After last year’s holiday delivery debacle, more retailers managed to keep their shipping promises this season as they and their carriers adapt to the rising tide of online shopping.
Two companies that tested whether last-minute online purchases would arrive in time for Christmas found improvement over last year, though wrinkles remain.
Thirteen percent of the 100 orders placed by retail consultancy Kurt Salmon on retailers’ deliver-by-Christmas cut-off days missed the mark, compared with 15 percent last year, but they were concentrated among a few retailers that got backed up, said retail strategist Steve Osburn.
Significantly, he said, 78 percent of the 50 retailers tested did get their packages under people’s trees in time, compared to 59 percent last year. The firm placed two orders from each retailer and had them shipped to different regions in the country.
Better weather this winter helped slick Santa’s sleigh, but “the big difference this year was the amount of communication,” Osburn said. UPS and FedEx put caps on how much volume they would accept from each retailer via their various shipping methods, and were in contact with retailers in the run-up to Christmas so they knew what was coming, he said.
Nordstrom, Staples, Zappos and REI stood out as success stories because they all allowed ordering until Dec. 23 and were able to deliver those 11th-hour orders Christmas Eve, Osburn said.
He declined to detail which retailers missed their Christmas Eve deadlines, but said those that did were challenged most by capacity at their distribution centers, which didn’t have the manpower or equipment necessary to push orders out efficiently. In addition, he said, lack of inventory was a factor.
Shipping has become an important front in the retail wars as online shopping steadily rises. Online sales were up 15 percent between Nov. 1 and Dec. 22 compared to last year, according to ComScore. Online sales account for about 14 percent of all holiday sales. Amazon.com said Friday that more than 10 million new members joined its Prime shipping service over the holiday season. A Prime membership, which includes free shipping, costs $99 a year.
Last year retailers and carriers were caught flat-footed under a torrent of online orders, exacerbated by winter storms, and 2 million packages promised by Christmas didn’t arrive in time. The volume was expected to rise this year, with UPS expecting to deliver a record 34 million packages on Monday, its single busiest shipping day, up from 31 million last year. It hired 95,000 seasonal workers, up from 55,000 last year, to handle the demand.
Retailers jockeying for online market share made free shipping and generous cutoff dates a hallmark of the shopping season.
“If you can impress the customer that time of year, that’s a good place to spend marketing dollars,” Osburn said. FedEx Express and UPS Express each had on-time rates of at least 99 percent on Dec. 22 and 23, according to ShipMatrix.
StellaService, a New York-based e-commerce startup, analyzed the last-minute shipping performance of 40 of the largest retailers by placing four orders from each retailer on their Christmas delivery cut-off dates and having them delivered to different regions.
Eleven of the 160 packages ordered, or 7 percent, were not delivered in time, compared with 12 percent last year, said Kevon Hills, vice president of research at StellaService.
Best Buy, Costco, Crate and Barrel, JC Penny, Kohl’s, Macy’s and Wayfair each missed delivery promises in one region, while Staples and Toys R Us each missed in two regions, Hills said.
The reasons behind the snafus were varied. At Best Buy, for example, a promise for free expedited shipping didn’t happen and the package, ordered by the Dec. 22 cutoff, was shipped using standard ground. Best Buy declined to comment.
Overall, Hills noted, retailers got the packages out the door on time but once they entered the carrier’s networks they slowed down.
Holiday shipping is not over, as unwanted gifts now must make the journey back to the retailers.
UPS said Friday that it expects to transport more than 4 million return packages in the U.S. by the end of the first full week of January. The busiest return day is expected to be Jan. 6, when the carrier anticipates consumers will ship more than 800,000 return packages.
