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Late spike in online sales leaves retailers, UPS floundering

  • A last-minute surge in online shopping and bad weather left major retailers such as Amazon (AMZN), Kohl's (KSS) and Wal-Mart (WMT) unable to fulfill guarantees to deliver packages in time for Christmas. IBM estimates that Internet sales jumped 37% on year over the pre-Christmas weekend.
  • UPS (UPS) was particularly caught out. "The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast," a UPS spokeswoman said. FedEx (FDX) was also affected, although the company said that it wasn't suffering significant delays.
  • Amazon is refunding shipping charges to affected customers and providing a $20 gift card, while Kohl's will pay the full cost of all goods that arrive late.
Comments (13)
  • Jeffry Chmielewski
    , contributor
    Comments (600) | Send Message
     
    Makes total sense if you look at guidance for Holiday 2013 from Amazon of a 10-25% increase in top line because the shipping/shopping window was compressed from 32 to 26 days. A nearly 20% decrease in the window and a 10-25% top line increase implies a 35-50% increase in volumes for ALL of Holiday 2013. The one day spike could have easily exceeded that.
    26 Dec 2013, 06:18 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (6843) | Send Message
     
    Yes, it makes for a significant per day increase.
    26 Dec 2013, 09:37 AM Reply Like
  • samsptl
    , contributor
    Comments (31) | Send Message
     
    OK forecasting gurus.

     

    Christmas comes every year. It comes on the same day every year. And for hundreds of years, every non leap year calendar has had 365 days placing 366 days on the leap year calendar. Did some political or financial wizard remove six days from 2013? Or how do you compress the calendar? Did our great and knowing Washington Oz's enact some law to prohibit shopping at any other time of the year?

     

    There weren't 6 fewer shopping days this Christmas season. The number of days on the calendar between Thanksgiving and Christmas only controls the number of shopping days in the minds of the hype mongers.

     

    So, are we going to get all giddie as we approach mid November 2014 because we will have two more calendar days between Thanksgiving and Christmas? Maybe we should hold off until 2017 when we again hit that magical 32 day number. Then we can have fireworks and champagne and really celebrate.

     

    Soft sales this year had very little to do with the calendar. Take off your rose colored glasses and you will see the real reason. There is far to much uncertainty in the condition of our economy. My wife and I reduced our Christmas spending by about 60% this year. Our income hasn't gone down. But we have held back for the past three years so we could tuck a little more away. By choice, we live our life on a cash basis and don't want to get caught in a tight spot. I don't have much trust in Washington - frankly, I don't have much trust in the number crunchers on Wall Street either. Too many hype and fear mongers in both locations.

     

    As we leave 2013 just remember, there are still 365 days on the calendar in 2014 and 2015 and 366 in 2016. And Christmas will always fall on the 25th of December each and every year.
    26 Dec 2013, 10:05 AM Reply Like
  • Agbug
    , contributor
    Comments (1148) | Send Message
     
    Is it just me, or have others had "issues" with UPS the last couple of years? One "issue" that sticks with me most prominently is tracking a delivery to me that was "out for delivery". The truck actually pulled up to my house and the driver couldn't find it! It was put on the wrong truck. A huge waste of my time as it required a signature. They made no attempt to complete the delivery that day. I avoid UPS like the plague. FEDEX, combined with the USPS for Priority Mail, are usually awesome. I'm not surprised that UPS is on the hot seat today. They stink.
    26 Dec 2013, 10:54 AM Reply Like
  • twterhune@yahoo.com
    , contributor
    Comments (2) | Send Message
     
    Somebody works for FEDEX
    21 Mar 2014, 06:14 AM Reply Like
  • Agbug
    , contributor
    Comments (1148) | Send Message
     
    Nope! Others responded with FEDEX knocks as well, so I guess none are perfect, but I stand by my UPS avoidance.
    21 Mar 2014, 09:22 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    My ridiculously hard times have been with Fedex. UPS has been mildly better (though also not perfect).

     

    Personally though, I use USPS whenever it's a reasonably competitive price (often it's lower). I've had much more consistency. Can always go to the PO to pick up the package if I switch to that option. Mail comes around same time every day, so I don't have to guess when the Fed/UPS truck will arrive.
    26 Dec 2013, 11:01 AM Reply Like
  • Agbug
    , contributor
    Comments (1148) | Send Message
     
    I dabble in EBay as a hobby and find the USPS is undeservedly maligned IMO. I usually get excellent service from them.
    26 Dec 2013, 11:25 AM Reply Like
  • PCFlyer
    , contributor
    Comments (7) | Send Message
     
    Big problem with USPS is theft by the employees. It's rampant and much higher than FedEx and UPS combined.
    26 Dec 2013, 08:01 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (5372) | Send Message
     
    Theft of what? Packages are tracked. I haven't had a USPS package gone missing (well one 40 years ago.)
    21 Mar 2014, 09:17 AM Reply Like
  • OPPORTUNISTIC 71
    , contributor
    Comments (41) | Send Message
     
    This is a good sign for UPS and FedEx stockholders. Whenever volume far exceeds demand in the highest margin air freight segment of the business model, profits will be huge for the season. The fact that it was both companies that had issues shows it was industry wide and not just poor execution. Drivers were out later on Christmas Eve this year than any prior year and overall put out record hours on the clock.

     

    There is way too much bashing of the package industry for only meeting 98% of the volume before Christmas when shoppers can buy the same items at any time of the year but chose to wait till the last minute. UPS, FedEx, and the Post Office are in the service industry that depends on human capital and humans make errors that result in service failures. Sorry but drones and robots cannot replace most humans in the system.

     

    The buying this Christmas is a sure sign that consumers that have jobs are feeling confident enough to go back to spending like stereotypical Americans after years of being tight fisted. 2014 will probably have a nice follow through. Consumers get addicted to spending once they start regardless of how much better informed they are with internet price shopping. I am sure that the management team of UPS, FedEx, and the USPS are studying all the data from this season and will use it to improve service next season after they all dance with joy that the US consumer has finally come back and exceeded the most optimistic estimates for this year with their spending.
    26 Dec 2013, 09:21 PM Reply Like
  • twterhune@yahoo.com
    , contributor
    Comments (2) | Send Message
     
    Right on !!!
    21 Mar 2014, 06:14 AM Reply Like
  • marloo
    , contributor
    Comments (17) | Send Message
     
    Does anyone else notice that more people are buying online than every before. Even more than the delivery companies can keep up with. Times are changing. Sales in malls are way down. We need more shipping companies.
    28 Dec 2013, 10:12 AM Reply Like
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