You will be redirected back to your article in seconds
Skip to main content

Could Spike in Cyber Monday Orders Strain Supply-Chain Logistics?: The Week Ahead

With promotions being pulled forward early into October and Black Friday digital sales projected as high as $10.6 billion, what’s left for Cyber Monday?

Adobe Analytics said Friday that Thanksgiving Day hit a new record with consumers in the U.S. spending $5.1 billion, an increase of 21.5 percent year-over-year. It’s also expecting Black Friday’s digital sales to reach as high as $10.6 billion, or a 42 percent gain from 2019 figures. Among the biggest category gainers were video games up 300 percent, thanks to two new consoles, and electronics.

Despite the pulling forward of holiday sales promotions into October, Adobe’s recent survey of consumers indicates that 56 percent still believe that retailers will save their best discounts for the two key selling days, Black Friday and Cyber Monday.

But Charlie O’Shea, senior credit analyst at Moody’s Investors Service, said the playbooks from years past don’t mean much this year. That’s because he says retailers are flying blind in 2020, not knowing either how much consumers will spend or even what they will be willing to buy. Much of the uncertainty stems from the unknown backdrop due to Covid and what course the virus will take.

The analyst did note that one might be able to glean information about Holiday 2020 by looking at the level of discounting. He noted that a company offering 40 to 50 percent off could be hitting its targets, while any discounting at 60 percent or higher on Cyber Monday could indicate some wrong guesses in the merchandise mix.

Related Stories

And the analyst pointed out that there could be some trouble ahead on the logistics front as companies as their shipping partners try to meet what appears to be exponential growth in online orders this year. That’s a problem that he’s thinks has already started based on personal experience for a delivery promised for the Wednesday before Thanksgiving, but in reality hasn’t even shipped yet.

Additional sales on Cyber Monday will only serve to aggravate the problem on the supply-chain side.

There’s been much concern in retail about strain on the supply chain—it’s one reason retailers have brought their promotions forward in the season to help ease pressure on order fulfillment by their warehouse teams.

Amazon expert Jason Boyce—he authored a book about the dot-com called “The Amazon Jungle”—expects that this year consumers will be waiting much longer than expected for their packages to arrive. That would translate into a disastrous holiday season.

“Amazon is going to break. They don’t have enough square footage, and there will be inventory failures,” Boyce said. “Typically, [Amazon] Prime is 99.5 percent delivered on time. That will drop to 80 percent. Massive packages will be arriving late. We’re going to see a lot of unhappy shoppers this year.”

And if there’s another spike up in Covid infections after the Thanksgiving holiday weekend, logistical concerns will be a major retail headwind as companies will be forced to implement even more restrictive social distancing rules at distribution centers, or possibly close locations and move fulfillment to other sites.