“The excuses simply don’t cut it and what UPS and FedEx and others should do is offer refunds right away to consumers whose Christmases were made less cheery because of late delivery,” Blumenthal told WCBS 880. “There’s an implicit obligation when a company promises on-time delivery for a holiday to make sure the gift arrives for Christmas, not a day after because it’s certainly a real downer if they’re deprived of on-time delivery.”
UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as “hot spares”—company lingo for aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, which have grown much faster than retail sales overall. And retailers likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales. Many chains dropped prices on the final Saturday before Christmas to levels below what they were offering on Black Friday, according to Simeon Siegel, an analyst with Nomura Equity Research.
That, coupled with retailers’ promises of just-in-time deliveries, encouraged many shoppers to put in orders at the last minute. People buying from more than 70 retailers including Toys “R” Us Inc. and Dick’s Sporting Goods Inc., whose online shipping is handled by eBay Enterprise, were able to place Web orders as late as 11 p.m. on Monday, Dec. 23, a full 24 hours later than last year.
The result was a surge in online sales shortly before Christmas. UPS had been forecasting an 8% average rise in its daily shipping volumes during the holidays. But online sales in the last weekend before Christmas jumped by 37% from the year before, according to data from IBM Digital Analytics. On Monday Dec. 23, growth in online orders spiked by 63% from the year before, according to Mercent Corp., which works with more than 550 retailers. By comparison, overall sales of holiday goods rose 2.3% between Nov. 1 and Dec. 24, according to preliminary data from MasterCard Inc. Spending Pulse unit.
To cope, retailers shifted more orders from shippers’ ground delivery to their air networks to get gifts to customers in time to put them under the tree.
Mercent CEO Eric Best said some of his clients experienced delays.
“It’s easy to blame UPS, but it’s the retailers that are pushing these next-day shipping offers in the final hours of the shopping season,” Mr. Best said. “Retailers are driving consumer expectations to get stuff they ordered by the next day and the later shoppers wait, the harder it is to predict.”
None of which eases the disappointment of buyers whose Christmas gifts arrived a day late, but it seems that UPS executives and managers put far more effort into planning for the Christmas rush than the Chief Executive of the United States did for his namesake healthcare program. Where’s Dick’s outrage on that?