Yesterday, this author had the opportunity to view ComScore’s Quarterly State of the Online Economy webcast.  Any team or individual professional with responsibilities to plan supply chain or online business should consider signing-up for this series of quarterly webcasts since they are very good. Yesterday’s session included a review of Q3 online activity, a  re-visit of online fulfillment  results from the 2012 holiday buying season, and ComScore’s preliminary projections for this year’s 2013 holiday buying season.

In 2012, according to ComScore, online E-commerce sales rose by 14 percent. More importantly, analysis of all of the various online data indicated that consumers had concerns about the state of the economy and events occurring in Washington, and thus online sales clearly peaked at the very latter stages of December. Consumer buying patterns reflected high sensitivity to price and thus high promotional events such as Thanksgiving, Black Friday, and to some extent, Cyber Monday, all reflected spikes in buying activity.  In terms of a pattern of one-day sales growth, Thanksgiving Day has grown the fastest over the past five years, growing a cumulative 201 percent on five years. It should therefore be no surprise that more and more brick and mortar retailers plan to open early on Thanksgiving to counter online buying promotions. Contrary to broad misconception, ComScore’s analytical data indicates that Green Monday, which occurs 10 days prior to the Christmas holiday, exceeded Cyber Monday in online sales, which is another indicator that consumers waited until the latter period to make online purchases. Also In 2012, there were 12 days of greater than $1 billion in online sales activity.

The ComScore team cautioned that 2013 reflects a much shorter shopping interval between the Thanksgiving and Christmas holidays in the U.S. , which reflects a mere 26 days. Growth in online activity involving mobile devices is projected to be $10 billion during this period, which is another reinforcement of a price sensitive online shopper equipped to price compare on a real-time basis. This online analytics firm additionally predicts that 25 percent of buying activity will occur after December 15th, with the period from December 15-20 being very crucial. And get this- they have further predicted that in one Monday to Friday week, there could be as much as five consecutive $1 billion dollar online fulfillment days.

Reviewing all of this data, it struck us that supply chain, Sales and Operations Planning (S&OP) and online fulfillment teams will again be put to the test in 2013.  More than ever, advanced capabilities in inventory management and responsive replenishment will separate leaders from laggards.  The ability to have real-time visibility and be able to pool inventory needed to support the breadth of omnichannel fulfillment needs is part of that differentiation. In 2012, we advised retailers to tear down the functional walls between traditional and online supply chain organizations. In 2013, we will again observe and teams will experience how important that becomes.

Consider a situation where the usual peaks will occur during the Thanksgiving holiday and Cyber Monday, but an even greater surge possibly occurring in the ten day widow prior to Christmas.  Consider the ability of the supply chain to respond to five consecutive days of greater than $1 billion in sales, where the need for inventory and logistics will peak across multiple areas.  Consider a consensus of predictions that consumers remained rather concerned about the future, and especially what is happening or not happening in Washington, a far more price-sensitive consumer whose holiday buying may be tempered or at least more focused toward specific needs.

The notion of “all hell breaking loose” will indeed take on a new dimension, and S&OP teams had better have clear communication with sales and marketing as to which specific product promotions are planned and how the supply chain will respond. Holidays in Asia and other parts of the world also follow in early January, which is another overlooked aspect to responsive inventory positioning and management.

Thus, a clear understanding and early detection of demand patterns among products, having deep visibility of the end-to-end supply chain, along with a responsive collection of key suppliers will obviously provide differentiation among your competitors in the market. Needless to state, supply chain teams are going to be very busy in the next few weeks, perhaps skipping Thanksgiving and working several weekends. S&OP teams will more than likely be having frequent added meetings to deal with any supply and demand imbalances that are bound to present themselves.

Another takeaway regarding what to expect in the coming few weeks are the critical role that logistics and transportation planning and execution capabilities will play in the coming weeks.  ComScore’s analytical data continues to reinforce that the online consumer, given a choice, shops where free shipping is offered. The offering of free shipping clearly correlates to buying preferences. Secondly, Supply Chain Matters has frequently alerted our readers that the flexibilities in transportation services have become rather constrained as carriers and service providers respond to a far more cost sensitive pattern of normal demand for transportation services.  Thus, the ability to take advantage of seasonally based flexible capacity will be a function of how responsive teams have become in planning and anticipating the specific surge periods of demand, as well as having solid and longstanding relationships with particular logistics and transportation service providers. Global providers such as FedEx and UPS have outstanding planning capabilities and are already predicting the specific days of expected peak shipment activity, and are planning flex capacity around such days.  But, this year more than previous, there is finite capacity that can be deployed, and advertised delivery times will vary.  Compound that with the need to responsively replenish inventories or have a supplier fulfill a last-minute need for added inventory, and the global network can become taxed.  It will be interesting for our community to observe how global transportation and logistics responds to the 2013 pattern of peak periods for both fulfillment and last minute replenishment.

The bottom line from our lens is that the 2013 holiday buying surge will provide another test of how prior investments in responsive business processes, logistics and transportation planning and end-to-end visibility, and advanced technology differentiates the winners. For retailers and online fulfillment,the  tearing down the prior functional walls among traditional retail and online inventory and fulfillment management should provide benefits.

We will all see how this plays out.

Bob Ferrari