Retailers Will Break Holiday Delivery Promises Again This Year

Last year’s debacle in which packages failed to reach their destinations in time for Christmas was a wake up call for many retailers and shipping companies. This year, all the parties involved claim to be better prepared for a season in which shipping services will be in greater demand as more consumers place online orders than ever before. But are they?

According to research by Kurt Salmon, many retailers have pushed deadlines for orders closer to Christmas despite all the problems encountered last year. Twenty-six percent of those surveyed will guarantee on-time delivery for orders placed one to three days before Christmas. That’s up from 17 percent last year. Nearly 50 percent will guarantee delivery of orders placed by Dec. 20, up from 37 percent in 2013.

Retailers feel that free and faster shipping are required to remain competitive. Eighteen percent of retailers who spoke with Kurt Salmon expressed concern they would lose sales to competitors offering next- or same-day delivery.

Even with guarantees, many retailers understand that not all orders will arrive on time. According to Kurt Salmon, merchants are looking to reduce late arrivals from 15 percent last year to eight percent for this holiday.

“Retailers are making ambitious promises in order to capture last-minute online sales,” Mr. Osburn said. “But if you compare average delivery times with last-minute promises, there is a gap that retailers will need to account for.”

Image: Amazon.com

A separate Kurt Salmon survey of 1,893 consumers indicated customer wariness, finding that 40 percent of shoppers are generally confident that their orders will arrive by the promised date, but that another 32 percent say their confidence level depends on the retailer.

In an online discussion earlier this week, some of the industry insiders of the RetailWire BrainTrust saw potential problems ahead for retailers adopting this strategy.

“I desperately want to be wrong, but I’m very worried about holiday logistics,” said Jason Goldberg, vice president of commerce strategy at Razorfish. “Every retailer I talk to is forecasting more home delivery growth than the logistic companies have increased capacity.”

“Retailing online is just as fierce as brick-and-mortar stores, and relying on weather being perfect, and all the delivery folks showing up on time for work and the trucks not breaking down, are ways for failure to occur,” said Tony Orlando, owner of Tony O’s Supermarket and Catering.

Some on the BrainTrust bristled about what pushing holiday order deadlines implies.

“It’s the same reason that retailers keep trying to open earlier and earlier on Thanksgiving Day: Desperation and the fear of losing out to the competition,” said Nikki Baird, managing partner of RSR Research. “It’s sad that disappointing eight percent of customers might be considered OK. In my book, the objective should be to avoid disappointing any customer.”

Some had a slightly more positive spin on the numbers.

“If only eight percent of consumers are disappointed by delivery problems this season, that is a huge improvement from last year’s 15 percent,” said Mohamed Amer, vice president of Global Consumer Industries at SAP . “And for those anticipated eight percent, they will not shy away from ordering online again, but will definitely scratch those retailers off their list.”

But Gene Hoffman, CEO of Corporate Strategies International, argued that there is more at stake.

“There are numerous reasons why a repeat of 2013′s delivery problems will affect how consumers shop online in the future. Included among them are the flooding tears in devastated children’s eyes,” said Mr. Hoffman.