The holidays aren’t all merry and bright—at least not when it comes to fulfillment and delivery—for online pearl jeweler The Pearl Source, says Leon Rbibo, the retailer’s president. The retailer is being hit with higher shipping costs combined with slower shipping times and packages being delivered later than originally promised by carriers.
Rbibo says packages aren’t getting to shoppers on time. “The rapid growth of e-commerce deliveries has completely overtaken and swamped large carriers like UPS and FedEx,” he says. He adds that his company began adding an extra day to its usual two-day delivery option and guaranteeing delivery in three days, not two, due to high shipping volumes.
Additionally, he says UPS Inc. has warned the retailer that it should should expect an extra day for all deliveries.
In June, UPS announced surcharges for packages shipped late in the season. Retailers will feel the biggest impact this week, the week before Christmas, when consumers are ordering last-minute gifts. From Nov. 19-Dec. 2, all packages shipped with UPS through Ground Residential had a 27-cent surcharge tacked on. During this week, the week before Christmas–Dec. 17-23–that surcharge will also be in effect, in addition to an 81-cent surcharge on packages shipped via Next Day Air Residential and a 97-cent surcharge on packages shipped via 2nd Day Air Residential and 3rd Day Select Residential.
Rbibo says while he’s unhappy with the fees, it’s the cost of doing business during the critical holiday season.
“We are absorbing all the costs of shipping since order volume and conversion is our No. 1 goal,” he says. The Pearl Source is both paying the added surcharges and, in some cases, paying to actually expedite the shipping to make sure customers are happy. “While we are unhappy with the way that UPS has handled the charges, it unfortunately will not change user behavior and we have to adjust accordingly. It’s the price you pay for the holiday rush, which, like it or not, is still one of the most important seasons for us and many e-tailers like us. We do what we have to do to make sure our customers remain satisfied, even if that means increasing our own costs.”
“Black Friday and cyber week online sales in the U.S. were record-breaking and UPS was asked to deliver more than it had forecast as a result of such strong e-commerce demand,” a spokesman for UPS says.
“We have returned to our original peak operating plan and normal delivery time-in-transit after the initial cyber week surge that exceeded our operating plans,” he says. UPS expects to deliver about 750 million packages this holiday season, which is about 5% more than 2016’s holiday volume of more than 712 million packages. That’s about 40 million more packages than last year. The vast majority of packages will be delivered in accordance with the service commitments for the specified time-in-transit, UPS says.
Through a combination of new capacity and seasonal hiring, UPS expects to deliver more than 30 million packages on 17 of 21 operating days during the holiday season, which is nearly double the normal average daily volume of more than 19 million packages and documents, the spokesman adds.
Satish Jindel, founder of SJ Consulting Group Inc. and president of software developer ShipMatrix Inc., says shipping volume increases 50% during the November-December holiday season when compared with the rest of the year. While he says carriers are doing all they can to fill the demands like bringing in temporary seasonal workers, on-time deliveries typically drop to about 97% during the holidays compared with 98% or 99% the rest of the year. With the main carriers combined (UPS, FedEx Corp. and the U.S. Postal Service) delivering 60 million packages a day on average from Thanksgiving to Christmas, a 1% drop in on-time deliveries means millions of presents missing the Christmas deadline.
“Temporary workers aren’t as efficient [as long-term employees],” Jindel says. “The carriers will do their best to to get packages to consumers, but consumers should not wait until the last minute.”
He adds that last-minute shoppers should take advantage of, and retailers may want to promote, newer options for deliveries and tools from carriers. For example, many FedEx packages can be delivered more quickly to many Walgreens stores than homes. Shoppers in many cases also can opt to have their packages delivered to a local UPS Store. Also, the UPS My Choice app and service and a similar tool from FedEx allow consumers to see their package status and allow them to change the delivery address if needed. Therefore, if a shopper is leaving town on Dec. 20 and her FedEx package is still not delivered, she may want to re-route it to her grandma’s house where she is staying or to the Walgreens nearest to her grandmother’s house.
“We plan and collaborate closely with our customers year round and engineer our networks to be ready to meet the significant surge in demand for residential deliveries,” FedEx said in an email.
The carrier adds that customers can track the status of their shipments or check updates on FedEx Service Alerts at http://fedex.com. FedEx also offers additional delivery options for customers, such as the opportunity to redirect packages via FedEx Delivery Manager to more than 10,000 FedEx Hold locations including Walgreens, grocery stores Kroger and Albertsons, and more than 1,800 FedEx Office locations.
The surest way for shoppers to ensure their presents are under the tree Dec. 25 is to order plenty early, Jindel says. “If you haven’t ordered your gifts yet, you are taking the chance of them not getting there on time,” he says.
Matthew Berk, founder of Seattle-based artisan coffee retailer Bean Box says his company’s biggest delivery holdup is the actual handing off of packages. Bean Box, which works with USPS and FedEx, says FedEx still scans packages one at a time which is a long and tedious process. “At our volume we’re filling up USPS trucks as soon as they can get them here, all day long,” he says. “USPS does SCAN forms. Those are super easy,” Berk says.
The Shipment Confirmation Acceptance Notice (SCAN) form from USPS is a single form containing a master bar code. The bar code links all the labels printed for packages that are ready for dropoff or pickup. This reduces the number of scans necessary when having packages picked up by the USPS.
FedEx would use a faster system similar to the way USPS scan packages if Bean Box‘s packages were palletized, but Bean Box ships “just south of that volume,” Berk says. “We’re at a scale that’s kind of like an ugly duckling: way bigger than most, but way tinier than the big guys,” he says.
Bean Box says it hasn’t run into any delays yet. “We are relying on our carriers to make good on their published shipping cutoffs,” he says.
Luxury consignment peer-to-peer marketplace Tradesy uses USPS for shipping and has not been disappointed, says Kamini Rangappan Lane, chief marketing officer.
“We haven’t had any issues with packages shipped from our headquarters not arriving on time, and we’re not incurring any surcharges,” she says. “We actually implemented an additional pickup—one in the morning and a late afternoon one to make sure more of our orders were sent to the USPS distribution center as early as possible.”
USPS also started a test—delivering after hours and on Sundays in select high-volume counties, including L.A. County, in late November, Lane says.
“The Postal Service is continuing to meet the peak holiday demand,” a spokeswoman for the USPS says. “We have planned for this holiday season all year long and have flexed our network and expanded delivery hours to accommodate increased volume. We continually review our staffing and scheduling and make necessary adjustments in order to enhance our services. We expect to deliver more than 15 billion pieces of mail nationwide during the holiday season, our busiest time of the year. As we do every year, we have hired seasonal workers based on local needs and we are flexing our network—early morning, evening and Sundays—as warranted.”
Department store Von Maur Inc., No. 725 in the Internet Retailer 2017 Top 1000, says it is experiencing good service from UPS and has not received any warnings from the carrier for the later ship dates for its fulfillment center or branch locations.
“Free shipping continues as normal and customers may choose to upgrade their deliveries for a fee,” says Melody Wright, chief operating officer. “If retailers properly estimated their shipments up front, the surcharges should not be an issue for them.”
Holiday shipping is shaping up to be a major headache for retailer Weby Corp., which operates shooting gear and guns stores 1800 Gear and 1800 Guns and Ammo.
“We have, in fact, seen a large influx of shipping issues this year compared to the past three years,” says Jennifer Ford, purchasing assistant, business coordinator and relationship specialist for the retailer. “Usually it has been our vendors causing delays, but this year it has been the carriers. We have had to remove some product offerings due to delays in shipments. This has also caused us to expedite some shipments at our own cost to get them to our customers on time.”
Weby mainly uses UPS and USPS, but it also ships a small amount of packages via FedEx. She say the vast majority of holiday shipping issues have stemmed from UPS shipments.
As a seller on Amazon, Ford says if late shipments rise above a certain ratio—even if it is not Weby’s fault but the carrier’s—Amazon may suspend the retailer from selling on the marketplace. “So we are always trying to be proactive in any issue like delay of shipment,” Ford says. “As an Amazon retailer we strive to keep a 100% rating. We are proud of that badge.”
As of Tuesday, Weby items shipping three day or ground will not be delivered until after the holiday, Ford says. “This is the busiest week for shipping,” she says. “Many customers will be trying to place last-minute holiday gift orders. As a smaller company, we are dependent on our customers, and we aim to make sure every customer has the best retail experience we can offer, even if we occasionally have to lose some on the sale. So while we are experiencing more significant carrier delays this year over all, we are doing everything in our power to make sure it does not impact our customers getting their packages on time.”
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