Has retail figured out last-minute holiday fulfillment?

Discussion
Photo: RetailWire
Dec 28, 2018
Tom Ryan

Retailers scored high marks this season meeting guaranteed shipping dates, according to the 2018 Holiday Shipping study from Kurt Salmon.

Similar to past years, the consultancy placed orders with 52 U.S. retailers across categories to measure fulfillment rates on their last guaranteed shipping date for standard delivery before Christmas. A commendable 93 percent of orders were processed and delivered on time. That’s down from a perfect score in 2017, although retailers cautiously pulled back their average cut-off dates this year to hit their promises. The rate was 92 percent in 2016 and 88 percent in 2015.

The best retailers this year for standard-shipping orders placed on or after Dec. 20 but arriving before Christmas, were:

  • Amazon Prime: ordered on Dec. 22
  • Under Armour, Lululemon, MM.LaFleur, Coach, L.L.Bean, Nordstrom and Zappos: ordered on Dec. 21
  • Dillard’s, Macy’s, Timberland, Sephora, Saks Fifth Avenue and Best Buy: ordered on Dec. 20

The average cut-off date was Dec. 17, but all retailers that missed their deadlines used a cut-off deadline of Dec. 19 or a later.

At the same time, one third of retailers opted out of having a “last order promise date” as Christmas approached to avoid disappointing customers, the highest percentage seen in the survey compared to previous years.

Instead, many retailers pushed BOPIS capabilities and in-store specials to drive last-minute sales and reduce risk. Many retailers, including Kohl’s, Best Buy, Home Depot and Lowe’s, had BOPIS options available late on Christmas Eve. Adobe found that BOPIS use over the holiday season was up 47 percent.

According to Kurt Salmon, Building appropriate capacity, implementing alternative fulfillment methods such as ship from store and BOPIS, and having the right order routing capabilities were keys to last-minute execution.

As online order volume continues to grow, consumer expectations for perfect service will no doubt as well. Kurt Salmon also found 54 percent of U.S. consumers now expect holiday orders — with free shipping — to arrive in just 3 days. In a statement, Steve Osburn, managing director at Kurt Salmon, said, “With the majority taking much longer to deliver — around 6 days — retailers have got a long way to go to meet this expectation.”

DISCUSSION QUESTIONS: Where do you still see the pain points in last-minute holiday delivery execution? Are newer alternative fulfillment methods, such as ship-from-store and BOPIS, significantly helping? Is three-day, free shipping a viable goal for retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"After all these years, there is still no free lunch!"
"Free shipping shouldn’t be a goal for any retailer. It’s basically just an extension of a pricing discount. The goal should be fulfillment the way the customer wants it."
"It’s easy to declare now that we always knew online retailers would master most holiday deliveries, but the outlook was pretty shaky a few years back."

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7 Comments on "Has retail figured out last-minute holiday fulfillment?"


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Bob Amster
BrainTrust

The pain points are many. First, there is the natural increase in volume being handled, in part, by temporary help that are not so efficient as the full-time employees. This affects distribution and fulfillment centers as it does freight carriers. The increasing number of returns helps to increase the volume of product to be handled. BOPIS helps to deliver satisfaction, if it has been properly implemented. Promising three-day free shipping either erodes margins or causes higher prices to cover the costs. After all these years, there is still no free lunch!

Gene Detroyer
BrainTrust

A few years ago, there was great uproar about the poor holiday delivery performance. It was called a disaster that would only get worse. The reality is that experience and technology have led to pretty good performance.

There will always be some pain points as online continues to rapidly grow and the volume with it. But, as over the last few years, those who deliver will adjust and improve their tools and forecasts.

The most important tool they have, today and in the future, is communication. Do not over-promise. Set people’s expectations properly. If one has to order by December 21 to guarantee delivery, tell them they have to order by the 19th or 20th. Delight them with a surprise.

Two-, three- or five-day free shipping is not relevant. Expectation is.

Shep Hyken
BrainTrust

The biggest pain point in last-minute holiday delivery is an intangible, and that is weather. Once you get around that, retailers are doing a good job of setting the right expectations. The problem is now moving from actual delivery problems to inventory issues. If it’s out of stock, it won’t be delivered regardless of how efficient the retailer manages fulfillment and shipping.

David Naumann
BrainTrust
David Naumann
Vice President, Retail Marketing, enVista
11 months 12 days ago

Managing the high volume of online orders right before the holidays is the biggest challenge for meeting short delivery timelines. It is difficult from a pick and pack perspective with high volumes and seasonal workers that may not be as well trained or efficient as long-term employees. Relying on third-party delivery services with extremely high volumes and potentially bad weather add additional potential issues.

For consumers that don’t want to take the risk of a late delivery, many opt for BOPIS, which has more certainty.

James Tenser
BrainTrust

It’s easy to declare now that we always knew online retailers would master most holiday deliveries, but the outlook was pretty shaky a few years back. The volume surge, uncertain weather, and less experienced seasonal employees are challenges that will always exist, even as systems are refined.

There’s still a way to go with respect to inventory forecasting and visibility. I regard this as the discipline that will set the leaders apart from the pack. When fully mastered: Fewer items go OOS or on back order. Shoppers see accurate item availability status at all touchpoints. Fulfillment gets quicker. Gift return rates decrease. Store pickup works more smoothly.

Shoppers may like overnight delivery and will sometimes pay a little to get it, but I think most are pragmatic enough that a two or three-day free standard is quite satisfactory. The assurance of tracking notices is a key element that inspires confidence an even adds some anticipatory pleasure.

Ananda Chakravarty
BrainTrust

Pain points remain the same, for holiday and off — just at different levels. Issues such as cost, timing, shrink, efficiency and accuracy will continue to affect last mile delivery. Tech, Bopis and ship-from-store allow other options than direct fulfillment to addresses, slightly reducing the volume burdens. But the same problems continue — incorrect addresses, porch thievery, out of stocks, weather (certainly), transparency and improper tracking, and of course the expense of shipping the goods whether passed onto the customer directly or indirectly. Free shipping shouldn’t be a goal for any retailer. It’s basically just an extension of a pricing discount. The goal should be fulfillment the way the customer wants it.

Rick White
Guest
11 months 10 days ago

Adding one more pain point: reverse logistics.

Online purchases have return rates as much as triple that of in store purchases – accuracy, timeliness of delivery are factors, but consumer behavior factors significantly. Impulse buying, less emotional connectedness to the purchase, and expectations of returning items for any reason with no penalty all drive a reverse logistics nightmare.

As stated in the comments, “there is still no such thing as a free lunch.” These are the trends … perhaps the new normal, therefore retailers and vendors need to sort out the economics of this elevated service level.

wpDiscuz
Braintrust
"After all these years, there is still no free lunch!"
"Free shipping shouldn’t be a goal for any retailer. It’s basically just an extension of a pricing discount. The goal should be fulfillment the way the customer wants it."
"It’s easy to declare now that we always knew online retailers would master most holiday deliveries, but the outlook was pretty shaky a few years back."

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