As A Blockbuster Holiday Season Takes Shape, Can The Industry Deliver?

The trucking industry needs to get ready because Americans are set to shop. New research from e-commerce solutions firm Radial found that 65% of American shoppers expect to spend as much or more as they did during the 2020 holiday season.

That is great news for retailers but could produce some delivery concerns as last-mile delivery networks strain to meet Christmas package demand.

Already, UPS UPS, FedEx FDX, and the U.S. Postal Service have put in place surcharges for the peak shipping season. Sendle CEO James Chin Moody said it was ready to meet the capacity needs this holiday season.

"The networks are going to be much more prepared this year, of course," he told Modern Shipper.

David Fildes, director of investor relations for Amazon AMZN, told analysts on its Q2 earnings call earlier this month that the e-tailer was prepared to meet increased capacity demands, especially in light of Amazon's partnership with BigCommerce, which is adding new third-party merchants to its network ahead of the holidays.

"I'd just say our focus is really squarely on adding capacity to meet the current high customer demand that [CFO] Brian [Olsavsky] talked about in his opening remarks," Fildes said. "We're always working to develop new and innovative ways to support partners, SMBs in particular who sell on Amazon, and that includes testing shipping programs and newer initiatives that can help those businesses get packages to customers quickly and reliably. So, continue to see us look for ways to be able to innovate where it's appropriate relative to the customer demand we're already seeing in our network."

Last year, U.S. online purchases reached a record $188.2 billion, according to Adobe Analytics. That was up 32.2% from 2019. EMarketer is predicting holiday retail sales will reach $1.09 trillion in 2021, with online platforms rising 11.3% to $206 billion.

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Related:

Read: UPS' peak-season surcharges to whack mega-shippers

Read: Sendle CEO: Just say no to peak surcharges

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Radial polled 1,000 adults across the U.S. on their holiday shopping plans. The company offers e-commerce fulfillment, order management, omnichannel technology solutions, transportation and customer care services.

"This year's survey shows us that in-store shopping is still alive and well despite the pandemic, but consumers are showing more preference and confidence in using other channels as they've been forced to drastically adjust how they shop over the last year," said COO Laura Ritchey. "What we're seeing this holiday season is high demand distributed across online, in-store, curbside, buy-online, pickup-in-store, and other emerging channels."

Beyond the sales, the survey didn't have many bright spots for retailers or their shipping partners. While 50% of respondents said COVID-19 drove them to shop online more last year, only 45% plan to shop the same amount in-store this year compared to last year, suggesting that e-commerce shipping could be even greater in 2021. Radial said it fulfilled nearly 330 million packages in 2020, 82 million of which came in November and December — a 34% increase over the 2019 peak season.

The pandemic also lessened expectations for quick shipping or pickup in 2020, but those are rapidly returning this year. Twenty-three percent of shoppers expect to receive their holiday orders within two to three days, compared to just 14% with those expectations a year ago. A plurality of consumers (45%) agree that three to five days is a reasonable time frame for delivery of holiday gifts, and fewer than a quarter think one week is reasonable. Less than 10% of consumers said more than one week is acceptable.

Fortunately, more retailers are building a mix of options for online orders, offering ship-to-home, curbside pickup, and pickup-in-store options.

"The reason there is such a mix of purchasing options comes down to convenience for the consumer and product availability," Ritchey added. "Consumers are getting used to going in-store to browse but buying online due to convenience of home delivery or out-of-stocks in-store. Brands that have developed and optimized their omnichannel strategies during the pandemic will be better positioned to serve customers regardless of the channel they are shopping in this holiday season."

More consumers expect to start holiday shopping earlier this year, though, with 57% saying they planned to start earlier and 80% saying special deals ahead of Black Friday would entice them. That could lessen impacts on the supply chain.

Moody said the "shape" of the peak shipping season should be similar to pre-COVID years, albeit at higher levels.

"Last year it was very unpredictable; no one could understand what was going on. August last year was our biggest month," he said. "I'm very confident around our ability to service capacity."

Click for more Modern Shipper articles by Brian Straight.

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Image by John R Perry from Pixabay