Much was made this last week over United Parcel Service’s (UPS) failure to deliver packages before Christmas. The media seemed to border on delight in sharing the stories of customers who were upset that their packages didn’t arrive in time. As I heard these stories played over and over again I kept wondering how we got to this point. Last minute shoppers who were Amazon Prime members could order their gifts on December 22nd and still expect them to be delivered anywhere in the country before Christmas with free two-day shipping. But when some gifts didn’t arrive in time who’s to blame – the retailer, the shipper, or us, the consumer?
Online gift buying continues to grow year over year and online retailer Amazon has taken advantage of this trend. While Amazon doesn’t normally comment on specific sales or order numbers they did issue their traditional post-holiday press release. According to the statement, the online retailer sold more than 36.8 million items world-wide on Cyber Monday at a record-breaking 426 per second. That was up almost 40% from their peak day a year ago. According to the Wall Street Journal, Amazon hired 70,000 seasonal workers for its U.S. warehouses, a similar 40% increase from the year before.
So if Amazon sees a 40% increase in their online orders how are their logistics and delivery partners expected to respond to that fact? Most likely they can’t react quickly enough to that spike in demand. For companies like UPS, that would require adding more planes, trucks and employees. I did notice that in my neighborhood UPS had added rented trucks to their fleet to assist with the increased volume of packages. Quickly adding more planes and pilots seems a little more complicated.
In fact, according to a UPS spokeswoman the planes were the bottleneck. On Monday December 23nd they had more shipments than the expected 7.75 million in their air network. Overcapacity and bad weather in the Northeast created a difficult scenario – some packages were going to miss their expected delivery date. In response, UPS and Amazon quickly began getting the word out that some packages were going to not arrive in time. They contacted the impacted customers, refunding their shipping fees giving them a $20 gift card for their inconvenience.
The response from Amazon and UPS was text book- communicate, apologize, and resolve. The communicated to their customers to let them know about the problem, they apologized for the impact that this problem had, and they moved quickly to resolve the problem and get the remaining packages delivered. What was missing from all of this was 1) addressing whether this “problem” was likely to happen in the future or 2) if we the customers need to rethink our expectations.
1. From the statistics this problem is not new and it will likely continue. According to Forrester Research analyst Sucharita Mulpuru, in a typical year about 15% of online shoppers who order items by retailers’ specified cutoff dates don’t get their packages by Christmas Eve. But with the continued growth in online shopping and more gifts being shipped the quantity of missed deliveries will likely rise even if the percentage doesn’t. According to Ms. Mulpuru, “Retailers think they can take orders up to the last minute, but they just can’t pick and pack fast enough.”
2. Where do we the consumer fit into the equation? In the era of instant gratification and expectations of perfection are we as culpable in making this problem? As a poster child for last minute shopping I have always known I would be in stores buying gifts a day or two before Christmas. But now with online shopping and “delivery guarantees” I don’t necessarily need to leave the comfort of my own home. The trouble is that too many of us last minute shoppers are moving to online shopping and the system can’t support the increased volume – this is when bad things happen.
If this trend is going to continue we will need to do one of three things: shop earlier – heaven forbid, shop in a store where we can take it with us, or change our expectations of “guaranteed delivery in time for Christmas.” I know that online retailers use the delivery guarantee as a sales enticement but perhaps it should read “Guaranteed to likely be delivered by December 24th.” As a society we need to move beyond our expectations of perfection.
Hoping that 2014 will be your best year yet!
If you would like to learn more about statistics and the probability of bad things happening I suggest that you check out Nassim Taleb’s The Black Swan (no, not the movie) and Nate Silver’s The Signal and the Noise. If you would like a great book that addresses our country’s increasing problem with perfectionism I highly recommend Brene Brown’s book Daring Greatly.
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