Retail sector might rethink late online shipping deadlines

The word "guarantee" was thrown around too loosely this holiday season by retailers, writes The Dallas Mornings News' Maria Halkias.

While UPS (UPS) blames bad weather for falling short with some deliveries this year, the company only hired the same number of temporary workers as last year despite forecasts for booming online sales. FedEx (FDX) and the USPS also had their own glitches. The spottier-than-normal delivery record this year falls on the shoulders of the retail sector not shippers.

What to watch: Online retail tracking firm StellaService reports that sellers such as Zappos, Amazon (AMZN), Wal-Mart (WMT), Best Buy (BBY), and Victoria's Secret (LB) scored well in meeting aggressive deadlines, although the cost may be high. Many of the firms upgraded late-ordering customers to express shipping to avoid a customer service backlash. Next year, deadlines may be earlier and holiday margins higher.

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Comments (13)
  • Ted Bear
    , contributor
    Comments (709) | Send Message
    USPS Priority "2 Day" service...only took five days during the week BEFORE Christmas.
    27 Dec 2013, 09:12 AM Reply Like
  • wam350
    , contributor
    Comments (173) | Send Message
    I received a USPS Priority "2 Day" service 10 days late, and no longer had a need for the product. You don't always get what you pay for!
    27 Dec 2013, 09:29 AM Reply Like
  • Eisensteind
    , contributor
    Comments (10) | Send Message
    FedEx had my package on the local truck out for delivery at 11am on Christmas Eve and still failed to deliver it. It was not the retailer problem. FedEx called me on Christmas Day and said if I wanted to drive 50 miles I could pick it up. Yeah right.
    27 Dec 2013, 09:40 AM Reply Like
  • Eisensteind
    , contributor
    Comments (10) | Send Message
    FedEx had my package on the local truck out for delivery at 11am on Christmas Eve and still failed to deliver it. It was not the retailer problem. FedEx called me on Christmas Day and said if I wanted to drive 50 miles I could pick it up. Yeah right.
    27 Dec 2013, 09:40 AM Reply Like
  • ewmpsi
    , contributor
    Comments (1697) | Send Message
    (AMZN) signed up 1 million new customers during the 3rd week of December as it’s Amazon Prime “and the free shipping offer” drove customers into a last minute Christmas Shopping frenzy. For all those who thought that online shopping was a fringe, they’ve had to run and hide as retail numbers show that traditional brick and mortar that did not have a strong online presence trailed in the numbers this holiday shopping season. However brick and mortar retailers that had both strong store presence and strong online presence did better. In fact, 2013 is shaping up to be the strongest holiday shopping season online to date with companies like Amazon who specialize in online retail having done exceptionally well.


    Amazon adds 1M Prime members one week before Christmas


    However, this year the volume was so significant in the last week of deliveries that shippers like UPS dropped the ball and were not able to get all packages that were promised “by Christmas” delivered to their destinations on time (and yes, there were other factors like weather). Amazon is already pointing fingers at shippers “UPS”, and this leaves the door open for a continued growth of the relationship between Amazon and the U.S. Postal Service. Amazon and U.S.P.S are already experimenting with Sunday delivery. I suspect that next year during the 2014 holiday season we can expect to see the U.S.P.S pick up some of the holiday rush “privately” for Amazon.


    Amazon and USPS to Deliver on Sundays


    This opens the door to a new era where I believe the U.S.P.S will become increasingly more privatized and may end up mostly working for Amazon and perhaps some other heavy online retailers like eBay. Let us not forget, Amazon wants to deliver your regular shopping needs such as groceries and as Becky Quick pointed out on CNBCs Squawk Box, “…the only way you can get additional infrastructure is to rely on existing infrastructure…” The only infrastructure that is both desperate enough to jump at such an offer while simultaneously being equipped with the resources is the U.S.P.S.


    Amazon Is Working On A Plan To Deliver Your Groceries


    Sure, Amazon wants to do this by drones, but we are a long way from that as a reality, so I agree with Becky Quick’s comment about existing infrastructure.


    This could lead to a reduction in the taxes posed on U.S. citizens as the post office regular mail carry is expensive to fund and stamps do little to subsidize it. A consortium of online retailers could privatize most of the U.S.P.S in exchange for being “exempt” on sales taxes in the states (where a battle to force online sales tax is pressing margins for online retailers).
    Price of a stamp set to rise AGAIN as postal service struggles to recoup $3 billion loss


    However, these are just more examples of why so many people consider Amazon to be peerless, who else is positioned to even consider this as a possibility? Yes, Amazon changed retail and it will spend another decade evolving under their tutelage. I am not recommending (AMZN) stock nor am I bullet-proofing the company or deifying Bezos, I’m just saying, that nose-bleed multiples aren’t based on valuations they are based on the inability to place a value on just how much of an impact a disruptor has on what’s being disrupted, allowing speculation to rule.
    27 Dec 2013, 09:49 AM Reply Like
  • Mort19
    , contributor
    Comments (1047) | Send Message
    Pure speculation and more so pure predatory collusive trading. Bezos and those behind the stocks melt up should be investigated. I expect this to occur well after the stock craters and ultimately it will under it's own weight. The billion dollar question is how high into the sky will the price be before a drone strikes it.
    27 Dec 2013, 10:10 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4381) | Send Message
    (AMZN) is apparently being evaluated as a technology company when in fact it is a retailer, and ought to be valued like one. Retailers have no moat, and Amazon competes mostly on price. There is convenience to shopping from home in your bathrobe, but Amazon long ago out-grew that market. Amazon also offers the ability to read online reviews from other consumers, but that must be balanced against the fact that you cannot view and possibly handle the product in person as you can at a brick-and-mortar store. Brick-and-mortar stores also have the potential to offer in store experts to help you, but in most cases they are less than helpful, so Amazon wins by eliminating that expense. So the question is, if Amazon is merely a lowest cost retailer of commodities of all types, shouldn't it be turning a profit by now?
    27 Dec 2013, 04:21 PM Reply Like
  • ewmpsi
    , contributor
    Comments (1697) | Send Message
    "The billion dollar question is how high into the sky will the price be before a drone strikes it.”


    It's been flying for 16 years I believe, those drones better have long-strike capability. Markets and the instruments traded on them go up and down, some participants will make money on the rise, some on the fall, some both ways.


    "(AMZN) is apparently being evaluated as a technology company when in fact it is a retailer, and ought to be valued like one."


    10 years ago that would have been an accurate description, now toss in cloud storage, cloud services, streaming, media consumption devices, intellectual property and content rights and suddenly it isn't so easy to categorize Amazon is it? They are a platypus, an unprofitable (some businesses) and marginally profitable (other businesses) anomaly in retail and technology.
    27 Dec 2013, 04:41 PM Reply Like
  • BillBrown
    , contributor
    Comments (605) | Send Message
    Amen to all of that. Excellent comment.
    6 Jan 2014, 05:18 PM Reply Like
  • layzredfox
    , contributor
    Comments (28) | Send Message
    I'm not sure I agree with the comment about UPS and temporary employees entirely. I can't speak to what was happening in the service centers and the parcel trucks, but UPS was already using contract carriers on Thanksgiving Day in their over-the-road movement of shipments between service centers. That was earlier than I'd seen UPS turn to outside contractors before.


    I probably watch these types of things closer than many people having worked in and with all segments of the trucking industry for 40 years.


    I would tend to attribute the delivery shortfalls by the three principle residential parcel delivery services to a large degree to the significant upturn in e-sales, along with the idea that while each retailer thought they could control last minute delivery of their merchandise, they failed to anticipate how the cumulative effect of all retailers offering last minute guarantees would impact delivery service providers
    27 Dec 2013, 10:27 AM Reply Like
  • RBsGang
    , contributor
    Comment (1) | Send Message
    There are so many variables in these situations. #1. You can only fit so much on a plane or truck and the last minute promises by retailers didn't take that into consideration when they tried to boost their holiday sales. #2. There are very strict government regulations (DOT) as to how long drivers can be on the road and yes - packages may have been on trucks but they can only spend so much time on the road. #3. Volumes were so high and retailers also didn't have the stock to fulfill orders. There is no blame to one person, one shipper, one carrier. #4. Weather cannot be controlled. #5. Human nature. People wait until the last minute to shop to get that great bargain and expect the burden to be on somebody else's shoulder to deliver on time.
    27 Dec 2013, 12:04 PM Reply Like
  • The Amazon Bear
    , contributor
    Comments (4) | Send Message
    I get a kick out of people thinking e-commerce is going to change the world.


    There is a possibility that e-commerce only worked at a smaller scale and in a sales tax free environment.


    And as the scale increased, the liabilities (such as price competition, cost of delivery, cost of returns, loss of sales tax free advantage) e-commerce ends up as a nightmare at large scale.


    No sense it will all play out.
    27 Dec 2013, 12:04 PM Reply Like
  • Johnwoods41
    , contributor
    Comments (177) | Send Message
    There is a great article published in the Financial Times today, "US bricks and mortar retailers seek online success" The future is a multi-channel business and it will be "bricks and clicks", buy online and collect in store is growing fast.


    Amazon is pure online but really there is little barrier to entry, they just proved they rely on the postal system as much as anyone else. As a retailer if you have a brand name (which most bricks and mortar stores do) and you can organise yourself, then there isn't a huge barrier to entry in setting up a competitive online business


    Just remember Apple might have bought the tablet and smartphone to the mass market but they no longer own them, the same can happen with online retail to Amazon, there are major risks ahead, be warned
    27 Dec 2013, 04:32 PM Reply Like
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