http://www.marketwatch.com/story/shipping-overload-leaves-many-christmas-giftless-2013-12-25 Dec. 25, 2013, 11:39 a.m. EST
Shipping overload leaves many Christmas giftless
By Shelly Banjo
Many shoppers are blaming online retailers for stealing Christmas.
Companies from Amazon.com Inc. to Kohl's Corp. and Wal-Mart Stores Inc. promised to deliver items from headphones to television sets before Christmas, but shipping delays left gift-givers across the country without anything to put under the tree.
On Christmas Eve, Brandon Scott was still waiting for a 46-inch Samsung TV and Kate Spade watch he ordered from Amazon on Saturday.
"I'm frustrated because these items could have easily been purchased at various retailers in my area, something I would have gladly done had Amazon not guaranteed' their arrival before Christmas," said Mr. Scott of Ann Arbor, Mich.
An unexpected surge of online orders in the past few weeks appears to have strained the limits of delivery and fulfillment infrastructure at retailers and parcel carriers. While instances of bad weather, Web glitches and late deliveries from manufacturers also played a part, the sheer volume may have been the problem, according to retail analysts.
United Parcel Service Inc. determined late Tuesday that it wouldn't be able to get some goods to customers in time for Christmas, as a spike in last-minute shopping demand overwhelmed its system.
"The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast," spokeswoman Susan Rosenberg said in response to questions. UPS delivers around 45% of U.S. packages and saw more shipments enter its air network on Monday than the 7.75 million it expected.
In notifications to some Amazon customers, though, UPS also seemed to blame the e-commerce giant for some of its troubles, saying shipping delays were because it had "not yet received the package from the shipper."
Having pushed delivery deadlines even later this year, some merchants weren't ready for the jump in online orders that came in the last few weeks of December, said Eric Best, chief executive of Mercent Corp., which helps facilitate online sales for more than 550 retailers.
"During the holidays, we reach the limits on the capacity of these retailers," Mr. Best said. "It's a double whammy for conservative retailers, which have been burned by excess inventory in the past, and underestimated demand."
After years of losing sales to online competitors, retailers have invested heavily in infrastructure to support Web sales and this year made aggressive promises for delivery by Christmas. Last-minute shoppers responded. During the last shopping weekend before Christmas, Web sales jumped by 37% from the year before, according to IBM Digital Analytics. Market research firm Forrester Research expects online sales to increase by 15% this holiday season amid slow mall traffic and weak sales at brick-and-mortar retailers.
In Alexander City, Ala., Kohl's shopper Andi Burks grumbled over the realization she wouldn't be able to give her husband the sweaters Ms. Burks had ordered on Dec. 19, a day before the cutoff for "guaranteed Christmas delivery."
"I thought that since they had stated on their website that it was guaranteed to arrive on time that I would be OK," she said referring to Kohl's. "Apparently I was wrong."
Kohl's said on Tuesday it would pay the full cost of all items not delivered in time. "We are deeply sorry for disappointing our customers expecting delivery in time for Christmas," spokeswoman Jen Johnson said.
Groupon Inc. sent customers an email this week suggesting they print out a picture of their present in lieu of the promised on-time delivery of the actual gift, as well as a $25 gift certificate. "We know it doesn't make up for the disappointment of not getting your item in time for the holidays," the email said.
The deals site "successfully fulfilled and delivered an overwhelming majority of orders," said spokesman Nicholas Halliwell.
It is unclear how widespread the delays were or which retailers suffered the most problems. Weather delays, mislabeled packages, and even errors by customers entering their own delivery information can cause delays.
Kohl's, Wal-Mart and UPS said a small percentage of customers experienced delays but declined to elaborate on how many people were affected. Amazon said it was unaware of major shipping delays.
Typically, about 15% of online shoppers who order items by retailers' specified cutoff dates don't get their packages by Christmas Eve, Forrester Research analyst Sucharita Mulpuru said. But with more gifts being shipped in the mail, the volume of errors is likely to rise, even if the percentage doesn't.
UPS, which handled more than 500 million packages during last year's peak period, was expecting an 8% rise in volumes this year. The U.S. Postal Service, meanwhile, said it expected to ship a record 420 million packages between Thanksgiving and New Year's, an increase of 12% from last year. The Postal Service in some cases plans to deliver on Christmas Day itself.
"We've heard more noise about shipping problems this year than usual," said Chris Saridakis, president of eBay Enterprise, which handles shipping for more than 70 retailers including Toys "R" Us Inc. and Aéropostale Inc.
Part of the problem is handling an increased number of orders in a shorter time frame, given that there were six fewer shopping days between Thanksgiving and Christmas this year.
"These retailers just don't have enough labor," Mr. Saridakis said, noting that while most of the distribution centers are automated, "you still need people to pack and unpack boxes."
Retailers like Amazon and Wal-Mart have been building more fulfillment centers and other infrastructure to handle surging online orders. This year, Amazon hired 70,000 seasonal workers for its U.S. warehouses, a 40% increase from the year before.
To ease pressures on possible shipping bottlenecks, many retail chains have promoted the option to pick up items purchased online inside stores. That plan might have backfired for companies like Wal-Mart, where dozens of customers complained that items weren't available for pickup in stores by the promised date.
The problem seemed to be biggest for customers who had lined up for hours during Thanksgiving weekend to get special deals on popular televisions and tablets.
As part of Wal-Mart's Black Friday promises, shoppers who lined up for the best door-buster deals were told that if the store ran out of stock, then the items they paid for would be available for store pickup by Dec. 22. But in some cases, the items weren't available and shoppers jammed customer-service phone lines and took to Facebook and Twitter to gripe at the retailer.
Wal-Mart said the issue affected only a small percentage of the five million people who took part in its one-hour guarantee promotion.
But by Christmas Eve, it was too late for some customers like Terence Kavanaugh in Louisville, Ky.
After losing hope on getting the $98 Emerson television he bought his 9-year-old daughter at Wal-Mart over Thanksgiving weekend, he went to Best Buy and bought a second TV for $179.
"It's more expensive but I'm not going to let Wal-Mart ruin my daughter's Christmas," he said.