Retailers spend all year gearing up for this moment: the launch of the all-important holiday shopping season.
The months of November and December are the most critical time of the year in retail, accounting for as much as 30% of annual sales for many retailers, according to the National Retail Federation.
Shoppers are expected to spend $655.8 billion in the two-month period this year, an 3.6% increase over last year’s spending, according to the NRF.
Online sales are forecast to grow between 7% and 10% over last year to as much as $117 billion.
That means a website glitch — even if it lasts only a couple minutes — or running out of stock on a popular item can cost companies millions of dollars in lost sales.
For that reason, retailers work hard all year long to get the holidays right.
For Walmart, Target, and Amazon, that has meant overhauling websites and shopping apps, speeding up shipping, and using predictive analytics to try and determine the right amount of product to stock up on for the busy holiday season.
Target last year broke a record in online sales on Thanksgiving, so it has been focused over the last year on ensuring that its website works seamlessly during the high-traffic holiday period.
The company says it has made “dramatic” changes to Target.com to speed up the checkout process and to make it function more fluidly across desktop computers, tablets, and smart phones.
It also widened its toy selection by 15% over last year, since the holiday season accounts for 50% of Target’s toy sales.
“We’ve made back-end platform changes that are designed to enhance day-to-day functionality — from account management to checkout — and build more capacity and flexibility as we head into the holiday season,” Target spokesman Eddie Baeb said.
The company has also made significant changes to speed up shipping for online orders.
Specifically, Target doubled the number of stores that are able to ship orders, bringing the total number of shipping-enabled stores to 1,000 out of Target’s 1,800 locations nationwide.
With this change, Target’s stores are now expected to fulfil more than half of the retailer’s holiday orders, executives said.
This not only cuts down on shipping times for customers, but it also reduces costs for Target because the packages don’t have to travel as far.
“With this increase, Target will be able to fulfil more orders, spread workload and improve average ship times during the holidays,” Baeb said.
Walmart meanwhile has been heavily focused on expanding the breadth of products it offers online.
The company has more than doubled its online assortment to 20 million products since last year, and “millions of additional items are scheduled to be added in the coming months,” the company said.
To prevent customers from getting overwhelmed by all the new products, Walmart made improvements to its “recommendation engine,” which so far has led to a 20% increase in customer engagement with items the website recommends.
It has also built a new software called Electrode that helps its web pages load 33% faster, according to Walmart.
But Walmart doesn’t just want its website to be fast: it needs to prevent crashes, as well. The company says it expects
about 10 times its normal traffic rates on Walmart.com from Thanksgiving to Cyber Monday.
So the retailer built software called OneOps that makes it possible to handle peak traffic on Walmart.com across several clouds — versus a single cloud — to avoid downtime on the site.
To make sure it works properly, Walmart has been stress-testing the website in the last several weeks by hitting it with traffic that well exceeds expectations during the holidays.
Walmart is also trying to cut down on shipping times this year after doubling its number of online fulfillment centres — which are responsible for packing and shipping online orders — from five warehouses last year to 10 this year.
Customers can also choose to pick up online orders in stores. Last year, the company received up to five times as many same-day pickup orders during the holiday period compared to a normal week.
So Walmart is staffing up its store teams responsible for helping customers with online pickup, and for the first time, adding dedicated “pickup” managers to every store.
Amazon has also been adding to its staff to handle holiday demand. The retailer this year hired 120,000 temporary workers for the holidays, up 20% from the 100,000 workers it hired during the period last year.
Amazon’s holiday preparation this year has also been focused on improving its mobile app to make shopping and in-store price comparisons easier.
For example, the company expanded the assortment of barcodes that shoppers can scan to compare prices in stores to those on Amazon.
The app is also offering a tool again this year called “watch a deal” that alerts shoppers to specific holiday deals whenever they become available.
According to the company, seven in 10 Amazon customers shopped using a mobile device last holiday season.
As Target, Walmart, Amazon, and others prepare for the rush holiday orders, delivery companies are readying for an influx in packages.
The United States Postal Service is expected to deliver 750 million packages this holiday season, or 5 million packages per day — a 12% increase from the 670 million delivered during the period last year.
The United Parcel Service will ship another 700 million packages over the same period, which is a 16% increase from the previous year.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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