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Shipping costs can kill, seal the deal on Cyber Monday

Shipping bonanza

28 million — Number of packages UPS expects to ship on Dec. 20, its peak day

15.8 million — Number of packages UPS delivers on an average day

Dec. 21 — Last day for UPS Next Day Air packages for delivery by Dec. 24

15.6 million — Number of shipments on FedEx's busiest day of 2010

17.2 million — Number of shipments on FedEx's busiest day of 2011

$1 out of $10 — Estimate of discretionary consumer cash spent online, according to comScore

Source: Tribune-Review research

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Monday, Nov. 26, 2012
 

Jill Lusk scours the web for holiday bargains, recoils from shipping fees and expects fast delivery from online merchants competing for her business.

“I'm signed up for an embarrassingly large amount of store emails, so I get inundated with all the different offers,” she said, estimating 30 or more arrive a day.

“It's probably the stubborn, competitive side of me that likes to know I'm getting the best deal out there.”

Lusk, 25, of Squirrel Hill estimates she does 75 percent of her holiday shopping online. On Cyber Monday she'll likely again be among millions of shoppers who spent a chart-topping $1.25 billion on the Monday after Thanksgiving last year.

Retail industry watchers say that number could rise as more websites entice customers with easier ways to buy, using mobile devices, cheaper shipping options and two-day delivery.

Cyber Monday can be stressful because the duration of sales is measured in hours rather than days and customers have little time to compare deals, Lusk said.

True bargains take precedence in her online shopping decisions, but free — and fast — shipping is a must. She has canceled online transactions that are a mouse click away from being completed because they tried to impose shipping fees. She would rather drive to a store or keep searching.

“I have to have my arm twisted to pay shipping,” said Lusk, who works at a pharmaceutical and medical research firm but blogs about life and twentysomething style at strawberryblondelife.blogspot.com.

“I would rather pay $10 more for the base price of the item than pay $10 in shipping,” Lusk said. “It feels like you're beating the system, in a way, if you manage to evade that shipping charge. If you're patient and resourceful enough, you can usually get a good price and avoid shipping.”

There's plenty of money at stake in persuading retailers to reduce shipping times and eliminate shipping fees.

U.S. shoppers will spend an average of $419 online during the holiday season, a 12 percent increase from 2011, according to Sucharita Mulpuru, an e-business analyst with Forrester Research Inc. in Cambridge, Mass.

Adjusting to expectations

Online customers expect free shipping — or at least no per-transaction shipping fees — and they have no patience for late deliveries, retail surveys show.

A Forrester survey found that 57 percent of respondents said they shop more often with retailers that offer free shipping than with those that don't, and 27 percent said they have made unplanned purchases to meet spending thresholds to get free shipping.

“Retailers expecting to succeed this holiday season must offer, and prominently display, shipping promotions during the holidays or risk losing customers to competitors that do,” Mulpuru wrote.

Paid delivery services such as Amazon Prime and Shoprunner have tapped into online consumer preferences for fast and free shipping to gain a larger share of the market.

Both services charge annual ($79) or monthly fees (Amazon Prime is beginning to offer a monthly pay option) to guarantee unlimited free shipping and two-day delivery with no minimum purchase. Shoprunner offers free return shipping. The service has partnerships with 70 retailers, including Pittsburgh-based GNC and American Eagle Outfitters, through which it offers the unlimited shipping options.

Amazon did not return calls seeking comment. It is offering an $8-per-month Amazon Prime option in time for the holidays to attract customers who don't want to pay the full yearly fee up front. The service provides access to Kindle e-book rentals and a library of unlimited streaming videos.

“Consumers like to shop online, but you have to make it easy for them,” said Fiona Dias, an executive with Shoprunner in Conshohocken, Montgomery County.

The firm developed a Pickup Points program that allows shippers to deliver multiple orders to secure locations, where consumers can pick them up at their leisure. It's offered only in Philadelphia but could expand.

Dias said retailers that partner with Shoprunner can offer “free” shipping because they don't have to spend as much to attract customers through advertising and marketing — they come through Shoprunner's site.

Greg Miller, a GNC spokesman, said Shoprunner enabled the company to offer two-day shipping. Though he did not provide precise numbers, the partnership has been positive for GNC's sales, he said.

Many retailers, including REI, Wal-Mart and L.L. Bean, offer in-store pickup options to help customers save on shipping. Wal-Mart announced this month that for the first time, it will allow customers to order online and pay with cash once the purchase is delivered to the store.

Ready to break records

To prepare for the onslaught of deliveries, FedEx will hire 20,000 seasonal workers, and UPS will add 55,000. The shipping giants are expecting to have record-breaking shipping seasons between Thanksgiving and Christmas.

Memphis-based FedEx officials said the company expects “Green Monday,” the second Monday of December, to kick off the heaviest surge in holiday shopping and shipping driven by online sales.

Overall, it projects a 13 percent increase from the 2011 holiday season, when it made 247 million shipments.

UPS estimates it will deliver 527 million packages between Thanksgiving and Christmas, up 9.7 percent from 480 million in 2011. The company, headquartered in Atlanta, is encouraging customers to sign up for UPS My Choice, a system that sends delivery time updates a day in advance via an automated phone call, text message or email. It allows customers to change delivery dates and destinations.

Myron Gray, president of U.S. operations for UPS, in a statement acknowledged the sinking feeling an ill-timed delivery can evoke.

“It can be frustrating to see a missed-delivery notice on your front door, especially if you're anticipating a holiday gift,” Gray said.

Jeremy Boren is a staff writer for Trib Total Media. He can be reached at 412-320-7935 or jboren@tribweb.com.

 

 

 
 


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