Will retailers regret later deadlines for Christmas deliveries?

By George Anderson

NOVEMBER 13, 2014

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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.

Last year, it took retailers an average of eight days to get holiday orders into the hands of consumers, according to the consulting firm. That included 3.4 days for processing and 4.6 days for shipping. This year, retailers are looking to reduce the total time to fulfill orders to 6.1 days.

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.

"It's high stakes during the holidays, and retailers are playing a game of 'anything you can do, I can do better' when it comes to fulfillment," said Steve Osburn, retail strategist at Kurt Salmon, in a statement. "While it's great for consumers looking for deals and convenience, it's proving challenging for retailers who are already contending with constrained margins from a heavy promotional environment."

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."

The Kurt Salmon survey included more than 100 retailers with e-commerce sites and revenues over $750 million (73 percent with $1 billion and up; 27 percent with between $750 million and $1 billion).