Convey Data: Retailers accelerate last mile investments and on-time performance improves

Since the COVID-19 pandemic started in early 2020, Convey has been called upon to provide data, trends, and insights into how COVID-19 is impacting retail, based on tens of millions of packages shipped from more than 500,000 locations in North America.  Our monthly performance index provides the market with data to help retailers understand and act on the trends shaping the delivery experience in 2021.

This month’s data shines a light on carrier on-time performance and market share, along with a sneak peek at how retailers are gearing up for the peak year-end holiday season. It’s about a five-minute read — let’s dive in. 

Key findings for April 2021 include:

Parcel on-time performance (OTP) surges ahead of last year’s COVID crunch

Convey found 82% of parcel shipments were delivered on time in April 2021, up from 77% in April 2020. A year ago in April, delivery networks experienced unprecedented stress due to panic buying and widespread physical store closures that led online orders to surge, causing fulfillment logjams.

In addition, carriers have now caught up to workarounds and processes instituted during the pandemic to ensure smooth fulfillment operations; furthermore, retail fulfillment centers and freight hubs are returning to full staffing levels, whereas in April of last year, social distancing requirements and other safety measures lowered productivity.

On-time performance still hasn’t quite caught up to April 2019 levels (89%), however, due to FedEx performance issues. With 71% OTP, FedEx is struggling compared with UPS (88% OTP) and USPS (90%).

FedEx’s cheapest service levels are hit hardest, giving headaches to retailers reliant on Ground shipping services. In response, FedEx recently announced a significant wave of hiring specifically to support its Ground operations. We’ll continue to monitor and see if these new positions positively impact on-time performance.

FedEx and UPS maintain dominant market share

Despite its performance struggles, FedEx continues to lead market share, claiming 36% of shipments in April 2021; UPS is in second place, at 28%, followed by Regional Carriers (16%), DHL (10%), and USPS (9%), 

These rankings have held steady for the past three months, suggesting that retailers did not significantly adjust their shipping options in April even as store locations re-opened and consumer shopping patterns adapted to changing conditions during recovery from the pandemic. 

Monthly Deep Dive: Retailers look ahead and accelerate last mile investment

As the second half of the year approaches, however, retailers may begin switching gears. A new retail survey from Convey shows that in the coming year, 81% of retailers are planning to boost spending on more complex last mile initiatives, such as in-store and curbside pickup of online orders, shipping from stores, and pickup lockers, as well as moving inventory closer to shoppers through forward stocking and “dark store” operations.

A majority of retailers, 57%, report they’ve diversified their carrier options by adding at least one delivery partner in the past year. The primary reason cited was “meet customer demand for increased delivery speed” (70%) followed by “balance delivery costs with customer expectations” (49%) and “offer innovative delivery options to remain competitive” (35%).

This pressure to provide fast, free shipping is acute as retailers emerge from the pandemic with the Internet’s biggest retailer, Amazon, in a stronger position than ever. More than four in 10 consumers now buy the majority of their goods on the site, according to a January survey from Convey  – growth of 83% since the pandemic began. Fast, free shipping is the site’s most popular feature by far, driving consumer expectations for efficient fulfillment. 

As retailers gear up to compete with Amazon during the summer months — starting with a June Prime Day sales event — and the back-to-school and holiday periods, their investments in delivery experience will be crucial. We’ll continue tracking to see if retailers’ carrier diversification impacts market share and fulfillment performance in the months to come.

Until then —

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Convey

Convey is an agile team of supply chain and technology professionals. Bringing entirely new data intelligence and real-time visibility, Convey helps companies maintain a strong brand with their customers and unlocks true growth potential. Convey on LinkedIn