As we pen this Supply Chain Matters blog mid-week between the Christmas and New Year’s holidays, indications are that this year’s holiday fulfillment period in the U.S. will likely exceed initial revenue and volume estimates for both online and offline. That being stated, there will certainly be individual retailer and online fulfillment provider exceptions.
While some is business media are quoting certain sales data forecasts, industry supply chain teams know all too-well that final revenue and profitability performance is best deferred until the holiday-related goods return process completes itself over the next couple of weeks. Some are forecasting a record year for product returns.
Yet, on the positive side, there are clear signs that consumers were in a positive buying mood this year, and that the final numbers will likely come-in at the high-end of estimates.
As we have indicated in prior commentaries, retailers have taken in a lot of prior learning from previous holiday periods in areas of advanced inventory planning, dynamic pricing, and differentiated product selection. Many retailers have also begun to figure out effective programs for integrating online and in-store shopping experiences and it will be rather interesting to assess the new success case studies that came about in 2017.
Amazon issued its annual press release of holiday performance which contained the usual collection of dizzying statistics on all products and services related to the online retailer. We honed-in on a couple of sobering indicators included in the release.
From an overall market dominance perspective, Amazon indicates that customers utilizing its mobile shopping App increased nearly 70 percent this holiday season. Similarly, the Amazon Echo Dot speaker-assistant was the best-selling product from any manufacturer in any category across the entire platform, with millions reportedly sold. Retailers should take special note of such sobering statistics since they point to an effective strategy of retail platform dominance in years to-come as consumers allow their Amazon electronic assistants to make merchandise selections for the near future. A similar message pertains to the Amazon Fire TV Stick which doubled its sales this holiday period and allows the retailer more control of viewed entertainment content.
In overall volume of customer fulfillment, the online retailer reports that in North America and Europe, associates at 10 fulfillment centers picked and shipped more than one-million packages in a single-day, and that the peak customer fulfillment day this year was December 19, 2017. That is an indicator that the Black Friday and Cyber Monday weekend may not have been the sole peak period as consumers opted to shop early and later, depending upon selection and pricing.
Turning to parcel delivery and last-mile fulfillment, the winter weather was relatively good in the initial holiday buying weekend but turned rather challenging in the final week with snow and ice storms impacting vast geographic areas. The struggles of United Parcel Service (UPS) remained in business and general media headlines with indications that the parcel carrier underestimated manpower needs to manage surge package volumes. The carrier had to reportedly enlist hundreds of staff accountants, marketers, and other administrative office staff within certain areas of the country to assist in package sorting and delivery needs. FedEx incurred a weekend disruption at its main Memphis central operating hub due to a severe storm that restricted flight operations, delaying final shopping weekend deliveries. Amazon and the United States Postal Service (USPS) seem at this point seem at this point to have managed surge delivery. Then again, all parcel networks will remain stressed as customer returns make their way back to retailers.
Overall, the 2017 holiday fulfillment period looks to be a rather good year for the retail industry and its supplier and services stakeholders. As for all of the supply chain, logistics and customer fulfillment teams that supported such efforts, they will likely be seeking so much needed rest time.
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