UPS Calls on Marketers to Help Manage Holiday Peak
One of the snowiest in recent memory, last year's winter proved to be a difficult one for UPS. With retailers unveiling tempting last-minute offers, consumers scrambled to order gifts guaranteed to be delivered by Christmas morning only to find that millions of them were delivered late. While retailers bore much of the blame from angry shoppers, this year UPS has taken it upon itself to prevent disaster from striking twice.
The main factor that contributed to 2013's delivery delay was the unprecedented volume, says Susan Rosenberg, a UPS public relations director. Retailers' unrealistic promises to deliver items ordered as late as 3 p.m. on December 23 by Christmas morning created problems for UPS, too, as did the growing popularity of the buy-online-but-pick-up-in-store delivery model.
Because this approach requires retailers to have sufficient inventory to handle both online and in-store demand, stores are setting up additional distribution centers and mini warehouses to maintain a steady flow of inventory. For UPS, this means businesses are not only experiencing a surge in outgoing deliveries to fulfill standard online orders, but also seeing more incoming deliveries for in-store pickup orders. "It's this two-way flow of traffic that makes an already busy time even more complicated," says Bala Ganesh, UPS' retail director.
This year, the challenge will be even greater. According to the National Retail Federation, holiday sales are forecasted to grow between 8 percent and 11 percent, and more than 35 percent of shoppers will opt to buy items online and pick them up in-store, according to comScore's "Pulse of the Online Shopper" study, which was commissioned by UPS. The workload will be greater than ever, yet UPS says it's prepared.
In addition to hiring 95,000 seasonal employees, creating three new shipping hubs in Texas and California, adding 50 new processing sort shifts throughout the country, setting up pop-up delivery centers, and getting more trucks on the road, UPS is working closely with marketers at major retailers that rely on its service for shipping.
To keep things running smoothly at the height of volume, UPS has asked major retailers to keep communication consistent and alert it ahead of time of any significant planned marketing pushes. The company is also calling on retailers to stagger deals with serious price cuts and introduce them in the beginning or middle of December to avoid a sudden rush. Consumers wait until the last minute to see if they can get a better deal," Ganesh says. "If retailers introduce great discounts earlier on, consumers might be less likely to put [purchases] off."
Scattering deals geographically is a viable option, too, Ganesh says. "When we have a massive jump in orders in one congregated area, that can be tough, but when they're spread out across several hubs, it becomes more manageable," he explains.
Though there are ways for retailers to boost delivery efficiency, improved communication can strengthen efforts across the board. "There must be alignment between marketing and logistics," Ganesh says.
"We hear all the time about marketers delivering more personalized offers to customers, and this level of personalization has to translate into the delivery process as well," adds Ray Wang, cofounder and principal analyst at Constellation Research.
UPS is doing its part to inject personalization into its service with the UPS My Choice feature, a tool that not only regularly updates the consumer via email, text, push notification, or other preferred method on package delivery status, but also provides a four-hour delivery window and enables users to reroute their packages from within the UPS app. The tool keeps shippers updated on packages as well, giving them the information they need to keep customers satisfied.
"When retailers have access to the same shipping information as consumers, that means they know exactly when consumers become unhappy. This is an important opportunity for engagement," Wang says. "If a package is taking longer than expected, the retailer can follow up with an email acknowledging the problem and offering a discount for a later purchase if the delay is significant."
UPS has also made tracking packages easier on its own Web site, with clearer language and more straightforward navigation, and encourages retailers to do the same. Often e-commerce sites require users to log in, go through their account history, or "jump through other hoops" before seeing their order status, Ganesh explains. The process should be simplified, he recommends.
And there are other, smaller changes retailers can make as well. For example, when estimating shipping time, 56 percent of consumers prefer to see a specific expected delivery date, while only 24 percent like to see the number of days it will take, according to the comScore study. This also gives retailers a firmer grasp of what they're promising, according to Ganesh.
As the holiday peak draws closer, Ganesh is optimistic about the outlook. "We're ready," he says. "We know it's going to be busier than ever, but we're confident that our efforts will pay off."