This story was delivered to BI Intelligence subscribers. To learn more and subscribe, please .
ADVERTISEMENT
UPS faces delays with surge of holiday packages (UPS)
UPS announced that there will be one- or two-day delays on an unspecified number of online orders the logistics giant is delivering during this holiday season
UPS announced that there will be one- or two-day delays on an unspecified number of online orders the logistics giant is delivering during this holiday season, The Wall Street Journalreports.
UPS, which delivers packages for many retailers, including Amazon, Walmart, and Macy’s, said it is shifting resources to address the problem and plans to have it resolved this week.
The delays show that logistics networks are struggling to cope with the e-commerce boom during this peak shopping season. US e-commerce spending over the holidays is on track to top $107 billion this year, $13 billion more than in 2016, according to Adobe. And UPS’ delays come on the heels of record-breaking online sales during Cyber Monday and the week of Black Friday.
ADVERTISEMENT
The company implemented shipping surcharges for the holidays this year, expecting it would deliver far more packages than last year, but has still struggled to meet the overwhelming demand for e-commerce deliveries. UPS delivered 89.2% of the parcels it shipped last week on time, according to ShipMatrix, a software company that analyzes shipping industry data. In comparison, FedEx delivered 99.4% of its packages on time last week. UPS said it has notified drivers at some of its busiest package sorting centers that it may extend their hours to help cope with demand.
Consumers’ expectations for on-time delivery are heightened over the holidays, putting extra pressure on retailers and their logistics partners. A recent survey of 1,500 US online shoppers found that 27% of the respondents expected companies to perform better at delivery during the holiday shopping season, and 32% said they’d be more likely to blame the retailer for any delivery hiccups during this critical time of year.
Amazon, for one, has responded to this customer sentiment by taking greater control of its own deliveries and investing in a growing logistics network to avoid delivery delays. If logistics providers fail to perform to customers’ expectations, it will likely push more retailers to follow Amazon’s example and take greater control of their deliveries, possibly by leveraging their store networks for omnichannel fulfillment and turning to alternative partners like crowdsourced delivery startups to perform last-mile deliveries.
Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.
In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:
ADVERTISEMENT
However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.
ADVERTISEMENT
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT