Holidays Will Swamp Delivery Systems

With holiday shopping set to explode and retailers diving into digital initiatives, Salesforce’s latest report

With holiday shopping set to explode and retailers diving into digital initiatives, Salesforce’s latest report warns that significant delivery disruptions lie ahead.

The report points to Amazon’s new October dates for Prime Day, combined with early shoppers’ eagerness to ensure the arrival of holiday gifts. Together, these factors create a conundrum for retail.

“This is expected to shift up to $6 billion of November’s Cyber Week volume in the U.S. and $26 billion globally to the month of October,” the report said. “Despite this, Cyber Week digital traffic is still expected to grow by 28 percent year-over-year — a trend accelerated by nearly ubiquitous access from mobile phones and the fact that fewer people will be rushing to stores on Black Friday.”

In other words, the earlier dates won’t redistribute all of the pressure on retailers, and the booming volumes are likely to swamp delivery operations.

Digital commerce is expected to increase 30 percent globally compared to the previous year, with 34 percent growth in the U.S., Salesforce said. The overall volume of delivery packages is expected to exceed shipping capacity by 5 percent worldwide, potentially hobbling timely deliveries for up to 700 million holiday orders.

The spike in online retail lines up with data from Shopify, which predicts the biggest increase in online shopping across every category. In a recent report, the online retail platform revealed that 55 percent of shoppers planned to shop online exclusively for Black Friday and Cyber Monday, rather than visiting stores.

And following October sales events unveiled by Amazon — as well as others, including Target, Walmart and Macy’s — 46 percent of Shopify merchants planning for Black Friday and Cyber Monday promotions say they’ll start a week earlier. Social media channels will be important sales drivers for Shopify stores this year, too: After their own Shopify online store, merchants’ top sales channels for the holiday kickoff will be Instagram and Facebook, at 65 percent each.

Altogether, the shifts to online shopping look tectonic. But with all that activity, delivery surcharges are expected to reach $40 billion worldwide from mid-November through mid-January, according to Salesforce. Yet it expects that overall holiday sales will be flat, bringing in $5.1 trillion globally and $730 billion in the U.S.

“Digital commerce won’t fully compensate for the projected brick-and-mortar slowdown, but it will be critical to help retailers close the gap this holiday season,” said Rob Garf, vice president of industry insights for retail and consumer goods at Salesforce. “Businesses that succeed during the holidays will use everything at their disposal to make shopping easy and safe, including convenient digital ordering, creative and efficient fulfillment and responsive customer service.”

Some of the preparation comes down to services like BOPIS (or buy online, pickup in-store) and curbside pickup, trends that have already been underway during the coronavirus era. The tech company believes that such pickup services will drive 90 percent growth in digital sales over last year.

But because transactions still take place online, without a chance for consumers to see goods in person before buying, the scenarios may feed into a potentially massive return cycle. Salesforce projects that as much as $280 billion in global online purchases will be sent back to stores, or some 30 percent of all purchases made. To ease the situation, the company believes retailers need to provide as much detail as possible up front on product pages.

As for what holiday shoppers will be buying, the Salesforce report singles out some notable changes this year. During holiday 2019, footwear, general and luxury apparel, beauty and electronics and gaming were hot items. Although beauty products and tech devices still make the list for 2020, they are now joined by other categories, namely home furnishings and decor, home fitness and toys — notably leaving out shoes and clothes.

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