In a year of record e-commerce sales, the Black Friday weekend appears to have stretched several retailers to their limit—or rather, to the limit of the United Parcel Service (UPS).
UPS notified drivers in an internal message this week to stop picking up packages from six major retailers—Gap Inc., Nike Inc., L.L. Bean Inc., Hot Topic Inc., Macy’s Inc. and electronics retailer Newegg Inc.—according to reporting from The Wall Street Journal, which said it had reviewed the message and confirmed its content with UPS workers in different regions. The shipping giant plans to pick up packages from customers who have exceeded their allotted space when capacity is available, a UPS spokesman said.
Despite the reported restrictions, a Gap Inc. spokesperson told Sourcing Journal, “We have been very satisfied with the level of partnership and commitment we have received from our carrier base, and especially that of UPS, and expect that to continue through the holiday season.”
“We are very happy with the performance of our parcel delivery network following the high cyber week demand,” the spokesperson said. “Knowing the unique constraints the industry is facing this peak season, we worked with our carriers early on to collectively build a strategic plan of execution—which includes dynamic pickups at stores.”
A Macy’s spokesperson told Sourcing Journal that the retailer is actively working with UPS and other shipping partners to best manage customer deliveries throughout the busy holiday season.
“While we encourage everyone to shop early, we are committed to getting customers what they need in time for the holiday by offering many easy ways to shop, including contactless curbside pick-up, buy online pick-up in store and same day delivery through DoorDash,” the Macy’s spokesperson said. “Macy’s expanded fulfillment options allow customers to shop safely and friction-free in store or online right up until Dec.24.”
A Nike spokesperson told Sourcing Journal it is communicating any delivery changes to its consumers, but it expects “the majority of these orders to meet estimated delivery dates.”
The temporary restrictions are not the only measure UPS has taken to confront extremely high shipping volume for the 2020 holiday. In August, UPS announced it would be adding surcharges to high-volume shippers that move more than 25,000 packages per week during the holiday season. These fees could cost as much as $3 per package for ground shipments and other lower-priced shipping options and up to $4 per package for air shipments, it said. By comparison, the last time UPS tacked on surcharges during a peak holiday season, in 2018, costs reached 28 cents on ground shipments and 99 cents for some air shipments.
In its third-quarter earnings call, UPS’s CFO Brian Newman reported that business-to-consumer shipments were up 33.4 percent in the quarter and represented 61 percent of its total volume.
Black Friday e-commerce booms
The UPS restrictions arrive following record e-commerce sales between Thanksgiving and Cyber Monday.
According to a survey released Tuesday by the National Retail Federation and Prosper Insights & Analytics, online-only shoppers jumped by 44 percent to 95.7 million over the entire weekend. On Black Friday itself, online shoppers rose 8 percent, surpassing 100 million for the first time, NRF said. The number of online Saturday shoppers grew even further, at 17 percent.
Analyzing its platform-level data, software-as-a-service e-commerce platform BigCommerce said its global merchant base saw a 74 percent increase in gross merchandise volume over the five-day period compared with last year. Though the number of orders occurring during this period only rose 48 percent, average order value grew 17 percent. While Black Friday remained the most popular day for making purchases, it said Sunday saw the largest GMV increase (86 percent), followed by Thanksgiving Day (84 percent).
Looking at just 20 of the top 100 retailers as defined by the NRF, online shopping traffic soared 560 percent this Thanksgiving, while Black Friday and Cyber Monday saw increases of 200 percent, according to Verizon Business. In contrast, it said mobility traffic to and around malls across the U.S. fell 25 percent between Black Friday and Cyber Monday compared with the same period in 2019.
An estimated 186.4 million consumers shopped in-store and online this year, according to NRF. While this figure represented a slight drop from 2019’s 189.6 million, it still came in well above 2018’s 165.8 million shoppers.
Clothing, bought by 52 percent of those surveyed, ranked as the top gift purchase of the extended weekend, followed by toys (32 percent), books/music/movies/video games (29 percent), gift cards/certificates (29 percent) and electronics (27 percent).
“As expected, consumers have embraced an earlier start to the holiday shopping season, but many were also prepared to embrace a long-standing tradition of turning out online and in stores over Thanksgiving weekend to make gift purchases for family and friends,” Matthew Shay, president and CEO of NRF, said.
Over the five-day period, NRF said shoppers spent an average of $311.75 on holiday-related purchases, including $224.48 spent on gifts. The five-day total, though comparable to 2018’s $313.29, fell below last year’s $361.90.
This decrease Is likely due in part to early holiday sales and promotions. Fifty-two percent of shoppers, NRF said, took advantage of early holiday sales and promotions this year. Of those, 38 percent said they checked off holiday purchases in the week leading up to Thanksgiving. More than half (53 percent) felt the promotions over the weekend were the same as they had been earlier in the season.
As widely expected, in-store shopping suffered as e-commerce flourished. According to NRF’s 6,615-person survey, the number of in-store shoppers dropped 55 percent year-over-year on Thanksgiving and 37 percent on Black Friday.
Analyzing foot traffic over the holiday weekend, Sensormatic Solutions reported steeper drops. Store traffic, it said, decreased 94.9 percent on Thanksgiving, when many retailers closed their locations, and 52 percent on Black Friday. Year-over-year decreases continued over the rest of the weekend, but none as steep as Thanksgiving and Black Friday. Looking at the five-day weekend as a whole, Sensormatic said traffic decreased 49 percent compared to 2019.
“Despite the low traffic numbers, this doesn’t predict the results for the rest of the holiday shopping season, and weekday traffic should be watched in the coming weeks,” Brian Field, senior director of global retail consulting at Sensormatic Solutions, said in a statement. “All of our data suggests that more shoppers are using their work-from-home status to visit physical stores during the week. It appears this trend will continue into the holiday season.”
The holiday season ahead
NRF’s holiday forecast calls for spending to increase between 3.6 percent and 5.2 percent to between $755.3 billion and $766.7 billion. This compares with 4 percent growth last year and an average 3.5 percent rise over the past five years. The federation’s forecast includes online sales, which it expects to expand between 20 percent and 30 percent to between $202.5 billion and $218.4 billion.
Still, NRF chief economist Jack Kleinhenz cautioned that the pandemic remains “the largest uncertainty and biggest risk the economy is dealing with.” If Thanksgiving gatherings seeded further spread of the virus, renewed business restrictions may follow.
“The near-term concern is the long shadow cast on the economy by the surging virus and expiring government support,” Kleinhenz wrote in the December issue of NRF’s Monthly Economic Review. “Every virus indicator across the United States is elevated and accelerated, which could pump the brakes on the momentum we have seen and have consequences for spending.”
Editor’s Note: UPS responded on Dec. 4 to the problem with package pickups.