2018 Holiday Shipment Growth Outpaces Growth in Orders
Holiday shipment-to-order ratios have seen a dramatic spike this year, with multi-product orders resulting in a deluge of packages, raising concern for retailers’ bottom lines and shareholder profitability.
Retailers and carriers are successfully meeting consumer demand this holiday season, improving the speed and accuracy of delivery. Consumers want their orders now, and will reward retailers who cater to PRIME-like delivery options including speedy, free delivery.
However, as retailers implement strategies such as flexible warehousing, ship from store, and dropshipping to meet demands, they must be careful to weigh the cost/benefit or risk significant margin decay.
Convey analyzed 7.1 million holiday shipments and found that the growth in unique shipments dramatically outpaced growth in online orders. Rather than consolidating items into single packages, retailers are sending many packages per order to get products into customer’s hands as quickly as possible – often without consideration for the true cost and customer experience implications of those delivery strategies.
For Convey customers, 2018 Thanksgiving week shipments grew substantially year over year. Additionally, the growth in shipments was pronounced at the beginning of the holiday week, representative of the fact that many retailers continue to push discounts earlier in the holiday season.
Additionally, customer engagement with tracking pages increased 38% during the week of November 19th and 48% the week of the 26th as customers closely monitor delivery progress for an increasing number of shipments
2018 Holiday Shipping Speed Strategies, Impact of Inventory Localization
Pressure from Amazon has led more shippers to offer fast, free shipping during the holiday season, but how does that translate to selected shipping speeds during the holiday week? 2018 saw a 4x rise in two-day shipping, however demand for upgrades, such as same or next day, either decreased or remained flat. Overall, slower (and likely free) shipping options continue to be in most demand during the Thanksgiving holiday week. Notably, this year did see a shift away from postal injection service levels which handoff to the United States Postal Service for final delivery. These shipments largely shifted to standard ground delivery services indicating that retailers are increasingly focused on ensuring ease of tracking and delivery date accuracy during the holidays.
Those who utilized a localization strategy (defined as three or more distribution points) through flex warehousing, ship-from-store, or dropshipping benefited from substantially decreased shipping speeds for some of the most affordable service levels.
- Localization cut average transit times for postal injection shipping methods like UPS Surepost and Fedex Smartpost by 50% (these are the most economical shipping choices for parcel retailers) while also significantly improving reliability
- Localized inventory has the potential to save $2-4 per individual shipment
Standardized Parcel Service Levels
|Service Level||Definition||Relative Cost|
|Same Day||These are parcel deliveries guaranteed to arrive within the same day as pickup/dropoff.||$$$$$$|
|Next Day||These are parcel deliveries guaranteed to arrive within the next business day from pickup/dropoff.||$$$$$|
|Two Day||These are parcel deliveries with guaranteed delivery within 2 business days from pickup/dropoff.||$$$$|
|Three-Five Day||These are parcel deliveries with guaranteed delivery within 5 business days from pickup/dropoff.||$$$|
|Ground||These are parcel deliveries which may or may not have a guaranteed delivery deadline. These deliveries can range between 2-8 business days from pickup/dropoff.||$$|
|Postal Injection Service||These are parcel deliveries that utilize a handoff to the post office for the final delivery to the customer. Delivery is typically 1 day slower than ground shipping||$|
2018 Holidays Represent a Banner Year for LTL/White Glove
One of the biggest trends from Thanksgiving weekend is the growth in large-item shipments such as furniture and appliances. Less-than-truckload shipments increased 638% between Thanksgiving-Sunday in 2018 compared to 2017, suggesting that consumers are increasingly taking advantage of holiday specials to order large home items for themselves.
However, the rise in large-item delivery comes with risk — they require delivery appointments that fit into consumers’ busy schedules. Today those appointments are made primarily by carriers and represent the top home delivery failure.
- Delivery appointment scheduling attempts represent 30% of carrier service calls and can take 4 attempts to schedule
- 28% of appointments still fail, which is unsurprising as recent Convey consumer survey data found that more than half of shoppers say they need to reschedule appointments at least 20% of the time
- This costs retailers an average of 4.64 additional days of an item sitting in a carrier’s warehouse (and not with the customer), and a minimum of $69 in added fees
Other holiday shopping data you may be interested in:
Holiday Shopping Reaches A Record High
According to a report by Retail Dive based on data from Adobe Analytics:
- Wednesday, Shoppers spent $2.4 billion online, +31.8% from 2017
- Shoppers spent $3.7 billion online on Thanksgiving, +28% from 2017
- Shoppers spent $6.22 billion online by the end of Black Friday, +23.6% from 2017
- Shoppers spent $7.9 billion online by the end of Cyber Monday, +19.3% from 2017
- Store pickups of online orders rose 73% over Thanksgiving and Black Friday compared to 2017 and 65% on Cyber Monday
165 Million Shopped over Thanksgiving Weekend
According to the National Retail Federation:
- 165 million people shopped from Thanksgiving through Cyber Monday
- The average shopper spent $313 on gifts over the five-day period
- More than 89 Million people shopped both online and in store, +40% from 2017
- 79% of shoppers (131.1M) did at least some portion of their shopping online
- Top purchases over the weekend included apparel (bought by 57 percent of those surveyed), toys (34 percent), books and video games (29 percent), electronics (26 percent) and gift cards (20 percent).