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Holiday crunch brings a parcel chaos

27.11.2020 | Cleveron, Black Friday

Despite many unpleasant surprises brought by the coronavirus, one thing that we could predict was the massive rise in online shopping. People had to stay in quarantine and follow lockdown rules, making online shops and marketplaces a perfect place to shop.

What's going to happen?

The numbers are clear. There's been a 129% year-on-year growth in U.S. & Canadian e-commerce orders as of April 2020 and a significant growth of 146% in all online retail orders (Forbes). But what are the numbers referring to?

The holiday season is here. Due to Black Friday and the Christmas season, people will be buying gifts left, right and centre. According to a study, the predicted holiday spend for one American will be $805 and $148.5 billion overall on Black Friday and Cyber Monday this year (Finder). This means that parcel volumes will be extraordinarily high. Due to COVID-19, the customers can't or don’t want to visit brick-and-mortar stores. As the second wave is spreading, many countries are starting to go into lockdown again, which means that all holiday shopping must be done online. Could you imagine thousands of people picking up their holiday gifts from a traditional manual pick-up point? These lines during the time when distance is crucial for one’s health? And those poor staff members ...

This situation can only be described as chaos. There will be endless queues, storage rooms running out of space with thousands of parcels and delivery companies will be strained. A report by Korn Ferry indicates that 47% of retailers are having a tough time finding workers for the holiday season, which means staff shortages will be a problem for many. Both FedEx and United Parcel Service Inc. have already openly stated that most of their capacity is already at its maximum, and many holiday orders will have to wait to be picked up. "There will be days within the holiday season where the industry will be overcapacity," said FedEx CMO Brie Carere (WSJ).

How will retailers survive?

What does this mean for retailers? If they don't prepare, there will be total parcel chaos. Due to too high parcel volumes, couriers and pick-up station staff will be scrambling for packages in massive parcel seas. It's like trying to find a needle in a haystack, but the haystack is twice as big as it usually is. This will result in long queues, which don't create happy customers. In addition, this will result in a low Net Promoter Score (or NPS), which means they probably won't recommend the retailer to a friend or colleague, and the chance of them returning or making a repeated purchase is small.

Besides a low NPS, customer convenience will also take a plunge. Standing in a long queue or waiting a week or two for a delivery isn't very convenient. Or safe, giving the circumstances we are living today. Many big retailers have declared that their overall goal is to put customer convenience first and foremost in everything they do. For example, Walmart says they are testing new ways to operate, and it's always the customer who wins. Inditex states that they have placed their customers at the very centre of their business model, and their omnichannel approach helps to boost the convenience of customers. So, if customer convenience is a high priority, then preparing for the parcel chaos should be the very first thing in retailers' agenda.

What's the solution?

Retailers will have to look for the best innovations to survive this parcel chaos. One of the most common click & collect solutions, self-service pickup stations, would eliminate queues and put the customer convenience at the forefront, since customers can pick up their parcels whenever they want. Parcel lockers and parcel robots are used and loved by many, and they would certainly handle the high parcel volumes. On the other hand, free in-store delivery would increase footfall inside stores, but it also has to be enjoyable – no lines, no fuss, in&out experience (plus it can create halo sales). Quick deliveries also depend on quick access. Micro-fulfilment centres or smaller automated warehouses also eliminate long waiting times. Amazon, for example, has increased the number of smaller warehouses in large urban areas to sort orders by destination and consolidate them onto trucks for faster deliveries (Forbes).

Millions of online customers are demanding a more seamless, quicker and convenient service, which is putting a strain on e-commerce and online retailers today. And the truth is that how they choose to react, whether to prepare, panic or go-with-the-flow determines the holiday season's parcel situation.

Photo credit: Eduardo Contreras / San Diego Union- Tribune 

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Tarmo Tamm

Chief Sales Officer

E-mail: [email protected]