Delivering Holiday Cheer in a Short Shopping Season

Thanksgiving is Nov. 28 this year—as late as it can possibly be. Will the same hold true for your holiday gifts in the compressed buying and shipping period that follows?

The holiday shopping season, which traditionally kicks off on Black Friday, can stretch for more than a month, depending on when Turkey Day falls. But this year, it’s only 26 days until Christmas and a scant 23 until Hanukkah starts.

Consumers who don’t hit the malls (or e-commerce websites) until after the pumpkin pie is a memory and the tryptophan wears off might face some last-minute hand-wringing. For context, roughly 8% of holiday packages handled by UPS and FedEx arrived late last year, according to a study by lateshipment.com. That’s about 98 million tardy gifts.

Fortunately, said Philip T. Evers from the University of Maryland’s Robert H. Smith School of Business, some calendar-savvy retail giants have been planning for this (admittedly predictable) situation. They’ve built parcel shipment capacity to help them avoid the kinds of backups that have foiled holiday plans in the past when the shopping calendar runs short. 

With e-commerce grabbing an ever-larger piece of the holiday shopping market—a whopping $122 billion, up 17.4% in 2018 from a year earlier—the biggest single difference, said the associate professor in the Department of Logistics, Business and Public Policy, is what Amazon.com is doing: “They’ve simply added a lot more capacity to the market this year.”

By far the leader in e-commerce, Amazon has aggressively expanded its delivery capabilities, investing in a network of contractors, vehicles, hubs and aircraft. That means it’s relying a lot less on UPS, FedEx and the U.S. Postal Service.

Target has made a similar shift, recently acquiring same-day delivery errand service Shipt, which allows consumers to buy online and have their Target gifts—and groceries—delivered the same day by a “Shipt shopper.”

Across the board, companies are trying to grab more control of their delivery systems, Evers said.  

“If the final customer doesn’t get the product on time, they don’t really see that as a failure by the carrier,” he said. “They see it as a failure of the seller, whether that’s Target or Walmart or Macy’s or wherever.”

UPS and Fedex have made holiday plans as well, learning from past seasons, improving processes and bracing for the busiest online shopping weeks of the year.

UPS has been trying to incentivize online shoppers to have their packages delivered to lockers and other central destinations, Evers says, rather than having them delivered right to the customer address. It’s about speed, efficiency—and cost. 

“The big cost in all this is that ‘last mile,’” Evers said. “And that's true for every type of transportation mode, whether we are talking about small-package delivery or individual rail-car delivery.”

No one likes to get presents late, but from a broader economic standpoint, it points to good tidings for the holidays.

“If the carriers have a problem delivering all the gifts on time this year, that may be a good thing,” said Evers, “because that says that more people are probably buying.”