Despite the threats posed by the coronavirus pandemic, the holiday shopping season is seeing record-high sales figures. Data today from Adobe Analytics showed that Americans spent about $9 billion via websites on Black Friday — a 22% hike from the previous peak of $7.4 billion last year. In addition, Cyber Monday is on track to become the biggest online shopping day in United States history, with spending predicted to grow between 15% and 35% year over year to $10.8 billion through $12.7 billion.
With spending hitting peak levels, new issues arise for retailers amid the persistent health crisis: Although a number of companies had ramped up investments to bolster their supply chains, the heightened demand during the holiday shopping season undoubtedly poses several logistical challenges. A surge in digital sales has led to strained shipping capacities at a time when businesses are already contending with uncertainties surrounding consumer behavior, rising costs from delivery providers like UPS and FedEx and other broad financial implications stemming from the pandemic.
During an unprecedented holiday shopping season, FN is exploring how retailers are managing their shipping and logistics infrastructures — and preparing for the busy December ahead.
Retailers started offering deals earlier than ever.
Likely influenced by Amazon’s Prime Day event, which occurred in the pre-holiday month of October instead of its usual date in July, major nationwide chains like Walmart and Target, as well as department store Nordstrom, athletic-outdoor firm Dick’s Sporting Goods and specialty retailer Old Navy, were among the businesses that began to offer their own promotions well before the late November shopping holiday. What’s more, they extended their sales events to last days or weeks instead of the usual 24- to 48-hour extravaganzas.
“Cyber Monday has less relevance this year as sales have been available online for days or even a week from many brands, including the largest retailers in the world,” Sarah Engel, January Digital’s CMO and chief people officer, told FN. “What we will see is Cyber December — a season of longer, deeper discounts aimed at moving excess inventory before shipping cutoff occurs and squeezing any last dollars possible into 2020.”
Retailers put the message out about potential shipping constraints.
By marking down merchandise ahead of the Thanksgiving weekend, a number of retailers were already ahead of the curve. But, according to experts, many companies took the added step of making sure that shoppers were aware of imminent shipping constraints. CGS noted that while 54% of consumers have experienced delays in deliveries since the COVID-19 pandemic took hold, 34% of them were notified by the retailer about such issues.
What’s more, Salesforce shared that notices related to shipping and delivery were prominent on 61% of emails to customers, while potential delays and pickup options were specifically featured on more than 10% of emails. It added that the average discount for Black Friday was 26% — relatively flat to that of last year — as companies balanced limited supply with booming digital demand and potential shipping issues. “With expected shipping surcharges, caps and capacity issues, retailers have been making every attempt to pull forward demand by creating urgency and product scarcity to encourage consumers to buy early in the season,” explained Salesforce VP of strategy and insights Rob Garf.
Retailers used their stores as distribution centers.
With foot traffic at a decline and online shopping only accelerating, some retailers have been leveraging their physical outposts as fulfillment centers — a trend that was on the rise pre-COVID and has only accelerated since the virus took hold in the United States. Retailers that ship from stores based on proximity to consumers can enjoy lower freight costs, shorter delivery times (see: greater customer satisfaction) and ultimately increased margins.
According to Garf, retailers that hadn’t already been planning for the so-called “shipageddon” — or delays as couriers are stretched even thinner into the holidays — are already at a disadvantage as they scramble to fulfill the onslaught of digital orders leading up to Christmas. Retailers that offered curbside, drive-through and in-store pickup services, reported Salesforce, increased their digital sales by 19%, compared to those that didn’t offer such options on Black Friday.
“With the influx of online orders, retailers that planned for shipping constraints and instituted creative last-mile options will be winners,” added Garf. “They are sourcing delivery services through companies like Uber, Lyft, Postmates and others to help expand their shipping capacity. They’re leaning into curbside pickup and evolving the role of store associates by turning them into fulfillment and delivery experts.”