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Overview of Retail Holiday Logistics Fulfillment

Volume 2, Issue 21
November 15, 2014
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Helping Customers to Manage Holiday Shipping Timeline Expectations

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Nearly eight in 10 – 78.8% — of retailers will set standard shipping deadlines for guaranteed Christmas delivery to expire at least a week before Dec. 25, compared to 73.7% who said the same thing last holiday season, a recent survey found.

Also, only 21.2% said they will set those deadlines to expire Dec. 19 or later, compared to 26.3% who said so last year. The eHoliday survey was conducted by Prosper Insights & Analytics for Shop.org, the ecommerce division of the National Retail Federation.

“Retailers and their delivery partners this year are proactively planning to make sure they meet customer expectations for delivery and customer service,” was the way that Shop.org Executive Director and NRF Senior Vice President Vicki Cantrell put it.

“In addition to ramping up their online promotions earlier to entice customers to start shopping earlier in the season, many companies this year also have invested in functionalities such as live chat, checking in-store product availability and buy online – pick up in store,” she noted.

Retailers Prioritize Customer Interaction to Support Shipping

Of the 92.3% of retailers polled who plan to offer free standard shipping of some sort this holiday season, 69.1% say their guarantee for Christmas delivery will expire on or before Friday, Dec. 19. Nearly three-quarters (74.2%) of retailers polled last year had a deadline on the equivalent day (Friday, Dec. 20, 2013).

According to a separate Shop.org survey in August, 41.3% of retailers have invested significantly in live chat, and 34.5% have invested in technologies that allow shoppers to check in-store availability.

Shop.org said areas of investment include shipping deadline calendars (30.9%), “ship from store” functionalities (27.3%) and buy online – pick up in store services (25.5%).

“Consumers now have more tools at their disposal when it comes to connecting with retailers, and as online shopping continues to grow, more shoppers this holiday season will look for specific online promotions as a way to find the perfect gift at the right price,” said Prosper’s Principal Analyst Pam Goodfellow.

“Possibly having learned from their procrastination last holiday season and with another shortened holiday calendar ahead of us, shoppers could start looking for those shipping offers sooner rather than later this year,” she added.

Retailers are Adjusting Holiday Delivery Policies to Ensure Customer Satisfaction

For those waiting until the last minute, 20.6% of retailers that plan to offer a free or upgraded expedited shipping promotion will give customers until Tuesday, Dec. 23 to use that service.

By contrast, 14.7% of retailers polled will let their customers take advantage of that offer only through Monday, Dec. 22, and another 14.7% will end their free expedited shipping promotions on Sunday, Dec. 21.

More than half (56.6%) of the retailers who plan to offer express two-day shipping say their deadline for guaranteed Christmas delivery will expire on or before Dec. 21, while the rest will end on Dec. 22.

When it comes to one-day express shipping, half (50%) are comfortable offering express one-day or overnight shipping as late as Tuesday, Dec. 23 for a guaranteed Christmas delivery; three in 10 (30%) have set Monday, Dec. 22 as the deadline for their one-day express delivery deadline.

Expected to take some of the pressure off is an innovation that has seen growing popularity among retailers – using bricks-and-mortar stores as warehouses for customers to pick up their online purchases (AA, 10-31-14, P. 1).

Retailers are Using Technology and Third Party Resources to Realize New Fulfillment Capabilities

In spite of this and other innovations like mobile technology which retailers have enthusiastically embraced, just 5% believe they have the advanced omnichannel capabilities they need, according to the third annual Retail Insight industry benchmark report released by SPS Commerce in October.

Just 11% of retailers said they were prepared for cross-channel fulfillment while 18% report mobile commerce readiness, the survey found.

About 52% of retailers and suppliers said they are too distracted to focus on omnichannel strategies and 43% of retailers report their legacy systems hold them back from omnichannel progress.

Forty percent of retailers reported shipping less than 5% of online orders from stores today, but an additional 25% reported that more than 75% of their online orders are fulfilled from stores.

However, retailers don’t see this continuing, SPS said. “Shipping from stores is expensive. So it’s no surprise that only 18% expect to be shipping 75% or more of online orders out of stores, while only 34% also expect to continue shipping 5% or less.”

Thus retailers are grudgingly accepting the need for more drop ship relationships, SPS said. “This is an opportunity eagerly embraced by their ecosystem partners but long-resisted by retailers.” They resist drop shipping for lack of visibility into the process, less confidence in partners delivering the right consumer experience, and the competitive threat arising from teaching manufacturers how to cut retailers out of the consumer relationship.

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