January 21, 2014, 11:08 AM

A ‘flood of late shoppers’ made the holidays challenging for e-retailers

SimplyLobsters.com was among the web merchants that couldn’t get all packages to customers in time for Christmas.

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It wasn’t the smoothest of holiday seasons for SimplyLobsters.com. The retailer only offers next-day delivery because its staples of fresh and frozen lobsters and and steaks need to get to shoppers doorsteps before they spoil. Of the 700 packages consumers ordered for arrival on Christmas Eve, 20% didn’t get there in time and in half of those cases the delicacies were ruined, says owner Daniel Lee.

“What happened was everyone waited until the last minute, some big retailers offered big late promotions and that basically overloaded [the shippers],” Lee says in the upcoming issue of Internet Retailer magazine.

Despite the late arrivals, the retailer’s carrier, UPS, agreed to only cover a portion of the cost for re-shipping because it did not guarantee safe arrival of perishable goods. UPS has said publicly that the volume of air packages in its system exceeded its capacity in the days leading up to Dec. 25 and some shipments were delayed. It said it delivered “nearly all the volume” of the late orders the day after Christmas. However, for lobsters, the day after Christmas often wasn’t quick enough. Lee says he plans to beef up the insulation in his packaging, and has been approached by other carriers about possibly switching his service.

Other e-commerce operators can certainly empathize.  In the recently completed holiday shopping season heavy online shopping just before Christmas combined with bad weather delayed many e-retail deliveries. For instance, Melina Ash, NoMoreRack.com’s chief merchandising officer, says 8,000 of the discount seller’s orders placed during the Christmas season did not arrive by Dec. 25. “Those customers purchasing products as Christmas gifts have been very disappointed,” she says. The retailer refunded a quarter of its orders and it allowed the shoppers to keep the late-arriving items for the inconvenience, Ash says.

“Shippers…didn’t read the pulse at all,” Marshal Cohen, chief industry analyst for the NPD Group Inc. wrote in a blog post. “The signs were there that there would be a late holiday surge and they failed to adjust.” Special sales and shipping discounts, including free shipping offers as late as two days before Christmas, all drove sales online, he says. While shippers got what they initially wanted—more shipments from online retailers, and more express deliveries with two-day and next-day service—the flood of late shoppers and the increase in online sales tested  the capacity of shippers, he says.

There certainly were plenty of free shipping offers. An Internet Retailer survey found that of the Top 1000 North American web retailers, 625 promoted some kind of free shipping offer on their home pages during the week ending Dec. 20, and 294 offered free shipping on all orders, regardless of the amount purchased.

To read an in-depth look at how e-commerce fared in the 2013 holiday season—and also a full report on fulfillment and delivery trends for 2014—subscribe to Internet Retailer magazine for free


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