Posted by: Laura Hills
MasterCard Advisors SpendingPulse reported that U.S. retail sales rose 3.5% during this past holiday season. According to ComScore Inc. merchandise purchased via personal computers rose 10% to $42.75 billion. IBM Digital Analytics cited Internet sales soaring 37% over 2012 in the last weekend before Christmas as last minute shoppers rushed to order gifts at the 11th hour. Statistics indicate that while the bulk of holiday spending still takes place at physical locations, online shopping has gained immense popularity and is becoming a much larger part of holiday spending. This is good news for online retailers.
Reliable deliveries are a crucial part of the online shopping experience, especially with shoppers that wait until the last minute to make their selections. This year Amazon raised the bar by offering expedited shipping with Sunday package delivery via the USPS and packages guaranteed to arrive by Christmas. Many retailers followed Amazon’s lead, extending their order cut-off dates, promising same-day and Christmas delivery even if orders were placed as late as December 23rd. Shoppers’ reactions were so overwhelming that UPS and FedEx experienced overloaded systems that caused numerous Christmas and same-day delivery promises to go unmet.
The growing popularity of free shipping to entice consumers was another major factor that resulted in increased shipment volume. In the third week of December, Amazon’s Prime membership drew more than 1 million people. Prime membership ($79 annual fee) offers free two-day shipping. Most last minute online orders needed to ship via air or other expedited methods to reach their destination in time. Bad weather across the nation cancelled or delayed many flights which contributed to the shipping woes.
Chetan Ghai, senior product officer at ShopperTrak feels that online businesses will continue to experience the greatest growth although he feels that next year, people who procrastinate until a few days before the holiday may be wary of relying on deliveries. He said, “I think there will be some people who choose to go into the store, rather than risk a missed delivery.”
Being prepared comes from lessons learned and this holiday shopping season was certainly a teachable moment for both shipping companies and online retailers. Both need to pay attention to aggressive shipping options, promotional offerings, weather considerations, order volume and timing issues to avoid a repeat of 2014’s shipping woes.
There is a lot of revenue riding on the ‘run-up to Christmas’ and 2014 will only see the gain of one more shopping day (26 to 27 days) between Thanksgiving and Christmas. Shipping schedules that allow for unforeseen delays will need to be factored in to deliveries. Connecting with customers early in the season (before Thanksgiving), offering more realistic order cut-off dates, not waiting until the last minute to offer the best deals and handling logistics more efficiently can help to avoid future holiday shipping issues.
For a closer look at the issues and opportunities surrounding shipping, please view the on- demand replay of the webinar entitled: Why Free Shipping Isn’t Free: The Top 7 Reasons You Need Effective Retail Promotions.