The 2018 holiday customer fulfillment surge appears to be occurring rather smoothly for supply chain logistics and transportation services without major visible glitches, but the final crunch comes over the next eight days.
Activity levels continue to be very active after a very robust kickoff over the Black Friday and Cyber Monday online shopping weekend. This year’s Black Friday online shopping holiday amounted to $6.22 billion in online sales, an increase of 23.6 percent from the year-ago period and establishing a new one-day record. The Friday after the Thanksgiving holiday set a new-record for online sales stemming from mobile devices. Cyber Monday similarly logged the single largest online shopping day with Amazon declaring that it was the largest shopping day in that company’s history.
All three shopping holidays posted over $14 billion in online sales, representing 28 percent or higher digital commerce spending levels vs. last year. Carrier networks essentially responded to the logistics and delivery network challenges.
Online Retail System Outages
From an online systems perspective, one highly visible glitch was a failover of the Lowe’s Home Improvement web site occurring intermittently over the Black Friday holiday weekend. Newly arrived CEO Marvin Ellison declared the incident an embarrassing moment for the retailer, but one reflective of the state of current systems of the home improvement retailer. CEO Ellison further observed that Lowe’s failed to keep-up with advancements in E-Commerce, It and supply chain, and that is going to change. Inconsistent leadership and the turnover of five CIO’s in eight years did not help in IT prioritization. According to reports, the home improvement retailer plans to invest $550 million in enhanced IT capabilities over the next three years including the addition of over 2000 new software engineers to build required systems.
Other systems outages due to higher online shopping activity involved retailers J. Crew, Lululemon and Walmart. J. Crew encountered technical snafus during the Black Friday promotional holiday sale as shoppers were not able to complete order entry. Lululemon’s online ordering site crashed soon after the kickoff of its Black Friday sale that started on Thanksgiving morning. Walmart shoppers experienced snafus and periodic outages on the Wednesday evening prior to Thanksgiving.
Online and In-Store Merchandizing
One noticeable area of larger retailer holiday merchandizing strategies on the part of Amazon, Target and Walmart took advantage of the bankruptcy of Toys R Us in aggressively promoting online and in-store selections of hot selling toys. Pricing seemed to be very disciplined with shoppers indicating little super bargains from last year’s same period.
All eyes remain on Apple and actual iPhone sales volumes during this holiday period. One equity analyst report points to as much as a 20 percent reduction in unit sales volumes for higher-priced models.
The Final Push
Amazon will again plan to appeal to last-minute shoppers by offering free, two-hour delivery in 30 cities up until midnight on Christmas Eve for a select grouping of products available to Prime Now members. The online retailer has set a deadline of December 23 for one-day shipping, and December 24 for same-day shipping if orders are placed by 9:30 am local time. Walmart announced that customers can order online up until 4 pm local time on December 23, to pick-up items in-store on December 24 by 5 pm local time.
Major U.S. parcel carriers FedEx, UPS and the U.S. Postal Service have staggered holiday shipping deadlines starting today for ground shipments, stretching out to Thursday for various 2-day shipment needs.
Freight experts warn of a potential year-end shipping crisis for businesses intending to closeout the year with final end-of-month shipping surges because the Christmas holiday falls on a Tuesday this year due to driver shortages and over-burdened networks in the final five days of December.
Speaking of end-of year, we should not forget the expected surge of purchase returns that can be expected in the post Christmas period. Record online volumes will likely lead to record numbers of merchandise returns that will strain logistics and transportation networks that are not prepared.
By the beginning of 2019, industry supply chain management teams will have a full picture of what occurred during the 2018 holiday surge. So far, so good.
© Copyright 2018. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.