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UPS Failed to Deliver During the Biggest Online Shopping Season in History

Posted by jtolman to on December 27th, 2013

Santa is running late this year, and his elves (FedEx and UPS) are blaming bad weather and skyrocketing online sales for the delays.  The day after Christmas, two of the biggest shippers scrambled to deliver boxes to upset customers who didn’t receive their online orders in time for the holidays.

In early December, UPS and FedEx seemed confident about delivering what they expected to be 132 million packages in time for the holiday.  However, the volume of orders went through the roof due to increase online sales and surpassed UPS’ projections.  This caused delayed packages and upset customers.

Perhaps looking at one of the biggest online retail stores will help us to gain a better perspective on how high online sales actually were over the holidays.  Amazon revealed that customers ordered 37 million items on Cyber Monday alone, which is 39% higher than last year.  They also revealed that they shipped to 185 countries during the holiday season this year.  Another interesting fact that Amazon revealed is that the extreme increase in sales is due in large part to the increase in mobile online shopping.  Tablets and smartphones are bringing in more sales than ever before.  In fact, more than half of Amazon’s holiday online sales came from a mobile device.

“While Amazon does not disclose specific Mobile commerce volume, we estimate that more than $20 billion of merchandise was purchased on Amazon this year via smartphones and tablets,” said Colin Sebastian, an analyst at Robert W. Baird. “We believe the new data suggests that many Amazon customers are frequently ‘show-rooming.’”

UPS knew that sales would be higher than ever before, so they added 23 extra jets, doubled their trucking fleet, and added 55 thousand part time holiday workers.  However, their preparations just didn’t cut it, and the demand was even higher than they anticipated.

The volume of air packages in our system exceeded the capacity of our network. ... We apologize,” UPS said in a statement.

Retailers like Amazon have offered free shipping and $20 gift cards to customers who didn’t receive parcels on time.  Kohls also said that they would refund the cost of the gifts that were not delivered in time.  UPS doesn’t disclose how much of their sales come from Amazon.  However, this may affect Amazon’s shipping relationship with UPS in the future.

UPS had more problems getting the packages shipped in time than FedEx. “The volume of air packages in our system exceeded the capacity of our network. ... We apologize,” UPS said in a statement. FedEx echoed that apology, calling the volume an “extraordinary event.”

UPS tried to amend the situation by offering refunds to customers who shipped internationally or by air.  Customers can call 1-800-PICK-UPS (742-5877) in order to get a refund.

Another reason to blame for the late deliveries was this year’s shorter holiday season.

“We had a shortened holiday season in terms of shopping: six fewer days and a surge in online demand, particularly accelerated by a surge in mobile devices,” said Mark Mahaney, an online retail analyst.

Retail analyst Marshal Cohen said, “More consumers shopped last-minute. More retailers offered online deals and free shipping.”

2013 was the biggest online shopping season to date. Overall online spending jumped 10% between November 1st and December 22nd, reaching $42.8 billion, according to comScore, an online research firm.  In 2013, overall holiday sales exceeded $600 million.

FedEx said in an email that it had shipped 99% of its ground deliveries on time, but it didn’t specify a percentage for air shipments.

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