Haven’t ordered all of your holiday gifts yet, and thinking about buying online?
You might want to think again.
If it was any other year, shoppers typically have more time to complete their holiday shopping on the internet without running the risk of not having those packages arrive at their doorsteps by Christmas Eve.
But this year looks a lot different. For weeks now, retailers’ supply chains have been strained and backlogs in warehouses have been building, as e-commerce sales surge year over year, and companies rush to adjust their workforces to meet the unprecedented demand. Carries like UPS and FedEx have been working around the clock to try to deliver packages on time. But now, they’ve also been tasked with prioritizing and tracking shipments of the coronavirus vaccine.
With a record number of people shopping on the web, holiday sales this year are expected by Adobe Analytics to rise by more than 30% from 2019 levels. And the majority of retailers have pushed up shipping deadlines by at least one to two days, and about 25% of them by at least a week, according to Jason Goldberg, chief commerce strategy officer at Publicis Communications, part of Publicis Groupe.
Christmas Eve delivery cutoff
Tuesday marks the official cutoff in the United States for standard ground shipping to receive an order by Dec. 24, for UPS, FedEx and the U.S. Postal Service.
“The carriers are well-equipped to handle the needs of both the vaccine distribution and e-commerce shipping — not to mention the fact that both rely on very different parts of the UPS and FedEx infrastructure,” said Laura Behrens Wu, co-founder and CEO of Shippo, a shipping software provider for e-commerce businesses.
“But if 2020 taught us anything, it’s that merchants and consumers should prepare themselves for the unexpected,” she said. “While a service disruption is unlikely, it’s still a smart idea for retailers to stay on top of real time delivery trends and over communicate shipping statuses with customers.”
Apparel retailer H&M is currently telling shoppers on its website: “Attn: Orders placed today will not arrive by Christmas.”
For others, like Bath & Body Works and Abercrombie & Fitch, the deadline for Christmas delivery has also already passed.
Deal experts are warning popular brands like Nike and Puma will face delays, encouraging people to buy as early as possible.
All told, as many as 7 million packages a day could face delays from Thanksgiving Day to Christmas, according to Satish Jindel, president of ShipMatrix, a firm that analyzes shipping package data.
Holding up under pressure
Still, he said, the national carriers have been holding up fairly well under the pressure to deliver items on time, so far. Jindel attributed the trend, in part, to strong preparation during the summer and fall, and the warmer, dryer weather that has been blanketing much of the country in recent weeks.
From Nov. 22 through Dec. 5, on-time delivery rates for FedEx, UPS and USPS were at 94.9%, 96.3% and 92.8%, respectively, according to ShipMatrix. Those percentages were all down from the first three weeks of November, however, with volume picking up.
“You’ve got to wonder how some of these holiday sales are going to go this year,” said David Berliner, head of BDO’s business restructuring and turnaround services practice.
“There are probably some procrastinators that are going to be freaking out that they waited, with all the shipping issues that are likely to happen in those last couple of weeks.”
When shipping is no longer an option, holiday procrastinators are going to have to visit stores to complete their shopping.
Pandemic concerns
But a quick trip to the mall becomes especially onerous during a global heath crisis, where most retailers still have capacity limits in stores, operating hours are being reduced and protocols like wearing masks must be taken. The U.S. Centers for Disease Control and Prevention has labeled holiday shopping in crowded stores as a “higher risk” activity, urging Americans to buy online and use options like curbside pickup.
Companies like Kohl’s and J.C. Penney have chosen to promote in their holiday marketing this year shopping safely by using curbside pickup. Penney is offering a 10% discount on select items when shoppers use curbside or in-store pickup. Barnes & Noble is also offering 15% off purchases when shoppers use its buy online, pick up in store option.
From Nov. 1 to Dec. 9, the number of online orders fulfilled via curbside pickup was up 88% year over year, according to Adobe. From Dec. 1 to Dec. 9, with shipping deadlines rapidly approaching and Covid cases still rising across the country, curbside grew 94%, and the companies offering it saw 33% higher conversion rates over those that don’t, the firm said.
Despite the pandemic and the financial stress it has placed on some families, consumers are still opening their wallets to spend on themselves and their loved ones to round out the year. Overall retail sales this holiday season are forecast to rise as much as 5.2% from 2019 levels, up to $766.7 billion, according to a forecast from the National Retail Federation.
More of that spending will be taking place online, of course, and likely will be concentrated toward those retailers that are prepared to meet shoppers with the right merchandise, and meet their promises on delivery windows.
Like there are every holiday season, there will be winners and losers in retail this year. The losers could see more bankruptcies and store closures in early 2021.
“Retail is in for a reckoning,” said Mike Cassidy of Signifyd, a platform that helps e-commerce companies prevent against fraud.
“You can add shipageddon and the weakness in retail’s fulfillment system to the list of trends that the coronavirus pandemic has accelerated,” he said. “The extent of the challenge will become crystal clear … as shipping deadlines for Christmas Eve delivery come and go. It’s a harrowing time any holiday season, but this year it is especially stress-inducing.”
Source: Business - cnbc.com
