FedEx Warns Retailers Not to Play Into the Peak
With predictions that online shopping will break records this holiday season, FedEx has been ramping up its services and network to expand capacity and enhance service to handle the increased pressure.
In September, FedEx began the expansion of its ground coverage for year-round seven-day residential deliveries to almost 95 percent of the U.S. population. The company has made investments in automated facilities and growth in FedEx Freight Direct services and in its retail convenience network. Other enhancements include new and expanded facilities and new technology solutions. The company has increased capacity with facility investments across its network including six regional sortation facilities, four automated stations, eight new or expanded large package facilities, and expansion of more than 50 existing facilities with additional material handling equipment and automation.
Additionally, enhancements will allow shippers to send packages as heavy as 150 pounds through FedEx Home Delivery. In a statement, FedEx said the goal of these strategic investments is to “better support what is expected to be an unprecedented holiday shipping season.”
According to Ryan Kelly, vice president of global e-commerce marketing at FedEx, the “peaking factor” can be tremendous. To illustrate, he said during peak a business that may normally ship 100 units a day have been seen escalating to 500 or even 5,000 units daily.
“During a peak, or a specific peak date, the magnitude of the volatility is huge,” said Kelly. “Every year we plan with our largest customers that have the biggest impact on our network and that’s something that we take a lot of pride in and every year we always get better at it.”
See Also: Adobe E-Commerce Report Says 2020 Holiday Spending Will Break RecordsInstead of planning for a dedicated span of time, this year shipping has been at a peak since the pandemic began. Notably, Kelly said while there was a prediction to see 100 million packages a day across the entire parcel industry by 2026, it is now being predicted that this will happen by 2023 due to the surge in demand this year.
“What you’re really looking at is a peak on top of a peak,” said Kelly. “It started in March and it hasn’t ended and it’s not going to end on Christmas day. When we are speaking to retailers a lot of our conversations are around doing everything you can to reduce the ‘peakiness’ of the peak.”
Put simply, to deliver on time, retailers should refrain from running a sale just before the final shipping deadline for Dec. 25. Instead, Kelly encouraged retailers who have started running promotions and sales early in an effort to move demand forward.
“I’m really optimistic that we’ll see some of that demand pull forward,” said Kelly. “It’s going to help make sure that we are able to manage the demand. Consumer expectations keep getting crunched and everybody wants everything faster and they overwhelmingly want it to be free. Free is more important than fast, but they want free to become faster.”
Moreover, as consumer behaviors have undergone changes, Kelly said he applauded efforts being made by retailers to execute curbside pick-up as an acknowledgment that many people are still not ready to return to shopping in-store.
“Some retailers have just done a phenomenal job to onboard their own roadmaps and thinking about what kind of consumer experience they want to deliver,” said Kelly. “They have just really knocked it out of the park executing curbside pickup and that entire experience.”
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And, Kelly said, many retailers have started to successfully leverage already built store networks. Not only does this solution address local inventory, but it creates localized delivery (meaning faster delivery) to the end consumer.
Another consumer sentiment that has seen a shift during the pandemic is a demand for more visibility and transparency in every step of a transaction. Whether it is using the FedEx Delivery Manager or through a retailer’s own tracker, consumers want to follow a deliveries’ progress.
“Having good visibility is super important,” said Kelly. “Retailers can actually differentiate themselves and ingratiate themselves to consumers by kind of over-serving them or having an awesome post-click experience, even when it’s not a great outcome. Meaning if you’re going to have a shipping delay proactively notifying that customer know. The reality is most people didn’t need it the next day or even two days. By proactively [telling the consumer] and not hiding a delay, you can really distinguish yourself from a customer service standpoint.”
As the holiday season gets closer, FedEx will continue to work with retailers to overcome peak challenges and plans to add an additional 70,000 positions.
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