advance and predictive analytics are increasingly leveraged, the future outlook for Black Friday logistics looks promising, with more companies in logistics and warehousing running smoothly throughout the peak shopping season.