 US retailers holiday sales earlier to curb parcel costs |
Source |
American Shipper |
Post Date |
09/30/2020 |
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US retailers are offering in-store and e-commerce sales promotions much earlier in the holiday season as a way to mitigate surges in last-mile demand, which could cause them to miss delivery orders and expose them to higher surges from parcel carriers.
Instead of focusing sales promotions on the traditional ning of the holiday shopping season, Black Friday, retailers are exting sales promotions throughout October through December or throughout November through December, deping on the retailer. That¡¯s a six-week longer sales promotion than in 2019.
By moving their sales promotions up by more than six weeks, Walmart, Home Depot, and other retailers hope to attract more in-store shoppers, reduce their parcel shipment sp, and smooth out e-commerce volume surges that trigger higher peak season parcel surges.
Large, bulky items such as exercise equipment, for example, will be assessed much higher peak surges this year with UPS¡¯ large parcel surge increasing 58.7 percent year over year per item and FedEx¡¯s oversize parcel surge increasing 39.7 percent year over year per item.
Smoothing out the peaks
More retailers will likely follow Walmart and Home Depot, not only because of the need to maintain a safe shopping environment within stores, but also because last-mile capacity will be in short supply. Small parcel providers FedEx and UPS, as well as regional small parcel carriers OnTrac and LaserShip, the US Postal Service (USPS), and Pitney Bowes are implementing holiday peak surges ning in October to help manage anticipated high e-commerce volumes.
In its fiscal first-quarter earnings report for the three months ing Aug. 31, FedEx said it is collaborating with its e-commerce customers to develop solutions to smooth out demand spikes during the peak season. Surges are considered a part of the small parcel provider¡¯s plan to manage demand for last-mile capacity, encouraging those customers that can to pull volumes forward.
¡°We are rewarding customers that can integrate their supply chain that are to longer-term contracts. From a capacity perspective, we are no longer just taking inbound fores,¡± Brie Carere, utive vice president, chief marketing and communications officer at FedEx, said in the earnings report. ¡°We are working with customers, and we are having kind of a balanced conversation between base yields, surges, and capacity management.¡±
FedEx believes it has enough capacity for the holiday season. By operating a seven-day network, it has expanded its pickup capacity on Fridays, Saturdays, and Sundays. ¡°If everybody wants to ship on Monday, then we are going to have to have conversations with people about how we modify that demand to fit the available capacity we have on one day a week¡± Henry Maier, president and chief utive officer of FedEx Ground, told investors during a Sept. 15 earnings call.
FedEx has made a number of additional investments ahead of the holiday season that it says will help alleviate capacity constraints, including six regional sort facilities and four new automated stations. In addition, SmartPost, FedEx¡¯s hybrid delivery service in which the USPS performs the last-mile delivery, is expected to be fully integrated into the Ground network by the of October, which will allow the company to repurpose former SmartPost facilities for large and small package operations and ground sortation.
According to a Sept. 15 fore from professional services consulting firm Deloitte, holiday season sales are expected to rise 1 percent to 1.5 percent from 2019 levels, with e-commerce sales projected to jump 25 percent to 35 percent. By comparison, retail sales between November 2019 and January 2020 grew 4.1 percent year over year and e-commerce sales grew 14.7 percent, according to the US Census Bureau.
Consulting firm AlixPartners expects a 1 percent to 2.6 percent rise in holiday season retail sales for the period between October and December. The firm noted, however, that the traditional definition of the holiday season as November through December is ¡°meaningless¡± due to the dramatic effects of the COVID-19 pandemic on consumer shopping behavior.
Some retailers, transportation providers, and analysts say they now see Amazons annual Prime Day ¡ª set for Oct. 13, according to various news outlets ¡ª as the ning of the holiday season, rather than B
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