The recent surge in ecommerce shopping because of COVID-19 has led to increased volume for couriers like FedEx, UPS and the USPS. With the holiday season quickly approaching, all three couriers have announced surcharges that retailers will have to reckon with through smart digital strategies and consumer outreach.
It is likely that online retailers will be handicapped by the already heavy burden on the parcel industry, disallowing consumers to buy at the last minute. To understand the holiday outlook for retailers, it’s important to see the numbers that couriers have been dealing with throughout the last seven months of consumers relying on ecommerce and online shopping.
- At UPS the “average daily shipping volume rose 21% in the [June] quarter, faster than the company has ever recorded, with a 65% increase in shipments to homes.”
- At FedEx the “average daily package volume increased 25% year over year,” and “residential deliveries made up 72% of FedEx's total volume — up from 56% the year prior” in the quarter ending May 31.
- At USPS, “Shipping and packages revenue increased by $2.9 billion, or 53.6%, on a volume increase of 708 million pieces, or 49.9%, compared to the same quarter last year.”
Plus, in order to make up for decreases in other delivery areas and meet anticipated delivery needs for the holidays, surcharges are being levied by all major parcel and courier services, with the expectation that retailers will pass those expenses along to consumers as needed.
There are a lot of question marks surrounding this holiday season, with a shaky economy and consumer confidence unknown, but the 2020 holiday season is a critical time for retailers. According to the National Retail Federation (NRF), holiday sales often account for 20% of retailer’s annual revenue and 30% for “hobby, toy and game stores.” Last year 190 million people shopped Thanksgiving weekend, including Cyber Monday, up 14% from 2018. The success of the unique 2020 holiday season could depend, in part, on how retailers respond to potential delivery delays and shipping cost concerns, making the difference between a successful holiday season and one that can’t meet consumer needs.
Here are three shipping-related strategies online retailers can deploy during the holidays to meet demand:
Offer Shipping And Delivery Alternatives To Avoid Additional Shipping Costs
Throughout the pandemic, retailers have explored a variety of ways to create contactless delivery that meets the social distancing demands of consumers. The contactless delivery trend is going to be critical for success during the holidays, with retailers stepping up efforts to facilitate in-store fulfillment strategies, like buy online pick up in store (BOPIS) and in-store delivery, which can cut down on shipping costs. (Most parcel delivery service surcharges only apply to residential deliveries.) An added benefit of BOPIS or “click and collect” options is that these last-mile strategies can also drive in-store shopping, a perk during a time when many shoppers may not be regularly choosing to shop in crowded stores.
Link Promotions To Shipping Times, And Make Recommendations To Increase Average Order Value
Even with surcharges meant to cover the increased need for staffing and technology at couriers, brands should expect shipping delays and difficulties this holiday season. Retailers can manage shipping issues by offering regular communications via email and SMS that link promotions to order dates, order quantities or shipping schedules and update customers on order statuses. While some brands in the past may have been able to promise Christmas Eve delivery for orders placed by December 23, that may not be an option this year. Therefore, it’s important for retailers to make turnaround times clear to consumers from the outset. Increasing average order value by making recommendations based on what’s already in consumers’ carts, or previous first-party purchase data information, is another way retailers can use customer communications to address the increase in shipping costs.
Start Promotions Earlier To Create Excitement And Test Procedures
Amazon has announced that it will hold Prime Day in October, a month not typically associated with holiday shopping. Insiders speculate that other retailers may follow suit in order to generate excitement and test the procedures and processes set in place to meet ecommerce demands. Early sales represent a “huge opportunity to pull forward demand from holiday  and also test what works and what doesn't in the current environment,” said Deborah Weinswig, CEO and Founder at Coresight Research.
A former executive at Macy’s, Stephen Rector, believes that the same kind of enthusiasm for in-person Black Friday shopping can be created with the right kind of online sales. For example, an “hours-long” online sale for a sought-after item during the week could “create that same sort of frenzy online that retailers create in-store.” Managing shipping delays may be easier for retailers if they can encourage shoppers to buy early.
Buy one get one (BOGO) promotions and inexpensive upsells are another option for catching consumers early, particularly in the browsing phase. Discount-style promotions are also cognizant of tighter holiday budgets, which may make consumers feel understood. Free shipping and coupon codes for shipping reductions can also be deployed. Educating the consumer on "last day to order to receive by" dates can also help drive urgency and sales.
Throughout the 2020 holiday season, it’s important for retailers to be judicious about when and where to execute free shipping, which will require listening to consumers and carefully tracking customer preferences. This holiday will be new for everyone — shoppers, retailers and couriers. The sooner brands make plans to deal with new challenges like shipping delays and increased ecommerce demand, the more likely they are to be able to navigate this unique holiday season successfully.
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