As major carriers such as UPS, FedEx and DHL put in place holiday shipping restrictions amid the COVID-19 e-commerce boom, the retail industry faces a so-called “shipageddon” that could make consumers cranky and could cost brands money — as well as customer loyalty.
From a consumer’s perspective, shipping options and deadlines on most e-tail sites are being updated throughout the day; and, on Amazon, every minute. Next-day and two-day delivery are available, but costly. And this year, Amazon did not post a holiday delivery schedule so shoppers need to check product availability on the product display page or at checkout.
If shoppers are looking to mail gifts and packages themselves, the U.S. Postal Service, FedEx and UPS have a Dec. 15 deadline (for the lower 48) for a Christmas delivery.
For retailers and brands, the boom in e-commerce is a headache they can do without. Collage.com, which is a custom photo gift company, told WWD that it has seen up to “24 percent of packages with some shipping methods taking longer in transit than expected,” the company said.
“We’ve adjusted our delivery estimates to try and account for the delays. But our message to customers is to get your order in early since we don’t know what will happen next week,” said Wally Nowinski, Collage.com’s chief marketing officer.
Amy Shulman, head of retail consulting at ShopperTrak, said, “Though the concept of a ‘shipageddon’ is not new to the holiday shopping season, the associated travel restrictions and store closures due to COVID-19 have pushed parcel companies to their maximum capacity quicker than ever before.”
Shulman said for this holiday shopping season, fulfillment issues “mean the possibility of nearly 7 million packages a day being delayed between Thanksgiving and Christmas.” When asked if there are any solutions to the problem, Shulman said for retailers and brands, “shipageddon really shines a light on how important the store’s role is in online order fulfillment. By offering alternative fulfillment options like buy online, pick up in-store (BOPIS) or curbside pickup, retailers can help alleviate the strain on delivery systems.”
Offering BOPIS and curbside requires investments, though. “To do this well, stores need to be equipped with smart technologies like RFID-enabled inventory intelligence, which give retailers an accurate and real-time look at the items currently available and ensures a smooth customer experience,” Shulman told WWD. “In addition to inventory visibility, the other key component to successful in-store fulfillment is staffing. Retailers can make sure they have enough employees dedicated to busy BOPIS or curbside offerings by reviewing their traffic data and optimizing staff accordingly.”
With curbside pickup, Shulman said retailers need dedicated staff on hand to run items out to cars. She also noted that the last thing retailers and brands want, “especially during the heightened pressure of the holiday, is to promise a smooth BOPIS experience only to find their inventory count is off and the product is unavailable or there isn’t enough dedicated staff to fulfill it in a timely manner.”
Regarding investments, retailers and brands are not the only ones doling out money to upgrade capabilities. Larger online marketplaces are also upping capital expenditures. Andrea Leigh, who is a 10-year former Amazon veteran and now vice president of strategy and insights at Ideoclick (an e-commerce optimization platform), said she “expects a ton of investment in warehouse automation (and other innovation) in the next two quarters.”
Leigh also said Amazon is “first and foremost a supply chain company. They won’t stand for another quarter of productivity headwinds related to COVID-19, getting new warehouses online, and new hires.”
“All retailers with e-commerce operations are anticipating shipping and delivery challenges in the weeks to come, but Amazon, which has experienced explosive growth due to the COVID-19 pandemic, is one of the players that will be hit hardest by such challenges this holiday season,” Leigh told WWD. “They’ll need to smooth demand to preserve delivery service and fulfillment center capacity, and they’ve already prepped customers, vendors and sellers for this with a few key tactics.”
“For retailers, the holiday shopping season is like facing Sandy Kofax — we keep getting curveball after curveball,” noted David Malka, chief sales officer at goTRG. “With careful planning and proven technology, we’ve been able to handle increased orders with necessary COVID safety precautions in our warehouses.”
Malka said limits imposed by carriers is causing severe disruptions. “In some of our warehouses, they are delivering less than 10 percent of orders,” he told WWD. “We are working with FedEx which is coordinating with other local operations to get all our excess packages picked up on Saturday, but nothing is guaranteed. We’re at the point where we’re thinking about making Dec. 15 the cutoff for guaranteed delivery on time.”
And when asked if “shipageddon” will impact in-store traffic, Shulman said the store’s role “has become much more significant in the completion of online orders.”
“As previously noted, fulfillment processes, such as BOPIS and curbside pickup, allow for the convenience of e-commerce with the timeliness of in-store,” she said. “If anything, ‘shipageddon’ will push more last-minute shoppers, who may have missed tight shipping deadlines, to the store.”
Shulman said she’s seen shopping shift to weekdays, “as a result we should expect the week before Christmas to include some of the busiest traffic days we’ve seen during the holiday season.”
Article courtesy of WWD here