retail news in context, analysis with attitude

The Wall Street Journal reports that both FedEx and United Parcel Service (UPS) "are straining to keep up with holiday shipping volumes that have blown past expectations, delaying the delivery of some of the millions of online orders shoppers have placed since Thanksgiving."

UPS had been projecting that it would handle more than 700 million packages during this year's holiday season, up 14 percent from a year ago; FedEx was expected it would handle 10 percent more packages. And both say that during peak times during the holidays, shipment volumes can be twice that of a normal day.

According to the story, "UPS has relocated hundreds of staff from its headquarters and other corporate offices to help at shipping hubs struggling to handle record demand, according to people familiar with the situation. Already in advance of the busy holiday season, both UPS and FedEx had extended delivery windows on some routes, suspended delivery guarantees and refunds for certain weeks and stopped promising to deliver express packages by a certain time in some cases."

The Journal goes on: "Parcel carriers’ logistics operations are being tested by the surge in web orders at the holidays, which has grown rapidly over the past several years. This year, e-commerce accounted for 25% of consumer spending on Black Friday and the two days prior, up from 18% last year and nearly double the figure for the same period four years ago, according to First Data Corp."
KC's View:
Shows two things, I think. (Probably more, but these are the first two that come to mind.)

One, it just shows the continuing growth of e-commerce ... and why, if you are in any segment of the retailing business, you have to be taking this stuff very seriously. I know there are still some folks out there who think that this won;t affect them. But they're just kidding themselves.

Two, it shows why Amazon is trying to figure out how to take greater control of the shipping process. Because that may be necessary if it is to live up to its brand promises.

A present doesn't show up in time for Christmas, we don't blame UPS. We blame Amazon. Which makes me think that if a customer is given a choice between a product being delivered by truck possibly showing up late or being delivered by drone and being delivered on time, the vast majority will choose the latter option.