holiday season Archives

Editor’s Choice: What Early Holiday Shopping Means for Parcel Shipping

Retail | By Chris Cunnane • 11/05/2020

Note: Today’s post is part of our “Editor’s Choice” series where we highlight recent posts published by our sponsors that provide supply chain insights and advice. Today’s article is from Logistyx Technologies.

Regardless of whether consumers and retailers are ready, holiday shopping – and shipping – season is here! With carriers announcing capacity shortages and major headlines advertising “Shipageddon,” consumers have been encouraged to start shopping for the holidays NOW. While this elongated holiday shopping season can certainly create new revenue opportunities for retailers, retailers can only capitalize on the opportunity if their parcel shipping operations are prepared to execute.

Although the holidays have always been considered “peak season” for parcel shipping, this year’s unparalleled e-commerce growth has redefined and intensified that reality. Businesses relying on parcel shipping must prepare for a capacity crunch and delivery setbacks (nicknamed the “Nightmare on Parcel Street”) as FedEx and UPS capacity for the holidays is filled. ShipMatrix projects as many as seven million packages per day could be outside of maximum capacity for these two leading carriers’ parcel delivery services, and even regional and last mile carriers OnTrac, LaserShip, and Speedee Delivery have reached capacity heading into peak season.

Despite Amazon moving its Prime Day event from July to October, Amazon Prime Day has remained a catalyst for competitors such as Target, Walmart, and Best Buy to launch their own offers. This year, however, these offers aren’t only available for a “limited time.” Rather than halt promotions after Amazon Prime Day and relaunch the offers closer to Thanksgiving, many retailers opted not to hit pause on their holiday sales. For example, Target is offering “Black Friday pricing all November” and Home Depot is making special offers available until the end of the year. The hope is to spread demand to prevent further strains on supply chains by encouraging consumers to shop earlier and avoid crowds and delivery delays. In addition, many carriers have encouraged retailers to run these types of sales events to increase the chances of deliveries reaching customers on time.

Extended discount periods aren’t the only changes we’ll see this holiday season. We’re also likely to witness a dramatic shift in consumer wish lists – pivoting from luxury goods to practical purchases such as home goods, office supplies, and outdoor equipment. For example, coats and fire pits are finding their way onto many letters to Santa, as they enable friends and family to gather outside in cold temperatures while respecting social distancing guidelines.

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Retail 2020 – A Year of High Season

Guest Commentary | By Diego Pantoja-Navajas • 10/22/2020

One thing is certain – there is no normal in 2020. What we have experienced so far this year is either a blip that we will look back at and wonder on, or our lives have fundamentally shifted, and 2020 is really just Year One.

Either way, what we understand about this year is that Covid-19 has upended everything about the status quo. The pandemic has exposed all of our weaknesses and all of the cracks in our frameworks. What it is, is a compelling reason to change, and luckily there are solutions and strategies to meet the uncertainty, and so more than anything, 2020 is a year of transformation.

A couple of weeks ago a CEO asked me if I expected or believed that the potential second wave would bring empty shelves. I shook my head. I don’t believe that we will see the same disruptions that we saw at the beginning of the pandemic – especially not for essential items.

When the pandemic began there were a lot of uncertainties and unknowns about the virus, and so consumer buying patterns were chaotic. We are only human, after all. We reacted to the situation emotionally and that was why we saw paper towels, toilet paper, hand sanitizer and other essentials being emptied out of store shelves. But over the last six months the demand and supply have adjusted in terms of price and quantity and the segment of essential goods has mostly normalized.

However, the pandemic has accelerated the altering of buying patterns, and I believe it’s done that for good. The eCommerce market size is expected to grow at a compound annual growth rate (CAGR) of 14.7% from 2020 to 2027, and it is expected to account for more than 95% of all sales by 2040. This year alone, eCommerce sales will surpass $4 trillion dollars.

I don’t have any reason to believe that online shopping will suddenly slow down over the coming months. In fact, what I have seen and helped implement with many customers this year is the combination of the digital and the physical. Companies don’t want to lose their physical space completely. They may want to reduce footprints, but they know it’s good to have a physical presence in markets where they expect to have growth. To meet this challenge they have to execute on physi-digital strategies that provide the quickest and safest services to customers. The important thing here is that companies are giving customers the option to decide if they want to go to stores or stay in the safety of their homes to complete their shopping. This is the critical requirement in meeting the challenges of Year One of the new world.

Implementing these processes is definitely not easy because businesses have to rethink and reengineer all of their processes under pressure. With IT landscapes exposed, I have seen many operational issues needing to be addressed. A lot of the businesses I worked with were not fully migrated to the cloud, and really in order to support these kind of activities in the physical world, a digital transformation is the key to surviving.

And to make matters more complex, now, in the northern hemisphere, we are starting our fall and winter seasons. High season is upon us. But based on the volumes of certain segments the past 6 months, one could say High Season started back in March. High season is already here. So what to make of the holidays? How are businesses planning to deal with holiday sales? What will Cyber Monday look like? What will Black Friday look like? Do they even matter anymore?

Well, of course, I think they do, but something to keep in mind is that Amazon Prime Day was moved this year from July to mid-October. Amazon Prime Day is now a kickoff event for what may be an intense season of holiday shopping. And maybe this is the beginning of a shift. Maybe this pandemic has moved the start of holiday shopping from the day after Thanksgiving to two weeks before Halloween!

Either a Blip or The Start of Something New

As we get closer to the holidays and six months after the beginning of the pandemic in the United States, I believe shopping patterns for the holiday season will be determined by the new world we live in and the new lifestyles we are experiencing. I believe it may even be determined by pent up demand! This year, I predict there will be huge demands for goods and products that are going to increase quality of life rather than wish lists of items that do not add value to people immediately. That said, I think sales might be down overall, but eCommerce will boom, especially in essentials and electronics.

And the largest beneficiaries of this eCommerce boom will be the big three. Amazon, Target, and Walmart will dominate the market – reflecting what we have seen now in the last few years, but also proving the adage that bigger is better in times of crisis.

But that’s not to say that other companies or smaller companies can’t partake in the eCommerce tsunami that is about to wash over us. I have been pushing my customers really to move fast on their cloudification efforts, to work hard with manufacturing, retailers, consumer good products companies to respond and accelerate their cloud migrations.

And while I’ve been preaching this for the last decade, 2020 is the year when everybody just gets it. As a cloud vendor, my main goal has been to remove all the stresses on system performance and to allow my customers to focus on their core business by using us as an extension of their organizations to achieve their goals and bring in shareholder value.

My hope is that this fall will not lead to another lockdown, but if that does happen, I think we can rest assured that businesses have pivoted quickly to understand better the mix of physi-digital shopping. Click and collect is the way to maximize and grow retail, and the businesses that have embraced eCommerce and invested over the last six months in digital technology will certainly have their share of the consumer pie in this very challenging year.

In short, this virus is the trigger to modernize technology that arguably should have been modernized 5 years ago. So even though it was 5 years ago when I was making the recommendation to change, retailers can still catch up and catch this wave. eCommerce is the new normal in shopping, and you owe it to yourself to get in on the business here at year one.

Diego Pantoja-Navajas is vice president of WMS development at Oracle and former founder and CEO of LogFire. He is an industry thought leader in SCM who enjoys exploring the impact of advanced and emerging tech on supply chains.

The 2020 Holiday Season Logistics Guide

Learning & Leadership | By Chris Cunnane • 10/21/2020

Last week’s Amazon Prime Day kicked off what will surely be a wild 2020 holiday season. While the numbers are not official yet, most estimates have Prime Day raking in nearly $10.5 billion in worldwide sales. Not to be outdone, Walmart and Target launched their own online deals to coincide with Prime Day. Black Friday is till 5 ½ weeks away, and by all accounts, it will be the biggest Black Friday ever. In fact, more and more retailers are launching Black Friday deals that will run for a week or more to help meet the rising demand for online shopping.

One of the biggest questions is whether or not logistics companies will have the necessary capacity to deliver all of these orders. According to multiple reports, UPS and FedEx have begun telling shippers that they have essentially reached full capacity already. With the onslaught of online shopping to come, retailers and logistics companies alike are telling consumers to shop and ship early. These companies are bracing for the potential of a massive capacity shortfall which could impact up to 7 million packages per day between Thanksgiving and Christmas.

As such, logistics companies and retailers are planning earlier than ever to get ahead of the capacity crunch. As we’ve done in years past, let’s check in to see how some of the largest logistics providers and retailers are handling the holiday logistics rush.

Amazon is in full-on holiday season mode even though we are still 10 days away from Halloween. The company has announced that as it gears for up the busy holiday rush, and to continue to ensure capacity around the growth of online orders, it is hiring 100,000 workers. While it did not say how many of that 100,000 would be seasonal-specific, the overall strategy is to bring in warehouse and delivery workers to build out the logistics and fulfillment network. The minimum starting wage is $15 an hour, and in some markets the company said it is offering up to $1,000 in sign-on-bonuses. Amazon will also open 100 additional buildings across its fulfillment, sortation, and delivery network. The company plans to increase capacity by 50 percent by the start of the peak season to effectively manage the demand spikes it is expecting. All of these numbers are on top of the 175,000 workers Amazon hired in a matter of months as the pandemic set in, with 125,000 of those workers becoming full-time employees.

UPS is hiring more than 100,000 seasonal employees as it gears up for the holiday season. Like Amazon, UPS has already brought in a large number of workers to meet the growing e-commerce boom. In the second quarter of 2020, UPS hired 39,000 as package volume surged by 23 percent over the same period in 2019. As a unionized workforce, UPS is among the top-paying in the industry; part-time package handlers earn $14.50 an hour and seasonal drivers can make as much as $21 an hour. On average, 35 percent of seasonal jobs turn into permanent positions. Like last year, UPS is also extending its “Earn and Learn” program, which gives qualified students a bonus of up to $1300 for college expenses. The shipping deadlines for UPS are December 15 UPS Ground, December 21 UPS 3 Day Select, December 22 UPS 2nd Day Air, and December 23 UPS Next Day Air. UPS will also impose surcharges ranging from $1 to $3 per package on high-volume US residential shippers.

FedeEx is planning to hire a record 75,000 seasonal workers in 2020, a jump of 27 percent compared to 2019. Aside from bringing in more seasonal workers, FedEx is expanding its e-commerce capabilities. The company will expand its Sunday home delivery service to cover nearly 95 percent of the US population. FedEx is also increasing Ground’s network capacity and expanding coverage of the FedEx Freight Direct service. The shipping deadlines for FedEx are December 15 for FedEx Ground, December 22 for FedEx 2Day, December 23 for FedEx Standard Overnight, and December 25 for FedEx Same Day. FedEx will also be applying peak season surcharges to high-volume shippers, ranging from $1 to $5 depending volume.

The Postal Service is gearing up for a busy season as well, as it gets ready to delivery nearly 15 billion pieces of mail and 800 million packages. The USPS will likely hire somewhere in the range of 35,000 to 40,000 seasonal employees once again this year in positions such as mail handlers, holiday clerk assistants, and mail processing clerks. The agency will also push consumers to use its Click-N-Ship feature which allows users to order free Priority Mail boxes, print shipping labels, purchase postage and even request free next-day package pickup. The Postal Services asks consumers to plan accordingly, as it predicts December 14 will the busiest day online with more than 13 million consumers predicted to visit usps.com for help shipping holiday gifts. USPS shipping deadlines include December 18 for First-Class Mail and packages, December 19 for Priority Mail, and December 23 for Priority Mail Express.

Walmart made some major changes to its normal Black Friday sales event for the 2020 holiday season. Last week the company announced that will be holding “Black Friday Deals for Days” with category-specific markdowns on different days, with an initial offering online followed by in-store deals. The dates include November 4 / 7 for toys, electronics, and home products and November 11 / 14 for TVs, computers, tablets, movies, and music. Walmart will hold a sale on November 25 followed by the company’s “true” Black Friday the day after Thanksgiving. To meet the growing demand, Walmart is hiring 20,000 seasonal workers in its e-commerce fulfillment centers across the country for a variety of positions, including order fillers and power equipment operators, that begin at a starting hourly rate ranging from $15.75 up to $23.75 based on location, position and schedule. Walmart has already hired more than 500,000 workers across its stores and supply chain since the beginning of the COVID-19 pandemic. In an effort to promote customer safety, Walmart is offering pick-up and delivery on more than 160,000 items that can be picked up or delivered as soon as the same day. Free next day or two-day shipping on online orders over $35, pending eligibility and customer location, will also be offered.

To kick off the holiday season, Target will pay $200 bonuses to all 350,000 of its hourly employees at stores, distribution centers, and contact centers. Target also launched an online sales event to coincide with Amazon Prime Day as part of its efforts to kick off the holiday season. The company is hiring about 130,000 seasonal employees this year, which is in line with how many it hired last year. These hires will focus on everything from customer service to stocking shelves. The big push for 2020 is how it will approach its staffing in relation to same-day services such as curbside pick-up. Target is doubling the number of employees that will be dedicated to same-day curbside and in-store pickup of online purchases compared with the first half of the year. Distribution centers will have more workers than last holiday season to make sure they can continue to re-stock stores in a timely manner. There will also be modified training across stores and distribution centers so employees can switch from task to task as needed, such as from disinfecting shopping carts and helping with curbside pickup during peak hours. Target-owned same-day delivery start-up Shipt will likely be very busy this holiday season.

Even though it’s earlier this year, the holiday season is kicking off. And this year’s season looks to be the biggest one yet. Most estimates put holiday spending around $1.15 trillion, which will be a 1 to 1.5 percent increase over 2019. The big driver this year will be online sales as more and more people avoid brick and mortar stores. Amazon, UPS, FedEx, the Postal Service, Walmart and Target are bringing in more than 465 million seasonal workers to make sure packages are delivered on time. The question remains to be seen whether the investment in people and infrastructure will be able to handle the strain of increased orders. And in a few weeks, we can talk about the reverse logistics nightmare that is looming.

A complete analysis of logistics trends, technologies, and services

Either a Blip or The Start of Something New

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