7 Common Holiday E-Commerce Challenges (And How to Overcome Them)

It’s the most wonderful time of the… Ah, who are we kidding?! When you’re an ecommerce business owner, there’s holiday magic all around, but there’s also higher expectations, thinner margins, and surges that can send you into a tailspin. 

Yet there is a way to scale without crashing and burning. Here are the 7 biggest problems small- to medium-sized businesses face, and the systems needed to prevent the chaos. 

Challenge #1: Forecasting and Inventory Planning

What Goes Wrong:

From pulling numbers out of a hat when it comes to demand, orders running late, bestsellers going out of stock, and overbuying slow movers, it’s hard to know just how much of what you’ll need. And at the end of the day, cash stays tied up in every piece of dead stock left on your shelves after the holidays. 

How to Overcome:

If forecasting is something your organization struggles with, you’re not alone. Over half of retailers say that they struggle with inaccurate forecasting. The best way to overcome forecasting woes is to build a simple forecast, including last year’s Q4 numbers, current growth rate, and promotional calendar. 

Then, tier SKUs (A/B/C) and protect A items with earlier reorder points. You can also create a pre-holiday inventory health check that includes lead times, supplier reliability, and minimum order quantities. A backup plan for substitutions, bundles, or waitlists and preorders for top sellers is always a good idea. 

Challenge #2: Fulfillment Capacity and Shipping Cutoffs

What Goes Wrong:

Fulfillment capacity and shipping cutoffs can feel like a slippery slope. First packing falls behind, then shipments start going out late, so everyone is rushing, which can cause errors and negative reviews. It’s easy to underestimate pick and pack times, as well as carrier pickup constraints. 

Add in shipping delays, bad weather, and insufficient staff and trying to get a package out of the loading dock can feel impossible from November to January. 

How to Overcome:

The first step to stopping the slide is to create a holiday fulfillment assembly line where you can pick, pack, QC, label, and stage efficiently. It can also be helpful to use batching by SKU (or pick waves) rather than doing everything as one-off picking. Then set realistic daily capacity. 

Challenge #3: Website Performance and Conversion Pressure

What Goes Wrong

If your traffic spikes during the holiday season but your conversions don’t, there’s probably a problem. One of which could be checkout glitches, which stop conversions. Common issues include:

• Slow site speed
• Broken checkout
• Issues with discount codes
• Confusing shipping or returns info 

Also since people are now using AI to compare products, you need to make sure your website is ready to be accessed by AI. This will allow shoppers to compare your products to similar brands, and find why yours is the ideal fit. Without that information, you may miss out on a sale. 

How to Overcome

Double check your website in October before the holidays are in full swing. Make sure everything is working for mobile checkouts, promo logic, shipping rates, and out-of-stock behaviors. 

You’ll also want to tighten up key webpages, like your gift guide, returns, or bestseller page, as well as anywhere shipping information is listed. Use bundles, upsells, and cart thresholds intentionally to make your life easier, not harder, come holiday season. 

Challenge #4: Customer Support Overload and “Where is my order?” 

What Goes Wrong

It’s easy for customers to feel ignored during a busy season. If your inbox is piling up, your response time will probably lag. With competing priorities, it can be hard to sit down and sift through a mountain of emails, so it’s essential to stay on top of them. 

How to Overcome

Automate every response you can during the holiday season. Things like order confirmation, shipping confirmation, delivery expectations, and pre-written delays give people the information they need when they need it. 

The more information people can find online, the better. Information on tracking, returns, exchanges, gift receipts, and other FAQs don’t require you to get involved if someone needs an answer. 

You can also set holiday support hours on your website and in auto-replies to set realistic expectations on when someone should expect a response. 

Challenge #5: Promotions that spike revenue but crush margins

What Goes Wrong:

There’s a simple equation that can crush ecommerce brands if you’re not careful. If your discounts stack unexpectedly, then you add in the cost of shipping which eats away at profits, plus deal with returns that erase gains, you’ll be left with… well no one actually wants to do that math. 

Since brands train customers to wait for sales your promotions must account for every inch of margin you’re trying to generate. 

How To Overcome:

One way to avoid this situation altogether is to use value-add promos, or better than 20% off promos, instead of blanket discounts. Think bundles, gifts-with-purchase, or tiered spend. But if you really want to offer a discount, plan offers with margin math which includes:

• Product margins
• Shipping cost
• Packaging 
• Pick and pack
• Expected return rate

Discount limits, exclusions, or minimum cart thresholds can also help cap and control unexpected margin burners. 

Challenge #6: Returns, exchanges, and inventory whiplash

What Goes Wrong:

Guess who’s back… back again… it’s a return! Returns hit right after peak sales, clogging storage and cash flow. This not only can hurt customer trust, but also restocking accuracy. After all, one third of customers return an item each year. 

How To Overcome:

First, set clear holiday return windows and gift-friendly policies. You can list this on your website, as well as in confirmation emails to help as many customers as possible see it. 

There will be returns, inevitably. So, it’s important to create a workflow that includes intake, inspection, restock rules, and disposition–including resell, refurbish, or donate. 

Instant exchanges and store credit incentives can help make the entire return process easier for you and customers. 

Challenge #7: Operational Burnout And Team Breakdowns

What Goes Wrong:

For small- to medium-sized business owners, burnout is somewhat unavoidable. Even outside of the holiday season. You can’t do everything, and be everything to everyone. Teams are scrambling, mistakes happen and morale drops. 

How to Overcome:

As the saying goes, a good offense is the best defense. Before the season starts, define roles, daily routines, and ‘done by’ times so everyone’s responsibilities are clear. A short daily standup can also be helpful for recognizing hangups before they become big problems. Check in with your team members on backlog, inventory issues, support tickets, and other priorities. 

You can also always bring in temporary help. We recommend doing this a month or two before you really need it, so all help is fully trained by the time the holidays hit. 

Get Your Business Holiday Rush Ready

This holiday season, make your mantra to fix the problem before it breaks. Holiday success is about planning ahead and systems, not heroics. 

Since consumers are becoming more discerning in their purchasing habits and may opt for fewer items while spending more per transaction due to inflationary pressures, hopefully the holidays will be more manageable for every ecommerce business. 

At Polygon, we provide co-warehousing spaces for small- to medium-sized businesses. Running a business can feel lonely, but now it doesn’t have to. Sign up for our email list at the bottom of the page to get more helpful information delivered to your inbox. 

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