Monday, December 14, 2015

SLOWER DELIVERY OF E-COMMERCE ORDERS--WHY?


E-commerce Retailers who focus on fulfillment--not on Supply Chain. HELLO. Move to the New Supply Chain. Or slowly lose.


Holiday Online Orders Taking Longer, Study Says

Retailers offering free shipping are tending to choose slower and cheaper methods, contributing to longer delivery times



Packages are sorted into chutes inside the FedEx distribution hub at Los Angeles International Airport. ENLARGE
Packages are sorted into chutes inside the FedEx distribution hub at Los Angeles International Airport. Photo: Bloomberg News
Attention online shoppers: Don’t wait until the last minute to do your holiday shopping this year.
It took an average of nearly seven days, or 20% longer than last year, for orders placed on Cyber Monday to arrive, according to a study by retail consultancy Kurt Salmon. And more packages are being shipped—an estimated 2.6 per order, compared with 2.3 in 2014.
Retailers offering free shipping are tending to choose slower and cheaper ways to ship, contributing to the longer shipping times, said Steve Osburn, who advises retailers on supply-chain issues for Kurt Salmon. Ninety percent of retailers offered free shipping, up from 78% last year.
The study, which included 62 retailers ranging from big-box chains to online stores, also found unexpected delays in 9% of the United Parcel Service Inc. UPS 0.42 % ground orders it analyzed, a sign that network is already strained.
“UPS and FedEx FDX -0.40 % both, they built out to a certain capacity based on what the retailers said they needed,” Mr. Osburn said. But, he added, e-commerce sales were higher through the Thanksgiving holiday weekend than retailers expected. That trend is likely to continue, he said.
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Consumers spent an estimated $3 billion online on Cyber Monday, with sales rising 12% from a year earlier, according to Adobe Systems Inc., ADBE 2.01 % which tracks purchases across 4,500 U.S. sites.
UPS and FedEx Corp. are hoping to avoid a repeat of the holidays in 2013, when bad weather and a flood of last-minute holiday orders caused a slough of packages to miss making it under Christmas trees in time. That year, 15% of last-minute orders tracked by Kurt Salmon were late.
Buying online and picking up in store is proving a more attractive option this year, with 35% more retailers offering the service than last year. But that method still isn’t without hiccups—about 60% of those orders tracked by Kurt Salmon had some kind of error, such as being ready later than expected.
Retailers tend to be aggressive with last-minute holiday sales, pushing delivery dates up until right before the holidays, Mr. Osburn said. And if UPS and FedEx’s networks are already at capacity, that could mean more late orders.
“My advice is give yourself a day-or-two cushion, and if you don’t want to spend a lot of time—buy online and pick up in store is a better option than it has been in years past,” he added.