October 20
Inflation is causing some trepidation and can potentially impact retailers shopping and shipping this season. Here is a round-up of some of the most recent reports on the peak shipping season:
- Inflation will likely curb holiday shopping habits: Holiday spending is flat year-over-year with an average of $1,455 per household, but consumers plan to purchase fewer gifts (nine gifts versus 16 gifts in 2021) for family and friends. [Deloitte]
- The leading industry association of mall and shopping center owners is cautiously optimistic about the holiday season, ICSC, after its annual holiday survey showed consumers expect to increase their holiday spending by 6.7% this year.
- “We expect volumes to be moderate from a year over year perspective. But we are ready for service and we are ready for our customers,” FedEx chief customer officer Brie Carere told CNBC in an exclusive interview. The logistics company recently released its holiday shipping outlook.
- While shipping timelines are important, consumers are far more concerned with saving money this year, especially as retailers are starting their discount season savings earlier than usual. Marketers should offer free shipping to remain competitive. Forced to choose between free shipping or quick delivery, 88 percent of holiday shoppers would save money over time. [Savings.com]
OCT. 12
The expected mixed bag for peak shipping season looks a bit emptier from recent reports.
This year, online Black Friday sales are expected to increase only 1% from a year ago, while Cyber Monday revenue is expected to grow 5.1%, according to Adobe. Overall, Adobe said online spending for the holiday season is only expected to grow by 2.5%, which would be the lowest growth rate since Adobe started tracking the figure in 2015. Adobe went so far as to warn of a potential decline between 2% and 5%.
And that slowdown in sales will impact holiday shipping as well. Recent reports show a potential capacity surplus of as many as 18 million parcels daily during the holiday season. This is far different from the last two years, where demand severely outpaced capacity forcing carriers to refuse shipments.
Citing an internal FedEx memo, Reuters recently reported that FedEx Ground expects to lower volume forecasts to reflect customers’ plans to ship fewer holiday packages this year. The official word from the carrier is expected later in October. Still, its contractors are reportedly preparing for a slower season and have not been scrambling to add equipment or staff as they have the past few seasons.
While it is unclear what this may mean for shippers’ ability to negotiate rates and peak season fees, it does mean that they will still have to manage their shipping as close as ever. This way, shippers can ensure they are getting their parcels from origination points to doorsteps efficiently and cost-effectively.
As we grind through the dog days of summer, the 2022 holiday shopping and shipping season is fast approaching. Early projections are mixed as retailers and eCommerce brands face inventory issues and costlier first and last-mile shipping. But despite that, retailers that have their final-mile shipping plan in place can still make the best of the season.
In the face of a challenging global economy, online shopping demand has dipped. This trend has early predictions for the 2022 holiday season a bit mixed.
Salesforce has already predicted that the more nominal growth of the 2021 holiday shopping season may be repeated in 2022. And with Q1 data showing a 3% YoY decrease in global digital sales, it isn’t a far-fetched prediction.
However, despite some of the same challenges, last holiday season proved to be a solid year for retail, despite trepidation heading into the season.
According to the National Retail Federation (NRF), 2021 retail sales during the November to December holiday season grew 14.1% compared with 2020 to $886.7 billion. This easily beat the NRF’s forecast and topped record highs for holiday sales.
Perhaps most importantly for retail last mile logistics, online sales last year grew by more than 11% to $219 billion, boosting parcel shipments for the season.
And eMarketer anticipates eCommerce and mCommerce to be strong again this holiday season.
The organization expects eCommerce sales to see pre-pandemic growth in the mid-teens, rising 15.5% to $235.86 billion. Further, at $117 billion, it expects mCommerce to account for almost half of those sales this year and top the 50% mark in 2023.
So, what should retail shippers keep in mind about the upcoming season to help maximize profits and stay ahead of the holiday shopping and shipping trends:
Plan for an early eCommerce shopping season
To stay ahead of global inflation, some consumers may already be done checking their lists twice. And with the most significant promotions of the year almost always occurring over the Thanksgiving, Black Friday – Cyber Monday weekend, budget-conscious shoppers may outspend last year at $33.9 billion in online sales.
Give shoppers the free shipping they want while not breaking the bank
As large eCommerce brands continue to offer free shipping to their customers and members, consumers are increasingly motivated by the “free shipping” label when making a purchase. As a result, when resellers, wholesalers, boutiques, and omnichannel retailers add shipping fees to their order total, customers will likely abandon their carts.
And, if they do press the “buy now” button, 53% of shipping costs and 41% of total supply chain costs are tied to the last mile, so sending that item without a charge can take a toll on the bottom line.
While many of those large eCommerce companies can absorb losses—or increase membership dues or the price of items—others need to keep costs down to ensure a profitable holiday season. This can be done through automation, omnichannel shipping, or utilizing a multi-carrier network to get the best price and service for the job.
Make online returns easy for consumers, and your staff
If there’s a 2022 holiday shopping prediction that is universally expected to come to fruition, the annual surge of peak season returns is it. Every year, customers return or exchange presents that don’t fit, aren’t what they thought they’d be, or showed up damaged. As a result, customer service representatives are inundated with daily phone calls and messages, and fulfillment centers and warehouses are bogged down with the influx of returned orders. But customers also want it more effortless. Automating eCommerce returns, such as with the Transtream Returns Widget, can save time and effort. From notification about the placed return request to printing the label to allow customers to track the returned item, automation will speed the process and reduce costs on your side and customer frustrations.
While a clearer picture of the upcoming holiday shopping and shipping season will come into focus as the leaves begin to fall. Getting a jump on your final-mile shipping planning to optimize your shipments can help retail and eCommerce companies have a happy holiday season. Take a tour of Transtream multi-carrier final-mile shipping solution to see how it can help brighten your holiday shipping season.