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[21 comments]

Delays Ruins E-Christmas for Some

December 26, 2013

Thousands of holiday gifts failed to arrive by Christmas day due to shipping problems at UPS. Many online stores, which guaranteed arrival, took at least some of the blame.

UPS last week indicated that ice storms had caused delays in the Dallas-Fort Worth area, resulting in a heavy backlog before the final week. But UPS officials also underestimated the volume of air packages caused by this year's short shopping period — just 26 days between Thanksgiving and Christmas. Finally, last-minute orders and robust e-commerce spending throughout the holiday spending period taxed resources.

"All of this culminated to become the perfect storm, so to speak," UPS spokeswoman Natalie Black told CNN.

UPS did not make pickups or deliveries on Christmas Day although packages were sorted in hubs to assure they arrived Thursday or Friday. Those paying for delivery guarantees will receive appropriate refunds.

To a lesser degree, FedEx also incurred delivery delays, although some customers were able to pick up packages on Christmas Day at their local FedEx Express centers. Neither company said how many packages were delayed.

Furious customers took to UPS's Facebook and Twitter pages to blast the shipper. Amazon also took some heat, especially from Amazon Prime customers who pay $79 a year for two-day guaranteed shipping.

One wrote on Amazon's Facebook page, "Don't say you guarantee Christmas delivery if you can't!"

Speaking to the Associated Press, Prime member Eric Swanson, who didn't receive a doll for his five-year old daughter, said, "Next time, if I need to get a gift and cut it that close, I will just have to enter the fray and go to mall."

In apology e-mails to affected customers, Amazon cited "a failure in the UPS transportation network" and provided an automatic credit of $20 "to compensate for this inconvenience."

Amazon's stated policy for missed deliveries also offers a free one-month extension of Prime. UPS plans to coordinate with Amazon and other retailers around restitutions.

"We have a relationship with Amazon. We will definitely work with all of our retailers," Ms. Black told CNN. "We're going to make good on our service commitments. What that exactly entails, I don't know, but we'll work with them to maintain that relationship."

Walmart and Kohl's also said a small percentage of packages missed their before Christmas targets. Kohl's said it would pay the full cost of all items not delivered in time. Walmart plans to send out $25 gift cards.

Discussion Questions:

Will the late holiday deliveries this year impact consumers' trust in online shopping? What can online stores do to assure customers won't be hesitant to turn to e-commerce for the 2014 holiday period?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that some customers will be apprehensive about shopping last-minute online come the 2014 holiday season?

Comments:

For goodness sakes...and this "shatters trust?"

I wish these self-centered complainers would go and spend Christmas with families where nothing arrives. Not a day late. Not a year late. Not ever.

Get some perspective people.

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Ian Percy, President, The Ian Percy Corporation

 
12

This was bound to happen eventually. The vagaries of retailing are inescapable, even for Amazon, which prides itself on logistics excellence. I am reminded of the time I was tasked with launching a retailer's first foray into home delivery, only to have the launch date coincide with a major blizzard that made the service extremely popular, beyond our wildest expectations.

After personally delivering dozens of grocery orders for two straight days, I vowed to develop a fail safe into the system to keep us from over committing our delivery guarantees, etc. Much is the same with the key online retailers. They will likely re-think their Holiday guarantees and practices and do a better job of forecasting demand and perhaps placing some caveats on their guarantees.

At the risk of quoting a notorious historical figure, Napoleon once said, "The best way to keep your word is not to give it." Perhaps his words have some application today with online retailers and their delivery partners.

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Mark Heckman, Principal, Mark Heckman Consulting

Without getting too deep here, I think the stories of missed deliveries are part of a larger narrative about the failure of our institutions to execute well. Setting aside your point of view about our government, it's hard to ignore the fact that some of the most trusted brands in America - UPS, FedEx, Amazon, Target and others - have shaken their customers' faith in their ability to do their fundamental jobs. Whether it's delivering a package as promised, or protecting your credit card data, this has been a tough couple of weeks - and not just for e-commerce.

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Dick Seesel, Principal, Retailing In Focus LLC

This will blow over almost immediately because UPS' explanation made total sense. But it won't blow over for the eternally dissatisfied, entitled whiners among us. They'll keep whining, and getting the ear of our pathetic media.

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Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

Maybe Bezos was not so crazy when he announced his "drone delivery"! Wonder if drones can fly in snow and ice storms?

There are practical limits of any supply chain with peak volume during widespread winter weather conditions. Despite the weather, this year was a tipping point which stretched delivery services beyond capacity.

Two things happened this holiday season:

1) Consumers have been spoiled with near perfect delivery in two day windows, and subsequently ordered holiday gifts at last minute.

2) Everyone underestimated the last minute purchase volume on Amazon and big ecommerce sites.

The long term question is whether Amazon and others will provide delivery services with enough predictive data in time to take corrective action. The corollary question is which delivery services will be able to use big data in ways to evolve the elasticity of their delivery chain to handle ultra peak volumes.

Has ecommerce in the US finally reached critical mass that breaks the delivery services model in peak holiday periods? That might be the only good news for bricks and mortar retailers coming out of this holiday season.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Ian said it better than I could. He is right. Let's get some perspective here. What calamity occurred because a gift might arrive a day late? Better late than the never, as many families are enduring. Our thousands of service men serving overseas would like to be in the position of those sitting by a cozy fire at home. Bet they would not be complaining.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

For some the answer is yes. For others, it will be a momentary blip soon forgotten. The issue for Amazon and other e-retailers is how many will fall into each category for next year's Christmas shopping period. IMO there will only be a very few that that will change their shopping habits, but they will replaced by others who elect to shop online.

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Steve Montgomery, President, b2b Solutions, LLC

Don't blame UPS. They are trapped by commitments made by Amazon and other customers who promise more than what is reasonable in hopes of squeezing the very last buck out of the season. I don't really think this will impact consumers' trust beyond educating them that, if they are going to be "last minute," to be last minute at the mall. Also, I have to believe that a lot of this was iPad/iPhone shopping by consumers stranded by the storms.

Ed Dennis, Sales, Dennis Enterprises

It is amazing, the power of social media and the press to take a small item and turn it into big news. I realize those people who did not get gifts on time are not happy. But considering the number of packages that did arrive on time, this is a minute problem.

Amazon did it right by offering the $25 gift card to those who did not get what they ordered on time. Not sure what UPS will do. It is actually their problem. But all in all this is not like being unable to keep your health insurance policy when you want to. This is like, did a gift get there in time.

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Mel Kleiman, President, Humetrics

Custora reports a FIFTY-FOUR PERCENT increase in last-minute rush sales over last year. Weather was lousy, people stayed home, the system was overwhelmed.

All indications already told us retailers will be looking for more efficient ways to fulfill orders next year. This will just expedite the situation across the whole ecosystem — from supplier all the way to consumer. The trust isn't broken. People will forget. And UPS and Fedex can't afford this kind of miscue. Everyone knows that.

As long as we have Black Friday promotions on the front-end, and the potential for lousy weather on the back end of the season, we'll see spikes in sales. We just have to get better at managing the processes.

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Paula Rosenblum, Managing Partner, RSR Research

Every year, UPS and FedEx invest in their network to handle volume increases. Lead times have continued to decrease throughout the year. Too many retailers and customers have been cutting the lead time on Christmas to the edge. This year Mother Nature caught up to them. Expect both retailers and customers to add a day or two to be sure in the future, but this will not slow down the growth in online retailing.

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W. Frank Dell II, CMC, President, Dellmart & Company

It should and is having a negative impact on consumers' trust in online shopping. Doesn't matter where the hiccup(s) occurred, retailers shouldn't make promises they can't deliver (no pun intended). And it seems like an investment in snow/ice removal equipment in the Dallas/Ft. Worth area is something UPS might want to look into and possibly the same for FedEx in the Memphis area.

That being said, the fact that the volumes overwhelmed both UPS and FedEx suggests the move to online shopping is growing at a faster rate than they expected. Given that benefits their business, I'm sure they have started looking at this and baking this into their 2014 plans.

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Bill Davis, Director, MB&G Consulting

The only thing that I might add is: With such big weather problems looming, it would have served those e-tailers well to post a caveat up front. I know that would not make it all up to those who could not receive their packages however, I'm sure they could have pacified some.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

It was an act of God. People will get over it.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

I agree with the others ("shut up and get over it already"), but I do have to wonder what, exactly, you're getting when you pay for "guaranteed delivery." If it's guaranteed "as long an nothing unexpected happens," people may wish to reconsider how much of a premium they're willing to pay for it.

'notcom'

Tangentially related to the discount pricing issues discussed on the other thread, this snafu with deliveries may actually help re-train consumers to think twice about shopping for gifts online at the last minute. I wonder how many of them waited till the very last minute in hopes of securing the lowest possible price?

'Liatt'

Good news and bad news. Bad news is, it happened. Good news is, it's the first time. More good news is that most consumers have short memories. That said, if it happens again, the consumers' memories won't be as short. This has to be a one-off problem.

For retailers, even though we can blame UPS or FedEx, we have to step up and take responsibility. Watch what Amazon is doing. They may be a role model.

As with most problems and bad PR, this is an opportunity to come up with a spin that creates some positive press. Let's see how the retailers (and the delivery companies) work through this.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Absolutely! Not only will consumers have second thoughts about doing online shopping at the last minute, they will have second thoughts about which shipping company to use for their other packages. Many people have switched to UPS or FedEx because of postal service issues. Now if UPS and FedEx have issues, what will the consumers do?

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Let's just say this delivery breakdown is a teachable moment for Amazon and other online retailers.

Yes, the confluence of circumstances due to a short holiday selling window and bad weather was probably a first for the industry. It apparently resulted in a surge of last-minute orders that could be processed and packed, but not reliably delivered, within the promised tight windows.

Even if the promises were rash in retrospect, disappointed shoppers needed to be reassured. The credits and public apologies should help some. Tempers will fade this time, but folks will be unforgiving if it happens again next year.

So starting today, e-retailers and their delivery partners must begin designing improved practices for next year. More redundancy, perhaps. Or sensible protocols for cutting off delivery guarantees. No snow-drones, please.

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James Tenser, Principal, VSN Strategies

As the guy in the article who didn't have the doll for his little girl said, "...next time...I'll just have to...go to the mall." Enough said.

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Marge Laney, President, Alert Technologies, Inc.

Looking at this another way, does the spike in sales say something about the consumer trust in Amazon versus (eroding?) traditional retailer sales?

Amazon relies heavily on UPS and FedEx; IMO generally reliable. The burden is on the delivery services to adjust logistics and the burden is on Amazon to communicate on a timely basis to its customers.

The whiners behavior carries over to other facets of life. The vast majority and in increasingly greater numbers, will trust Amazon.

Now I can see why Bezos wants a percentage of deliveries by drone.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

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