E-commerce: How logistics players are increasingly mastering the peak period

Throwback to the 2023 peak season and what e-commerce and logistics actors have implemented to cope with the surge in deliveries associated with this peak of activity.

In the world of e-commerce, the end of the year is commonly referred to as the “peak period” or “peak season.” As the name suggests, it’s a period of intense commercial activity, fueled by exceptional promotions eagerly anticipated by consumers in search of good deals or looking to do their Christmas shopping affordably. Crucial for all e-retailers, the success of the peak season largely depends on the efficiency of logistics, especially the capacity of last-mile actors to deliver 20% to 60% more parcels than usual, on time. In total, we’re talking about hundreds of millions of parcels of all shapes and sizes to be delivered throughout France within increasingly shorter deadlines, with next-day or two-day delivery now being the expected standard.

A season that’s becoming increasingly longer

Historically, the peak period began on the last Friday of November, Black Friday, and ended on December 24th. It now starts earlier and earlier with Singles’ Day (November 11th), which Chinese e-commerce giants (AliExpress, Temu, Shein, etc.) seek to establish in Europe, and also because Black Friday is now preceded by Black Friday Week, which itself is preceded on many merchant sites by targeted special operations.

Operationally, the peak season also ends later, with websites having to manage both returns from the holiday season and prepare for the “private sales” week preceding the winter sales. As a result, the high season now extends from mid-November to mid-January, with several days of very high peaks at the end of November (Black Friday and Cyber Monday) and mid-December (the last round for shipping and distributing purchases guaranteed to arrive “before Christmas”).

2023, a satisfying peak season for e-commerce

Amidst inflation, loss of purchasing power, and prevailing gloom, there were concerns that the 2023 peak period might not be the best vintage for online sales of physical products. According to a survey conducted in mid-October 2023, 40% of French people planned to spend less for the holiday season, and 57% intended to give fewer gifts (Fevad / Toluna Harris Interactive). Far from being penalized by these forecasts of restraint, e-commerce, on the contrary, was seen by 78% of French people as the solution to the dwindling purchasing power, with 62% intending to take advantage of Black Friday, even resorting to credit or installment payments offered by an increasing number of merchant sites, even for modest amounts.

These intentions more or less materialized. While the assessment of Black Friday alone is described as “mixed” with “only” a 7% increase in sales value compared to 2022 (Criteo), the overall result of the peak period is positive, reinforcing the relatively good figures of e-commerce for the year 2023 (source Fevad):

• a total turnover of 159.9 billion euros, up 10.5% compared to 2022 (146.9 billion), and 2.35 billion transactions (+ 4.4%);
• a lesser decline in sales of physical products (-1.8% compared to -7% in 2022) for an annual turnover of 61.2 billion euros (62.3 in 2022), with an average basket at 59 euros, slightly up (+1%). It is worth noting that online sales of products had increased significantly during the Covid years, and their apparent decline since the beginning of 2022 actually masks a progression of +33% compared to 2019, the last “normal” year of activity.
• Product sales represent 38.2% of the total turnover of online sales, compared to 42.4% in 2022. This means that service sales, especially in the transportation and tourism sectors, continue to drive e-commerce with a turnover increase of +20% compared to 2022, a 12% increase in transactions, and an average basket also increasing to €75 (+7%).

The important point is that the fourth quarter of 2023, which includes the bulk of the peak period, totaled a turnover of 43.1 billion euros, up by +32.5% compared to the fourth quarter of 2022. Between these two periods, the number of transactions only increased by 6.2%. Even though services dominate, the increase in product sales is evident and translates into higher volumes of shipped parcels. This increase is even stronger as consumers are less hesitant to place multiple small orders. Subscription programs like Amazon Prime or Cdiscount à volonté encourage this behavior by emphasizing “unlimited free delivery” and free product returns.

A 2023 high season without logistical chaos

In 2023, we are far from the logistical chaos that characterized the peak season in the early 2010s. Delivery delays, parcels never delivered, or arriving open were once a year-end recurring issue, with the media often highlighting the operational weaknesses, or even the negligence, of e-commerce sites and, especially, delivery drivers. While there may have been some hiccups here and there at the end of 2023, things have significantly improved! On one hand, e-retailers and carriers have definitively integrated the specific demands of this period and are no longer caught off guard. On the other hand, they have learned a great deal from the COVID period, which forced them to revise their processes and equip themselves with new tools. The following factors have contributed to the improvement.

Anticipation of resources to be implemented

Relying on data from previous years, e-retailers are able to forecast the volumes that will be sold during the high season. They can thus secure their stocks and negotiate with their logistics partners the transport capacities necessary to ensure deliveries during the peak period. Based on these forecasts, carriers/logistics companies and their subcontractors can launch temporary recruitment drives for delivery drivers and handlers well in advance—typically starting as early as July—which will allow them to handle the flows and deliver within contractual deadlines.

>> Some carriers that solely subcontract for large groups can even double the size of their teams to meet the demands of the high season.

>> La Poste Group, the number one last-mile logistics provider in France with its brands Colissimo, Chronopost, and DPD, employed 3,000 seasonal workers for the peak period of 2023. The company extensively communicated to the general public about the 106 million Colissimo parcels it was preparing to distribute in November and December, with two peak days seeing over 3.2 million parcels. The fact that this information was disseminated by all major media outlets speaks volumes about the importance of this period for the French group and its determination to reassure end customers of e-commerce platforms using its services.

Equipping Delivery Personnel with Tracking Tools

In recent years, there has been an acceleration in equipping logistics actors with route optimization and delivery solutions. In addition to route optimization by planning teams, major carriers now equip their drivers, as well as those of their subcontractors, with mobile applications on handheld devices (PDAs) that ensure the traceability of each parcel, from its departure from the warehouse to its delivery to the recipient, against a digital signature on the PDA screen.

From a practical standpoint, the driver scans all parcels loaded into their vehicle at the beginning of their route using the PDA. At each delivery point, they also scan the parcel to be delivered as they remove it from the vehicle. If the recipient is absent, they leave a delivery notice and scan the parcel again when they return it to their vehicle. Each time a parcel label is scanned, whether on entry or exit, the list of transported parcels is automatically updated. This procedure allows knowing at any moment exactly which parcels are in the vehicle and ensures a constantly updated CRM consignment note.

This practice significantly reduces the risks of “accidental disappearance” of parcels. It particularly protects the driver by allowing them, if necessary, to prove that they visited all addresses scheduled on their route, with each scan being geolocated and timestamped. They can even prove they left a delivery notice by photographing it in front of the customer’s door. The timestamp of the photo and the geographical coordinates of the shot will attest to their good faith. Lastly, with the risks of delivery vehicle theft and cargo theft tending to increase towards the end of the year, the real-time updated CRM letter allows drivers to make a rapid and accurate report to the police. With the exact list of undelivered parcels at the time of theft, the driver’s manager can send a message to all customers on that route, informing them that their parcel cannot be delivered due to a logistical issue and offering to reschedule delivery for a new date.

The Proliferation of Out-of-Home Delivery Solutions

Home delivery remains the preferred delivery method for customers. While 78% still utilize it, there’s now a significant increase in customers, 70%, opting for delivery to a third-party location (Fevad), particularly in pickup points and, to a lesser extent, in lockers. This option, offered by most e-commerce sites, is gaining popularity as the number of pickup points has skyrocketed in France.

• Relais Colis reached 9,000 pickup points by the end of 2023 (50% more than in 2022);
• Pickup claims 18,000 pickup points, including 16,500 pickup points and 1,500 lockers;
• Mondial Relay boasts 14,400 pickup points and 4,000 lockers;
• Colis Privé has a network of over 4,000 partner merchants.

In addition, there are post offices and lockers from Amazon and Vinted, to name a few of the most well-known.

Cheaper for the customer than home delivery, and sometimes even free, delivery to a pickup point is also less restrictive. Most merchants offering this service have extended opening hours, allowing customers to collect their parcels at their convenience. This option is also less expensive for carriers than home delivery since it concentrates the number of delivery points and eliminates delivery failures and subsequent rescheduling. In case of a failed home delivery, the parcel can be deposited in the nearest pickup point after informing the customer via email or SMS.

The peak period of 2023 confirmed customers’ strong preference for these delivery methods, with an unfortunate consequence: saturation of pickup points! Due to insufficient space or considering this ancillary activity too time-consuming, a number of merchants declared themselves unavailable, thus reducing the number of pickup points available to customers on e-commerce sites. With the influx of parcels, parcels diverted by carriers, and handling of returns, those that remained open struggled to provide the smooth service that customers expect.

Three points of attention for the 2024 peak period

While the peak season of 2023 went relatively smoothly, e-commerce and logistics players still need to address some persistent issues.

The first concerns the valuation of transportation and delivery. Since the end customer rarely pays the actual price, they place orders without much consideration, resulting in significant ecological costs and impacting the margins of e-retailers, the profitability of carriers, and ultimately, the remuneration of drivers. When we learn that Temu, which entered the French market in April 2023 with extensive advertising and saw significant success at the end of the year with its products at very low prices, loses $30 on each delivered order, it becomes apparent that this model is unsustainable.

The second concerns the ability of major players to retain merchants who make up their network of pickup points. To sustainably project into this activity, they need reliable tools to manage parcel reception, organize storage, and facilitate customer pickups. This activity will be more attractive if it is profitable, once again raising the question of the price paid by the customer choosing this delivery method.

The third question relates to the integration of information systems throughout the value chain, from the factory to the final delivery to the customer. The deeper the integration, the more data is shared among actors, making it easier to forecast, rationalize, and optimize operations, even during peak activity periods.

Nomadia is addressing these three issues with the largest last-mile logistics players. Our experts can help you prepare for the 2024 peak season. Do not hesitate to reach out to them now to be ready in time!