Photo: FedEx
Will delivering online orders seven days a week further transform retail ops?
FedEx will soon start delivering packages through its ground service seven days a week to more fully support booming e-commerce growth.
Last September, FedEx expanded delivery to six days a week for most of the year, although it had previously run on some Saturdays and Sundays around Christmas. Beginning in January 2020, FedEx will add year-round Sunday delivery for the “majority” of the U.S. population.
In a statement, Raj Subramaniam, president and COO, said FedEx expects that average daily volume for small parcels in the U.S. will double by 2026. The significant investments in capacity, technology and automation the company has made at FedEx Ground over the past 20 years will support the Sunday move.
“Expanding our operations to include Sunday residential deliveries further increases our ability to meet the demands of e-commerce shippers and online shoppers,” said Mr. Subramaniam.
The move will make FedEx the first major U.S. carrier to offer seven-day-a-week ground residential delivery to any shipper. UPS is exploring Sunday delivery after expanding in 2018 to offer regular Saturday delivery in many major metro areas.
Kevin Sterling, an analyst at Seaport Global, said the move helps FedEx customers “get on a more level playing field for shipping” with Amazon.com, which delivers on Sundays through USPS. Mr. Sterling told the Memphis Commercial Appeal, “If you do same- or next-day delivery, you almost have to have the Sunday option.”
FedEx is also taking back nearly two million daily deliveries to homes that are currently handled by the USPS in a move designed to drive efficiencies and offset higher fees from USPS. Since 2016, FedEx drivers have handled more of these deliveries for packages going to the same or nearby address, but the “vast majority” will be handled by FedEx by the end of next year.
Mr. Subramaniam said, “We anticipate substantial density improvement and efficiency opportunities when all residential packages are sorted and delivered within the same ground network.”
Other e-commerce initiatives by FedEx include FedEx Extra Hours, FedEx’s next-day prescription delivery service and the FedEx SameDay Bot test of delivery robots from local stores.
- FedEx Ground Announces Seven-Day Residential Delivery Year-round – FedEx
- FedEx Ground expands Sunday delivery – CNN
- FedEx aims to boost service, profit more from online shopping – Reuters
- FedEx will start delivering on Sundays to meet online shopping demand – The Associated Press/Chicago Tribune
- FedEx Ground to deliver 7 days a week all year beginning in 2020 – Memphis Commercial Appeal
Discussion Questions
DISCUSSION QUESTIONS: Will seven-day residential delivery significantly raise the bar on same-day, next-day or other delivery expectations? What challenges will expanded delivery place on store operations and logistics?
Poll
BrainTrust
Zel Bianco
President, founder and CEO Interactive Edge
Paco Underhill
CEO of Envirosell Inc., Speaker, NY Times Best-Selling Author
It was not a question of if, but when. Logistics is now sexy and the most essential part of retail.
I honestly don’t know how much further the bar can be raised on delivery expectations. Amazon’s recent same-day announcement and other retailers doing their best to get as close to that promise as possible leaves carriers little choice but to expand to seven-day delivery.
Smart move as USPS is already delivering on weekends. I am surprised that it has taken them this long. I do think it helps to further transform retail ops as the demand is there and delivery needed to catch up to it. UPS, you are next.
I don’t think it is going to raise the bar… rather it is about keeping up with today’s expectations. Retailers like Amazon have brought in the idea of same-day and next-day delivery. As such, the carriers either adapt to mirror this offering, or they will become a non-preferred carrier. It is a fact of the market.
For retailers already offering ship-from-store or BOPIS, same-day delivery means they will have to ensure they are sufficiently staffed to be able to handle the orders, load, and timing expectations. Basically more powerful and smarter DOMs (distributed order management systems) will have to step in to handle this logistics challenge (where to route for speed and effectiveness). This is an exciting new realm in retail!
Zel is right on the money: UPS has some catching up to do (Saturdays as well as Sundays) in order to maintain market share. It’s not just about its traditional competitors like FedEx and USPS, but especially about the infrastructure that Amazon is building out for its own delivery service.
The bar had already been raised. FedEx is simply coming to terms with the new retail reality of 24/7 consumer convenience as it seeks sufficient delivery density to control cost.
Retailers have been making the transition to deliver on consumers demand for high availability and convenience through new systems, processes, and revamped supply chain and store operations. Investments and focus will go to elements that increase customer convenience and enhance experiences while simultaneously differentiating on product and assortment.
Of course it will. Frankly, I’m surprised it has taken FedEx and UPS this long to catch up to the USPS. Consumers are a bit like taxpayers and employees, what starts out as a bonus quickly evolves into an entitlement. So companies not matching the highest standards of service — in this case seven day a week delivery — are soon seen as service deficient and the pioneers rarely enjoy long-term credit, since consumers assume they have always been entitled to get their packages on weekends. Obviously adding another day puts a tremendous strain — capital, human resources, and systems on existing logistical operations. And as I said, it’s hard to see anyone getting much credit for all the investment in the end. It’s just the cost of doing business.
Once upon a time, Sunday was a different day of the week. But in retail all days have melded together. Why should we not expect delivery to follow suit? Today, in many aspects of life, Sunday is just another day.
Gene, I miss those days when Sunday truly did feel different. Most stores were closed and that was OK.
We both are showing our age.
Gene, I too miss those days when Sunday was different. Not any longer.
I’m with you too, Gene. I’m also getting disappointed in the always impatient attitude all around us. Why can’t anyone relax anymore? For my 2 cents.
Lee, people can’t relax because things keep moving faster than they do. Some on RW may remember when, in our childhoods, sending something “Air Mail” was an indication of importance. Then “Overnight” came and that became the standard for how long things should take to get from Point A to Point B. Then we got Fax technology and we all stood around waiting for “important things” to appear out of the little box. Now we do email and wonder why nobody has replied before we sent our message out. That’s what happened to Sunday — it just became part of a continuous time link between Saturday and Monday.
No surprise that FedEx is doing this.
We should be clear, though, that Sunday delivery is purely a tactical move for retailers — not a strategic move. Retail’s focus needs to continue to be delivering a meaningful, useful, and motivating store experience built on products of value.
Only a strong store experience can build retailer e-commerce power.
Seven-day, two-day, next-day… These are the realities of today’s retail world. This is what customers expect, thanks to retailers like Amazon, Target and Walmart, who set the bar higher for everyone. Retailers will have to adjust, the same as they did when delivery went from mail orders taking “two weeks,” to a standard three-to-five day timespan, to two-day, and now one-day. And remember, Amazon is still pushing same-day. This is our new retail reality. Get used to it!
The carbon footprint of today’s small package delivery offering is miserable. Its effect on traffic, particularly in urban settings is again miserable. We will have a distribution/delivery act at some point in the future to regulate more responsible access to goods. We might call it the Couch Potato Act, where convenience is making it to the front door and exercise is taking out the garbage.
It is going to happen, and watch the demand become even bigger. Tomorrow we will hear UPS will jump in the game.
Spreading the delivery of online orders makes a lot of sense. It improves the utilization of resources and reduces the congestion in and around urban and city areas. Whether it will increase the move to same day and next day delivery is more about the marketing departments of the major players than the logistics companies. Walmart has already stated they will extend next day deliveries. Amazon is also doing so but the move to seven day deliveries does not impact this.
Eventually, large retail companies will understand that the additional cost of shortening the delivery lead time is very high and, if it does not deliver customer benefits or bigger business, then they may back off from that strategy.
Retailers have scrambled to match Amazon’s two-day delivery service levels and now they will work to shorten it to one-day service. It won’t be long before same-day delivery is the norm for most commodity products. These elevated delivery expectations have forced retailers to delivery on Saturdays and now Sundays.
Retailers that are fulfilling these orders from store inventory are adding more burdens on their store staff. Now they will need to schedule additional staff on Saturdays and Sundays to pull and pack merchandise for online orders. This will expand the role of the store in product distribution … ship from store will now be a seven day proposition with expanded shifts and hours to meet the demand. The game is changing and one day delivery will be table stakes as we move to same day service.