Q4 and the end-of-year holiday season brings with it one of the biggest busiest times of the year for e-commerce and logistics businesses.
While this time of year presents numerous opportunities, it also presents significant challenges.
As order volumes increase, the pressure to fulfill orders on-time only rises as well. Businesses who can consistently deliver on-time throughout this period will be able to extract more business from their existing customer base and gain new market share, while those who can’t will lose customers left and right and struggle to maintain their foothold in the market.
While there’s more than one way to improve on-time fulfillment, the challenge is doing so in a sustainable way that doesn’t completely wipe away profit margins or require major capital investments.
That’s where Veryable can help.
In this article, we’ll explain how leveraging the Veryable solution helps e-commerce and logistics businesses fully capitalize on the opportunities that peak season brings, while simultaneously improving operational performance and profitability.
Heading into peak season, the traditional approach has been to hire a crew of seasonal workers to meet average demand throughout the busier months. The problem with this approach is that we can’t predict the future. In the distribution space where demand constantly fluctuates, it’s hard to predict upcoming labor needs a few weeks in advance, much less several months out. Even with the best forecasting methods, some amount of uncertainty is impossible to avoid.
Consider the following situations...
If demand ends up higher than you planned for, you’re going to be forced to rely on overtime to keep up. While this may work as a crutch, relying on it too much will only cause greater problems down the road with retention and quality. When you’re adding work to your team’s plate, they’re going to be forced to work faster which greatly increases the likelihood of costly mistakes occurring. This time of the year, service level expectations are higher than ever and any mistakes or delays will likely lead to lost customers. Also, pressuring your full-time employees to work overtime for weeks straight is a great way to promote turnover.
If demand is lower than planned for, you’ll be overstaffed and burning through your margins. Your options here are either to lay off a portion of your seasonal workforce, or stay overstaffed for the time being and hope that demand increases in the near future.
Neither of these options is ideal - if you lay off part of your seasonal workforce, all the time and money that went into recruiting, screening, hiring, and training goes right out the window. If demand increases a week after, it’s very unlikely that you’ll be able to get any of these workers to come back. Trying to hire mid-season is also a slow process, and that means you’ll be severely capacity constrained and creating opportunities for your competitors. On the flip side, every day you stay overstaffed is hurting your bottom line in a major way.
If you experience this, your remaining employees will be forced to pick up the extra workload. The last thing you want to do is disappoint your customers and deliver late, and this means lots of mandatory overtime. Your team isn’t going to like this, and if you don’t figure out a way to backfill these spots quickly you’ll likely see even more turnover down the road. Sure, your FTEs might like working overtime every now and then, but not when they’re pressured into doing so every night for several weeks straight. The challenge is, trying to backfill turnover with FTEs mid-season is a painfully slow process, not to mention that you don’t even know if the new workers will meet your expectations. You could spend weeks trying to backfill spots only to end up right back where you started.
This likely means that whatever projects or other revenue-driving initiatives your managers are working on will have to be put on hold so that they can help your skeleton crew get orders out on-time.
What if this happens right before a huge spike in orders? Now you have literally no way to get everything out on-time even with overtime and managers stepping in to help. Late deliveries are costly as it is when you factor in the extra fees, but even more so when you're losing customers. This time of year is when expectations are highest for on-time delivery, and when you can’t do so consistently, not only are you decreasing the lifetime value of a customer who is less likely to do business with you again, but you’re also increasing the cost of acquisition as it’s far more expensive to win new customers than retain existing ones.
At the end of the day it’s likely that you’ll experience all of these situations to some varying degree throughout your peak season, and if you plan on addressing them with a fixed supply of labor you can expect to see inflated costs, poor service, missed revenue, turnover, and numerous headaches for your team.
Veryable’s on-demand labor marketplace labor connects businesses with skilled and vetted workers at the click of a button, enabling businesses to create a flexible extension of their full-time workforce called a labor pool.
Ditching the old-fashioned approach and adopting this strategy has numerous benefits during peak season…
When you build your labor pool, you gain the ability to match headcount to demand on a daily basis. This means your team can review forecasted demand, and then adjust headcount accordingly. You never know just how busy it will get during peak season, and with a labor pool at the ready, you can tackle spikes in demand, call-outs, special projects, etc without having to ask your full-time employees to work overtime or putting on-time delivery targets at risk. The opposite is true as well - if demand dips down for a week you can post fewer ops and ensure you don’t have workers standing around your facility twiddling their thumbs and eating up your margins.
Instead of going through the seasonal hiring cycle to increase your headcount and meet your average demand during these busier months (green dotted line), just keep your full-time headcount at your minimum volume (yellow dotted line). As demand comes in above that minimum headcount, that’s when you leverage your flexible capacity. When your volume is lower, (closer to the yellow dotted line), reduce flexible capacity usage accordingly and now you’re perfectly right sized to meet that level of demand.
With a leaner full-time headcount and unlimited flexible capacity at your disposal, you can take on every order that comes your way while simultaneously minimizing risk and giving yourself the option to scale down instantly if needed. This is especially beneficial in uncertain times like what we have been experiencing over the past few years.
Not only does this approach help you maintain perfect service regardless of demand, but it gives your business a significant competitive advantage. Your competitors who hired a seasonal workforce to meet average demand throughout the season will be ill-equipped to handle demand above what they planned for. As previously mentioned, hiring more workers mid-season is slow, and this leaves significant opportunities on the table for those with a labor pool who can increase the size of their workforce in less than a day.
Additionally, adopting this approach will help you increase retention and morale among your full time workforce. How? With the ability to bring in extra workers as needed, your full-time employees will have more predictable schedules with less mandatory overtime, and they'll be able to use their time off without feeling like they're putting the whole facility behind. You can read more about why this is in our article about how the use of on-demand labor impacts full-time employees.
With more than 675k+ skilled and vetted workers on the Veryable platform, you can find workers with the exact skills and experience needed to support your operations. Additionally, the platform’s rating and review system leverages genuine reviews from previous businesses to provide an unbiased assessment of an Operator's track record. Unlike traditional resumes, which are often tailored to present a certain image, these reviews offer a truly unfiltered perspective.
The best part is, Veryable gives you access to these skilled and vetted workers without the inefficiencies of the hiring process or the restrictive nature of working with a staffing agency.
When you post on the Veryable platform, you’ll see bids come in instantly from local operators. You’ll then have the ability to review their experience, qualifications, and ratings from previous businesses and select the exact ons you want. Compare this to a staffing agency where they just send you whoever they have available, or direct hiring where you spend weeks going through the process just to test the waters with a candidate.
While Veryable gives you more information about a worker than traditional methods and full control over selection, it’d be unrealistic to think that you’re going to absolutely love every operator on the platform. Thankfully, if an operator isn’t the right fit, you aren’t locked in whatsoever. Just rate an operator accordingly, prevent them from bidding on your ops again, and then bring in a different operator the next day.
In logistics and e-commerce facilities, Veryable operators commonly assist with tasks such as:
To learn more about the skillsets and experience Veryable operators possess, click here.
With the ability to scale each day to the precise level of support needed, your business can stop relying on overstaffing and overtime. This will lead to drastic reductions in cost per unit. You’ll also save thousands more when you don’t have to spend months going through the process of recruiting, screening, hiring and training a seasonal workforce. This frees up time for your team to focus on other cost-cutting or revenue-driving initiatives.
Lastly, eliminating late deliveries is another way on-demand labor can help you reduce expenses - every delay brings extra costs: handling fees, detention fees, and sometimes the need for more expensive expedited shipping to catch up on lost time. Not to mention the fact that its expensive to replace customers.
No need for mass layoffs - after peak season has passed and demand has returned to normal levels, you can taper down your platform usage just as quickly as you increased it. Just stop posting new opportunities, and just like that you’re back to your off-season headcount. The best thing is, you’ll still have all of these trained operators in your labor pool, and that means when demand spikes again you can quickly bring back these workers at zero cost to scale.
This also gives you a competitive advantage during your offseason - your competitors who hired a crew of seasonal workers and then laid them off after will be constrained by labor after doing so and won’t be able to capitalize on any unplanned spikes in demand.
In this video, business users from several different e-commerce businesses share how the Veryable solution has helped them take full advantage of peak season while cutting costs and improving service levels in the process.
For more on-demand labor success stories, click here.
The Q4 peak season provides a massive opportunity for e-commerce & logistics businesses to grow their revenue and market share, but only for those who are properly prepared and can consistently deliver the world class service customers expect.
By ditching the old-fashioned approach to peak season and building an on-demand labor pool, you’ll be able to delight your customers with on-time fulfillment regardless of volume in a cost-efficient manner and capitalize on opportunities that your competitors can’t due to capacity constraints.
To get started with on-demand labor, take 5 minutes to create your free business profile. Our team of operational experts will reach out shortly after to answer any questions you have and ensure that your team is setup for success. To learn more about the process of getting started, click here.
Have any questions? Contact Us
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