Q&A: Peak Season and holiday activity with Maria Haggerty, CEO at Dotcom Distribution

Logistics Management Group News Editor Jeff Berman recently caught up with Maria Haggerty, president at Dotcom Distribution, an Edison, New Jersey-based provider of fulfillment and logistics services for premium e-retailers about the many facets of e-commerce and supply chain- and logistics-related impacts they have, with a specific focus on Peak Season and holiday deliveries within the e-commerce supply chain. A transcript of the conversation between Haggerty and Berman is below.

Logistics Management (LM): How are things shaping up as we get closer to Peak Season? Are things picking up?
Maria Haggerty: We are always looking at how many days there are until Peak Season, with the year flying by as it always does. What we are seeing here with one of our clients, Poppin, a provider of office furniture and supplies, it has a big back to school business, which we ramped up for and saw major traction. Most of our other clients are not back to school ones, so what we normally see now are more inbound shipments coming in in a big way in advance of the holidays. In late August into early September, we really started ramping things up for our B2B clients as the summer comes to a close. We also have some small Halloween promotions, too, as we move right into Peak.

LM: What are your clients’ expectations for Peak?
Haggerty: They are aggressively forecasting for it and it is all about planning and looking at forecasting for things like the number of orders and units, how many units are coming in, the number of SKUs, making sure we have the proper space allocated, as well as resources allocated in terms of equipment and pack stations and speed lines. We are getting word from most of our clients that the forecasts they gave us at the beginning of the year for the holiday season are being increased by as much as 35 percent. We are really starting to button everything down to make sure we are ready for this. I am expecting a huge holiday season this year.

LM:Things went pretty smooth last year for holiday deliveries, coming off of the winter of 2013-2014, which saw myriad delays and obstacles, due largely to winter weather, as well as e-commerce holiday gift orders largely exceeding expectations. Are things firmly back to normal now heading into this year’s holiday season?
Haggerty: I don’t know if it is back to par or back to normal really, because e-commerce kind of ups its game every year. I think sometimes you have to fall and stumble as UPS and FedEx did to a degree the winter of 2013-2014 to realize what you have to do to reinforce your system. So, I think that big stumble on behalf of the carriers actually went on to fortify them by putting more resources in, putting more trucks on the road, introduced dimensional weight pricing to generate more revenue with transportation costs rising, which is enabling them to invest more in their infrastructure, which will continue to improve processes. That stumbling block strengthened them, and we are doing things here on our side, because our clients are only as good as we are at getting goods on the truck to get it to their customers and obviously once we put it on the truck we have to rely on carriers to get it there. My team now is meeting with a transportation software company so we will be able to put a modal optimization system in place this year, where we will be able to choose for our clients on behalf of them the best option to get goods to their customers by the promised date at the lowest cost. We always have done this but this one is more robust for giving us options on a mass scale and the opportunity to have our customers tell us what we need to do in a more detailed way. We are also using dimensionalizer (which we did not have until this year). Knowing the weight and dimensions and knowing destination we can then pick the best shipment method for it, whereas in the past we basically just looked at when a shipment needed to arrive at a destination and then picked the best shipping method based on time and transit, and not considering the dimensions and what the cost was and the service level as much.

LM: E-commerce activity continues to ramp up seemingly all of the time. Has that leveled things out at all on a seasonal basis, with more first half of the year activity in recent years than in the past?
Haggerty: 100 percent yes. What we normally see is that clients for the last few years usually have a very steady and loyal base of customers. What the holidays do is give them the ability to acquire more customers so not only do their loyal and existing customers buy more from them around the holidays, it is also an opportunity for them to attract new customers. If they go out and do a good job of delivering of what their brand promise is for things like how an order is supposed to be packaged or giving customers a ‘wow’ factor for getting an order on time and that it looks like the product quality and packaging is excellent, that bar is set at the holidays and that customer will go on to repurchase in the first quarter after the holidays when sales hit because they have already been exposed to the brand and were pleased with the experience and will do it again. This brings in more repeat customers at the holidays. January 2015 was much higher than January 2014 and we are forecasting January 2016 and the three months after will be higher than the same period in 2015.  The key really is impressing the customer at the holidays.

LM: What are e-tailers doing to get smarter about handling Peak operations and increased order activity? We are seeing more focus on things by large players like Amazon on things like same-day deliveries and next-day deliveries and last-mile initiatives. How has the emphasis on speed and getting things now fundamentally changed things?
Haggerty: Speed comes up over and over, but at the end of the day a lot of it has to do with balancing costs. There is a fraction of the population that wants things on the same day but until we figure out how to drive costs out of that model and make it affordable, it remains challenging on that front. Nobody wants to pay that much more for something if they know they can get it the next day. We looked at data with information on how many people are ordering next day to New York City and it is less than 5 packages per day out of 10,000-to-15,000 for the shipments we handle. From our perspective it is real, and Amazon is talking it up with things like drones and next-day delivery. I live in New York and use Amazon all the time for whatever I think I need and I cannot think of one time I have been asked if I want something delivered on the same day I order it. And I am in the target area they are talking about. We will get there one day, but there is still a lot of road to be paved to get there. We also all need to think about understanding and mining data to better learn what the data is telling us and how to strategize over that. There are going to be certain product categories that are more likely to be products you want the same day, and there are things where that won’t matter. Amazon is raising the bar with their predictability models and things along those lines. From our perspective, given that we don’t work with Amazon-like clients, instead we are working more with clients that are working on spending their time and resources on developing their own brand and messaging and delivery, coupled with how it is communicated through e-commerce, which is critical. They are also focused on packaging and how it is critical to e-commerce.