The holiday hustle is officially on for online retailers. Delivery trucks are filling up faster than Santa’s sleigh as shoppers continue to swap venturing out to stores with online shopping as a result of the coronavirus. That’s leading e-retailers to pull out all the stops to convince shoppers to place their online orders now if they want them under the tree by Christmas.
Web retailers and marketplaces including Cost Plus World Market, Etsy, TJ Maxx and Puravida have all sent messages to consumers in the last few days warning of delays as Dec. 25 inches closer. Meanwhile, last-mile technology vendor Convey—which works with 130 retail clients, including The Home Depot, No. 5 in the Digital Commerce 360 Top 1000, Neiman Marcus (No. 40) and Eddie Bauer LLC (No. 137)—says the shop-early messaging worked as consumers seemed to start ticking items off their gift lists sooner this year. And the three major carriers say they have strategies to deal with the shipment surges.
Retailers use elves and apologies to warn of delays
Cost Plus World Market, (owned by Bed Bath & Beyond, No. 58) sent an email to shoppers Sunday with the subject line: “A message about holiday shipping.” The email urged shoppers to buy now and warned of possible delays. “Our elves will do their very best to ship your gifts on time, but some packages may arrive later than we would like,” the message read.
It also touted curbside pickup as a fool-proof way to get gifts in time for the holiday.
Online marketplace Etsy Inc., No. 18 in the ranking of Digital Commerce 360 Top 100 Online Marketplaces, took a more apologetic and thankful tone in its message about an order to a Digital Commerce 360 editor on Monday. “We wanted to say thank you for purchasing from a small business this holiday season. The seller has shipped your order but it’s taking a bit longer than usual to arrive due to holiday postal service delays,” the message read. “We know that this can be frustrating, especially during the holiday season. For the most up-to-date details on when your order will arrive, you can take a peek at the tracking details on Etsy. Remember, each and every purchase you make on Etsy helps support a small business. That’s pretty awesome. Thanks for your patience during this extra busy holiday season.”
Discount retailer TJx Cos. Inc. (No. 62 in the Top 1000) encouraged another Digital Commerce 360 staffer not to procrastinate in an email announcing an earlier-than-usual cutoff date this year of Dec. 9, with the subject line: “Shipping cutoff TONIGHT!” The message further prodded shoppers to: “Order those gifts soon. Our shipping cutoff is today.”
That same staffer received a second warning email also on Dec. 9 with a similar subject line from handmade jewelry retailer Puravida Bracelets: “LAST day to get your holiday orders on time!”. The body of the message noted, “Timing is everything.”
Shoppers turned up early
The “shop early” messaging and early Black Friday sales have been successful in spreading out the peak ecommerce season, last-mile technology vendor Convey says. Its data shows the spike in holiday shopping started earlier, with total shipments 61% higher this year versus 2019 for the week before Black Friday.
And U.S. package volume reached 18.1 million in November 2020, up 30.2% compared with 13.9 million for the same month a year earlier, Convey says. Convey’s data is based on tens of millions of packages shipped from more than 500,000 U.S. locations across the company’s client base but excludes shipments from Amazon.com Inc.
And that volume is taking a hit on on-time deliveries. For example, 80% of packages were delivered on time in November 2020 compared with 86% in November 2019, Convey says.
FedEx Corp. and United Parcel Service Inc. held steady during the kick-off week to the holiday shopping season with only a slight dip in on-time deliveries the week of Nov. 27-Dec. 3, which is over the Thanksgiving weekend. FedEx delivered 75% of packages on time the week of Nov. 27, down from 76% the week prior. By comparison, in 2019 FedEx dropped from 91% to 76% for the same period. UPS delivered 80% of packages on time the week of Nov. 27, down from 82% the week prior. By comparison, in 2019 UPS dropped from 90% to 80% for the same shopping period.
“We believe this stability is a result of both carriers implementing strict volume restrictions,” says Carson Krieg, co-founder and director of strategic partnerships at Convey.
United States Postal Service, meanwhile, is picking up the slack and taking packages that UPS and FedEx won’t and has doubled its market share since early October, Convey says. But it’s feeling the heat with on-time performance dips, according to Convey data. USPS grew from 9% of ecommerce parcel shipments the week of Oct. 9 to 20% the week of Nov. 27. And on-time performance dropped to 78% the week of Nov. 27—down from 87% the week prior, and down from 94% the week of Oct. 9.
Vaccines add a shot of complexity to late holiday orders
UPS has an added strain to its delivery network as the primary end-to-end distributor for Pfizer Inc.’s coronavirus vaccine, as well as for kits to prepare the shots and dry ice shipments to keep the inoculations at extremely cold temperatures, UPS sales chief Kate Gutmann said in an interview. The vaccine and kits will have tracking devices that allow shipments to be monitored at all times. But it says it has the capacity to handle both the rollout of coronavirus vaccines and an unprecedented holiday package rush this month following investments in automation, tracking technology and dry-ice production.
“We’re planning enough capacity on the ground and in the air to make sure that there is no limit around the UPS side,” Gutmann said.
The initial vaccine shipments will coincide with the busiest shipping weeks of an extraordinary peak season in which virus-adverse consumers are going online to order a record deluge of goods for home delivery.
UPS had to limit the packages it took from some large retailers immediately after Cyber Monday because volume exceeded pre-arranged delivery agreements. That surge has now eased, allowing those extra packages to be “feathered” into the network for delivery, Gutmann said. Last year, the network was overwhelmed for about a week because UPS accepted too many packages at once, she said.
“If we took everything, we would have gone well above network capacity,” Gutmann said. “Any of the loads that were left over, we actually moved into the network.”
The strategy of matching capacity with volume has so far enabled UPS to post the best on-time delivery performance for any peak season since at least 2012, said Nando Cesarone, chief of U.S. operations. The Atlanta-based company cites data from ShipMatrix that shows 96.3% of its packages were delivered on time from Nov. 22-Dec. 5 compared with 94.9% for FedEx and 92.8% for USPS during the same time period.
Now, with the final week before the Dec. 25 Christmas holiday approaching, UPS said it’s ready to take on last-minute deliveries while doing its part to ship all the vaccines that roll off the production line.
“We’ve been disciplined to not turn the network upside down,” Cesarone said. “We are in great shape in terms of service, capacity and working very closely with our customers to fulfill their requests.”
FedEx, which operates the largest freight airline, also pledged to make vaccine distribution a priority over other shipments. The courier is using tracking devices and providing dry ice to make sure the vaccines reach their destination and are ready to be administered, Richard Smith, head of the Americas for FedEx’s Express unit and the point person on vaccine distribution, said in an October interview.
UPS on Dec. 10 issued a statement saying it is “running smoothly through the first two weeks of December.”
“UPS is running one of the most successful peak holiday shipping seasons ever,” said UPS CEO Carol Tomé. “With great discipline and precision, we are delivering industry-leading on-time delivery performance.”
The company says it hired approximately 100,000 seasonal employees and 39,000 permanent, new employees between April and June. It also says it built 20 new facilities and brought on 14 additional aircraft for the peak season. Additionally, it expanded its weekend operations to provide both commercial and residential pickup and delivery on Saturdays.
Bloomberg contributed to this storyFavorite