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Hanjin woes threaten to bankrupt holiday season: What retailers should do to prepare

Hanjin, South Korea’s largest shipping company, filed for bankruptcy on August 31st. It is the largest disruption ever to impact the shipping industry, and puts an extensive number of retailers at risk for fulfillment issues going into the holiday season. The Wall Street Journal estimates Hanjin accounts for seven percent of Asia to US cargo trade, and BBC estimates there are more than 540,000 containers with cargo at sea. The deadlock is such that ports will not allow the containers to dock for fear of not getting paid, and cargo that is docked cannot be claimed until a resolution is reached. Implications are far reaching and present a major headache for retailers going into the most crucial point of the year for sales and revenue expectations.

So what should retailers do? Here are a few recommendations to take into account:

  • Have merchandising and supply chain management work with your marketing department to identify the items most at risk for non-fulfillment. Take this into account in creating promotions and marketing themes for the holiday to avoid fulfillment woes and unhappy customers. If these promotions are already set, like they are with many proactive retailers, revisit which promotions should be amended to ensure seamless customer experience from purchase to delivery.
  • Work with marketing and your creative team to carefully select which imagery will be shown in your inserts, display ads, and emails. Visual depiction of products is especially important during the holiday, and you don’t want to prominently feature a category, product or brand that will be out of stock at key purchase points.  
  • Ensure your dynamic pricing ads and Product Listing Ads (such as Google Shopping) have a suppression list to identify items that are out of stock and ensure they aren’t showing in advertising media. This is a best practice anyway, but now is the time to ensure it’s accurate.
  • Consider proactive messaging or promotions to put into the marketplace for select products. This will give early insight into consumer interest for holiday 2016, and may also give savvy consumers (aware of the supply chain issues) an ability to capitalize early.

Finally, if you are concerned that a large portion of your inventory will be at risk, create a strategy for transparency now, so as to be proactive to concerns. This includes website information with delayed shipping messaging, ongoing email contact strategies with updates on inventory, and perhaps even partnering with your preferred delivery company for text updates. The customer will have an experience with you, not the shipper -- so cultivate that relationship as much as you can through honesty and proactivity to mitigate their frustration and the ultimate possibility of attrition.