Believe it or not, nearly half of U.S. adults begin back-to-school shopping by early July, according to a March 2024 survey. Back-to-school spending is projected to grow 3.2% from last year and reach $81.16 billion this year. A whopping 65.1% of those sales will take place in physical retail locations, which is somewhat surprising given the rise of e-commerce over the last several years.
This spending spree can last all the way through the end of September. Brands looking to capitalize on this record spending need to be prepared for the rush – starting with transportation.
Back-to-School Sales & Gross Profit Opportunity
Many retailers have recently implemented strict delivery compliance benchmarks to grade their vendors. Continually failing to meet these benchmarks can lead to hefty fines. But even more costly is the shelf space lost when deliveries fail to be on time.
The table below demonstrates the gross profit opportunity available to brands who can meet retailer’s expected delivery performance standards.
*This example assumes the $10M company operates at a 45% gross margin.
Annual Revenue On-Time Delivery Performance Gross Profit
$10M 77% 3,465,000
$10M 95% 4,275,000
In this example, the difference between hitting retail suppliers’ average delivery performance (77% on time) and hitting the performance retail partners expect (95% on time or better) is $810,000 in pure margin.
In addition to tanking their gross profit, brands that continually fail to meet standards are at risk of damaging their retail relationships and hurting their chances of growth. Keep in mind that 66% of CPG buyers stated they have stopped working with suppliers over delivery issues.
That shelf space can be yours.
These CPG Brands Will Dominate the Shelf
The most forward-thinking brands are looking at their retail-optimized supply chains differently.
No longer is logistics an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth.
The best logistics providers typically take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process.
A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spend and improve on-time percentages, like consolidation programs or warehouse reconfigurations.
Win the Back-to-School Season
Retail logistics solutions consultants at Zipline Logistics can help brands master their most important customer relationships.
We believe in creating seamless partnerships with our customers. That means making your goals our goals and working to meet them. We help even multibillion-dollar companies lock in the right capacity partners to achieve the best possible freight outcomes and uncover new savings potential.
Interested in learning more about what we can do for you?
