As retailers everywhere fought to push “into the black” during 2019’s holiday season, spending records broke yet again. According to Adobe, customers spent a whopping $142.5B on holiday shopping in 2019, up 13.1% from 2018.
Throughout peak season, we’ve been tracking delivery trends, data, and earnings. Here’s what we found.
High-Stakes For Retailers Going Into Peak Season
Going into peak season, promise dates made shoppers the most anxious about buying online. A full two-fifths of shoppers were worried about getting their holiday gifts under the tree in time, citing ‘late delivery’ as their top concern. Meanwhile, 1 out of 5 shoppers said that porch piracy was their main concern, besting concerns about delivery costs (only 19% of shoppers said this was their biggest delivery concern).
Overall, shoppers had high hopes that there would be no issues that would cause them to deal with customer service — only 4.5% were concerned about this. Often when delivery issues happen, the stakes are high for retailers: significant costs from WISMO calls (otherwise known as ‘Where Is My Order? calls) and customer churn. Our data showed that 83% of customers consider the delivery as an important part of the customer experience, and 73% of customers will not return after a poor experience with their shipments.
Substantial Growth for eCommerce Fulfillment Giants
Earlier this year, both Walmart and Amazon announced that they would invest in the resources necessary to dole out one-day delivery promises year-round. As a result, both companies thrived in Q4, growing sales and winning over customers. Ecommerce sales soared 43% for Walmart during the quarter. On the other hand, with over 150 million Prime members, Amazon’s online market share has also grown remarkably, and the company was ready to lure in shoppers for the holiday season, as it had done for Prime Day earlier this year.
According to our 2019 annual survey, Last Mile Delivery Wars, 25% of shoppers planned on using Amazon for holiday shopping if they were using eCommerce websites, and a full 7.9% of those shoppers planned on exclusively using Amazon to buy all of their holiday gifts.
We also saw that investments in logistics infrastructure are paying off for these eCommerce giants. According to Amazon Chief Financial Officer, Brian Olsavsky, the company spent a cool $12.9B in shipping costs during the quarter, up 43% year over year. He still claimed the company saved $1.5B due to their prior logistics investments. Increased control over last mile data, logistics, and ultimately their delivery machines, gave these retailers a competitive advantage.
Winter Storms And High Delivery Volume Caused On-Time Performance To Drop
With six fewer days to shop in the holiday season than in prior years, time was not on retailers’ side in 2019. To spread out eCommerce fulfillment and alleviate customer holiday angst around delivery, many retailers followed suit with Amazon and started their online holiday sales much earlier this year. This was to the immense benefit of customers — in a recent survey, almost 4 out of 10 shoppers said that ‘late delivery’ was their top holiday delivery concern.
Still, intense winter storms, paired with the high capacity of peak season, plagued all retailers and caused consumers’ top concern to be fulfilled. Particularly, the storms created delivery delays during Cyber5. Our data shows that on the week of Black Friday there was a jump in weather exceptions from 5% of total exceptions to 12%, and on-time rates for major carriers dropped. On average, UPS, FedEx, and USPS performed at an 81% on-time delivery performance rate, falling 6% from last year.
Our data showed that during Cyber Week, when both volume was high and winter storms slowed delivery, 17% of shipments were flagged as ‘Predicted To Miss Estimated Delivery Date (EDD) by our machine learning model. Over the full course of the holidays, we uncovered that a full 43.8% of packages had missed their original promise dates — this is 1.7X more than last year.
Successful Brands Proactively Set Delivery Date Expectations They Can Keep
It’s no wonder, then, that delays topped the list as a reason for customer complaints (these made up 56% of complaints), followed by individual carrier complaints (14%), and missing packages (12%). The highest spikes in negative feedback occurred directly after the spikes in exceptions as well — right after Cyber Monday.
Still, Convey customers saw a 28% reduction in customer complaints year over year. Those practicing Delivery Experience Management (DEM) were able to see and act on issues as they were happening, avoiding angry WISMO calls from customers, and the potential for delivery churn. Retailers using Convey’s platform were able to allow their customers to opt into SMS alerts, let them know about the delays, and keep them apprised of their new delivery dates, or alternatively, the retailer could notify their customers if they expedited a new shipment to them.
Maintaining Delivery Excellence During Peak Season
Here are some best practices our customers followed in order to keep customers happy during peak:
- Define moments when you can make trade-offs between cost and speed:
While many brands can use zone skipping to make hand-offs to regional carriers, saving time and money, it’s also best to analyze customer preferences and shipping performance around peak. Early in the season, Gartner expert, Tom Enright, suggests offering incentives for slower delivery. However, as it gets closer to the holidays, we’ve found that shoppers opt to buy from retailers who can provide upgraded shipping options such as one-day delivery. In fact, after December 18, 90% of customers are more likely to buy from retailers who have one-day delivery.
- Take Action In Real-Time:
Automatically detect network-wide issues in real-time in order to make fast decisions and take action on issues, and send out alerts to customers as soon as possible to reset delivery expectations or apprise them of the situation. Many retailers, such as Bodybuilding, also leverage Recover to detect individual exceptions in real-time, and alert customers of new delivery dates or expedite another package out to the customer. This reduces WISMO calls by 27% and improves NPS scores by 6.3%.
- Optimize the customer journey along the way:
Analyze your customer journey, including their historical carrier performance, pinpointing unreliable moments in the customer experience, and make changes in their carrier networks before it affects peak holiday performance.