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NEW YORK (AP) – Retailers and carriers are bracing for a wave of holiday online shopping that could tax shipping networks and lead to delivery delays.
FedEx and UPS are stepping up their holiday hires while expanding their weekend operations and asking retailers to use their shipping network when the slack is more. And stores are pushing shoppers to buy early, and expanding services like curbside pickup to minimize the need for delivery.
In recent years, many retailers have been using their own physical stores, in addition to their distribution centers, to fulfill online orders. But now they are designating some of those stores to handle even higher volumes. Best Buy, for example, converted space in 250 of its 1,000 stores this fall to handle online orders.
Walmart, the nation’s largest retailer, said Thursday it was taking up space in 42 regional distribution centers to create “pop-up” e-commerce distribution centers to meet growing demand for orders in line this holiday season.
The changes come as most carriers have reached full shipping capacity for months, with buyers moving their purchases online during the pandemic.
“We’re warmed up for what we call the ship-a-thon,” said Brie Carere, director of marketing and communications at FedEx. “Like everything else in 2020, it will be an unprecedented high season. We’ve actually seen three years of e-commerce growth continue. So we expect a ton of volume. “
Carole B. Tome, CEO of UPS, told analysts last month that she expected a “pretty sharp peak.”
Amazon, which has developed its own delivery network so it doesn’t have to rely so much on UPS and the US Postal Service, is warning shoppers nonetheless not to wait until the last minute to purchase gifts. While the world’s largest online retailer delivers more than half of its packages itself, it still relies on other carriers to place orders to buyers.
“It’s going to be tight for everyone and we’ll all be exhausted,” said Brian Olsavsky, chief financial officer of Amazon. “And it’s good for the customer, and probably the businesses, that people are ordering at the start of this year.”
Satish Jindel, the president of ShipMatrix, which analyzes shipping package data, predicts that 7 million packages a day could experience delays from Thanksgiving to Christmas. That’s because he expects the industry’s total shipping capacity to be 79.1 million packages per day over the 34-day period, with 86.3 million packages at the search for space. Last year, the total capacity was 65.3 million packages with a demand of 67.9 million packages per day.
Currently, Jindel expects delivery times of one or two days for packages.
Online vacation sales in the United States are expected to break previous records. Adobe Analytics, which measures the sales of 80 of America’s top 100 online retailers, predicts a total of $ 189 billion in online sales for the holidays, a 33% increase from last year. This equates to two years of e-commerce sales growth over the holidays in one season.
But even with the online surge, overall vacation sales are expected to register only modest gains from recent years. Consulting firm Deloitte expects total sales, including online, to increase between 1% and 1.5% between November and January. That is compared to a 4.1% increase last year for the period of November and December, according to an analysis by the National Retail Federation. The trade group says it won’t issue a forecast until this month, given so much uncertainty.
Retailers can’t afford to annoy shoppers with delayed deliveries or post-Christmas freebies, so they’re stepping up their game.
Kohl’s says it has tens of thousands of items on its website available for curbside pickup. The retailer has doubled the number of car parking spaces in its stores to meet increased demand. Similarly, Target also doubled the number of parking spaces for its in-car driving services, to 8,000.
Meanwhile, carriers have added vacation extras to some packages, a blow to retailers already struggling with higher costs during COVID. Jindel says the U.S. Postal Service could be a good alternative for retailers now that it has weathered the deluge of mail-in ballots during the election. He estimates that temporary postal service surcharges mainly range from 25 cents to 40 cents per package, which is considerably less than $ 1 to $ 5 per package at major carriers.
“Our network is designed to handle temporary and seasonal volume increases and we have the ability to deliver these additional vacation packages on a timely basis,” said Kimberly Frum, spokesperson for the US Postal Service.
For the holidays, FedEx is hiring 70,000 workers, while UPS is hiring more than 100,000 temporary workers.
Lee Spratt is the CEO for the Americas of DHL eCommerce Solutions, a division specializing in handling small packages for medium to large shippers. He predicts that online shopping will be up to 50% higher this holiday season compared to the period the previous year. The division is already grappling with a 40% increase in online orders since the start of the pandemic.
It is hiring 900 more permanent workers for its current workforce of 3,000. It will also hire 1,400 temporary workers, roughly the same as last year, as the company invests in more permanent workers instead.
In September and October, it was also upgraded, and some cases added new sorting machines in six key cities, including Baltimore and Atlanta, to process more packages.
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AP Retail editors Alexandra Olson and Joseph Pisani in New York City contributed to this report.
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