After weeks of speculation about how a massive shift to online shopping amid the pandemic would impact the retail holiday season, the inevitable appears to have happened.
Reports surfaced this week suggesting that the United Parcel Service Inc. has already enforced shipping restrictions on several large brands and retailers, including Nike Inc. and Macy’s Inc., in a bid to relieve its stretched-thin delivery networks. (Both FedEx and UPS had already tried to sidestep some delivery friction by increasing their rates and adding surcharges to deliveries during the peak season.)
According to The Wall Street Journal, on Cyber Monday, UPS instructed drivers across the U.S. to stop picking up packages at six retailers, including the aforementioned names as well as L.L. Bean and The Gap. Some delivery drivers also told the publication that they had not seen such temporary limits in previous holiday seasons.
While UPS did not immediately respond to FN’s request for comment, spokespersons for Macy’s and Nike seemed to confirm that their respective organizations had been affected by or, at the very least, were made aware of the shipping giants’ purported move.
“We expect the majority of these orders to meet estimated delivery dates and are communicating with consumers any changes in delivery,” a spokesperson for Nike told FN.
Meanwhile, Macy’s touted some of its expanded convenience services such as curbside pickup — and emphasized that it had done what many retail experts suggested: Encouraged consumers to shop early.
“Throughout the busy holiday season, we are actively working with UPS and other shipping partners to best manage customer deliveries,” the Macy’s spokesperson said in an email statement. “While we encourage everyone to shop early, we are committed to getting customers what they need in time for the holiday by offering many easy ways to shop, including contactless curbside pick-up, buy online, pick-up in store and same day delivery through DoorDash. Macy’s expanded fulfillment options allow customers to shop safely and friction-free in store or online right up until December 24.”
Retail experts long warned that consumers’ reliance on online shopping in pandemic times was going to challenge retailers — who were already contending with enormous brick-and-mortar losses — in an especially significant way during the holiday season.
“For more than six months now, retailers have felt the impact of shipping capacity constraints, caps and surcharges with FedEx and UPS,” explained Sarah Engel, CMO and chief people officer at advertising agency January Digital. “So they should have been ready — by diversifying their delivery options earlier in the year and by communicating shipping constraints to customers clearly. If anything is certain this year, it is that you need a backup plan for your backup plan.”
She added, “So, although [companies] may not have expected yet another constraint from the carriers, they should be in a good position if they prepared by having regional shippers in place, leveraging Uber, Postmates and Shipt for last mile delivery, and leaning in to curbside pickup.”
According to data from CGS, while 54% of consumers have experienced delays in deliveries since the COVID-19 pandemic hit the U.S., 34% of them were notified by the retailer about such issues. Meanwhile, Salesforce said notices related to shipping and delivery were prominent on 61% of emails to customers for Thanksgiving weekend, while potential delays and pickup options were specifically featured on more than 10% of emails.
And, for what it’s worth, Amazon’s delayed Prime Day, which shifted from July to October as a result of the global health crisis, was a blessing in disguise for the retail sector as it helped to usher in an earlier start to the critical shopping period. Of course, names like Target and Walmart followed Amazon’s lead by launching concurrent sales extravaganzas.
But not every firm has the scale and capital backing of Walmart and Target — whether it relates to their ability to cobble together a sales event on the same day as Amazon or if it’s a matter of competing on delivery, speed and convenience.
But those that haven’t adapted their supply chains to meet the needs of an increasingly demanding consumer could be in big trouble during the critical weeks ahead, said Keith Turco, president and managing director for the Americas at digitization software provider Evrythng.
“You run the risk of dis-incentivizing loyalty if you can’t get consumers what they want, when they want it,” said Turco. “If [a delivery] takes too long, you can lose a customer purely from a logistics and supply chain perspective — not even from a product or from a quality perspective. They’re going to have find it somewhere else in order to satisfy the desire to get somebody a gift or get the merchandise in time.”
He added, “When it comes to loyalty, it’s 10 times harder to keep a customer than it is to win a customer.”
And that could be especially true for smaller mom-and-pop retailers that are now, more than ever, relying on their longstanding relationships with devoted shoppers.
But Turco said it still isn’t too late for such companies to take some small steps — even amid the ongoing health crisis and the holiday season’s heightened logistics issues.
“It takes time to understand the current environment and [figure out] how to optimize it from a digital transformation perspective or supply chain digitization perspective,” said Turco. “But it doesn’t take as much effort as one would think to at least begin the initial stages of supply chain digitization and understanding the use of technology.”
For example, at Evrythng, Turco said the company has a “pretty quick” approach and can put a supply chain digitization framework in place in three to six months and begin execution. And, in the interim, a company could reap small, immediate benefits such as connectedness to its network, tools and insights.
What’s more, with data from McKinsey putting coronavirus-induced e-commerce spikes as high as 700%, investments in effective digital solutions are perhaps necessary to equip most retailers well beyond the era of COVID.