The e-commerce industry is currently facing its busiest holiday shipping season yet. Consumers are making more online purchases, not only for holiday gifts but for essentials. The numbers don’t lie. Overall online shopping has increased by 36.7% in 2020. According to CNBC, Cyber Monday was the largest U.S. online shopping day ever recorded with $10.8 billion in sales, up 15% from last year. The total spend for the entirety of the shopping season is forecasted to be $184 billion (30% increase from last year).
Impact on Carries
These dramatic increases in online shopping will strain the small parcel industry like never before. Three billion packages are expected to travel throughout the network—about 800 million more than last year (StarTribune). This equates to 7.2 million additional packages in a system that lacks capacity. Carriers like FedEx and UPS have already implemented capacity constraints due to equipment shortages. They have expanded weekend deliveries and hired hundreds of thousands of employees, but this may not be enough to keep up.
Impact on Retailers
These constraints are not only affecting the carrier networks, but also the retailers, especially small businesses. FedEx and UPS have an enormous amount of leverage over how many packages can be shipped, which is causing some retailers to not oppose. On top of this, delivery costs and surcharges are increasing. To work around this, retailers are offering sales earlier and recommending curbside pickup or buy-online-pickup-in-store, which exponentially grew by 500% during the pandemic. In addition, retailers are still becoming more creative by adopting in-and-out shopping models. This is where consumers can look at merchandise, consult with sales associates inside the store while paying for purchases, getting gifts wrapped, and making returns outside in common areas or outdoors (L.A. Biz).
Impact on Consumers
Last, but certainly the most important, the consumer impact. Although consumers will be saving money on deals, they are probably spending more on shipping this year. Another struggle that consumers will potentially face is longer delivery timelines. It’s crucial that deliveries are on time during this time of year. However, with the network capacity constraints, many packages may not arrive until after the holiday season. These unhappy consumers could have detrimental effects on already struggling retailers trying to earn consumer loyalty in the e-commerce world.
The overall impact of the holiday season on the e-commerce industry will be revealed in a few short weeks. Many industries and involved parties may be struggling this year but with struggles, come lessons learned. The carriers may find ways to streamline processes and improve infrastructure to handle more packages. The retailers will continue studying consumer behavior and cater to their ever-changing needs. And last-minute shoppers will learn their lesson of ordering in advance to avoid expedited shipping costs and delayed deliveries.
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