With initial preliminary data now being reported regarding the recently completed 2020 holiday fulfillment period, supply chain management teams will need to undertake a cautionary approach towards summarizing trends and takeaways. The uncertainty is reflected in initial retail sales forecasts for different channels, as well as a very high rate of merchandise returns that are still occurring. The concerning trends are in the overall performance of parcel carriers and logistics networks, trends we believe will be one of senior management discussions throughout this coming year.

Amazon branded delivery vans

Retail Channel Sales Data

According to data shared by Adobe Analytics, which directly tracks online focused sales from 80 of the top 100 Internet retailers, online shopping in the United States totaled $188.2 billion, representing a year-over year growth of 32.2 percent. During the period, daily online volume exceeded $1 billion daily, with 50 days reportedly topping $2 billion in online volumes. This was noted as an all-time first. Entering the 2020 holiday sales period, Adobe was forecasting upwards of $189 billion in online sales.

Online sales for the important period that spanned the five-day Thanksgiving, Black Friday and Cyber Monday shopping holidays reportedly accounted for 18 percent of overall seasonal sales and was down from the 20 percent number during the 2019 period. Adobe indicated that online sales of groceries, appliances and books surged in popularity during November and December, while online sales toys and jewelry also surged.

Supply Chain Matters is of the believe that online shoppers indeed took advantage of promotions and discounts that online retailers offered much earlier in the shopping season. The multi-day Amazon Prime shopping promotion held in October was a likely differentiator as well.

Speaking of Amazon, a blog posting authored by Jeff Wilke, CEO Worldwide Consumer indicated that the online platform provider had a record-breaking holiday season with billions of items delivered to customer. Focus on the term “billions.” As an example, the posting indicates delivery of 1.5 billion toys, home products, beauty and personal care products during this most recent holiday season. Further touted was an over $18 billion investment to help independent hosted businesses increase their sales on the Amazon platform. However, by early December, Amazon was metering inventory levels of hosted sellers leading to concerns of inventory constraints.

Data from Mastercard Spending Pulse focused on holiday retail sales excluding automotive and fuel, reported a 3 percent increase in holiday retail spending for the that period spanned October 11 thru December 24. This index measures U.S. retail spending across multiple payment types including cash and checks. The index noted a 49 percent increase on online sales compared to 2019.  This report reinforced that consumers shopped earlier than ever before, with a discernable focus on household needs, but also reinforces significant shifts toward online buying in certain categories. A chart contrasting year-over-year spending on overall retail sales growth and online sales growth indicated in part:

  • Home furniture and furnishings: Retail sales up 16.2 percent while online sales 31 percent
  • Home Improvement: Retail sales up 14.1 percent while online sales up 79.7 percent
  • Electronics and appliances: Retail sales up 6 percent, online sales unchanged
  • Apparel: Retail sales down 19.1 percent while online sales increased 15.7 percent

Other indicators, those from monitor traffic in physical stores based on cameras and sensors reinforce that physical traffic fell sharply this holiday season. The Wall Street Journal cited a Sensormatic Solutions indicator that between November 22 and January 2, physical retail store traffic declined 33 percent on a year-over-year basis.

A further data point is this week’s release by the U.S. Commerce Department on December 2020 retail sales. The report indicates a seasonally adjusted 0.7 percent month over month decline in retail sales, representing the third consecutive decline in monthly sales. The data, which represents sales volume among physical stores, auto vehicle dealerships, gasoline sales, restaurants and online retail channels. At this time in early 2020, Supply Chain Matters was similarly citing a difference in what market analytical firms were depicting as robust online sales and a contrasting government report of retail spending. The numbers were not resolved until sometime in March of 2020.

Finally there is consideration from data shared by Salesforce, which indicated that online consumers use of “buy now and pay later” grew over 100 percent during this past holiday period, with the biggest ramp occurring in the final week before Christmas, would indicate that spending declined in a number of key categories. That implies that the economic strains of current high unemployment levels as a result on the ongoing pandemic was a consideration for consumers.


Parcel Logistics and Last Mile Delivery

As many online and physical retail logistics and transportation professionals are acutely aware, if there was one significant pain point during most of last year, it was transportation and last mile delivery bottlenecks and capacity constraints.

Challenges involved increased online shopping volumes throughout the year, a holiday fulfillment season that began much earlier with September and October promotional events, and the need to distribute the initial shipments of approved COVID-19 vaccines in mid-December thru the end of the year. The volume was so heavy that major carriers such as UPS forced daily capacity metering of online shipments during portions of December. That participated a scramble among shippers to find alternative carriers including the U.S. Postal Service (USPS).The 2020 holiday fulfillment season also included an additional round of increased shipping rates and fees imposed by carriers earlier in the year.

In early January, the Atlanta Constitution reported that UPS, FedEx and the USPS handled a record crush of holiday related shipments but more than two million were estimated not to have been delivered by the Christmas holiday.  The most challenged carrier was obviously the USPS, whose network was overwhelmed both by volume and a lack of adequate manpower and resources during the month of December.

Data cited from ShipMatrix indicated that on-time delivery for UPS averaged 96.6 percent, FedEx at 96.5 percent, and the USPS at 94.7 percent. Remember, the baseline represents an estimated 3 billion packages processed during the holiday period, thus a few percentage points equates to millions.

This particular area will obviously require new thinking and direction in the coming year, not only just for online parcel, but global wide transportation and logistics.

Included in our 2021 Predictions for Industry and Global Supply Chain Research Advisory, our Prediction Nine states that significantly increasing global-wide transportation costs and eroding service levels will indeed foster new thinking in many areas. They are clearly not sustainable from a shipper, retail and services focused provider lens.  We will feature this prediction in our unveiling next week.


The takeaway of this commentary is that line of business and supply chain management teams will need to perform detailed analysis of last year’s holiday fulfillment trends to determine what items were in the most demand, what channel was the most preferred, did the business maintain or lost margin on such sales, and how will the business budget, administer or control exploding transportation and logistics costs moving forward.


Bob Ferrari

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