Retailers prepare for a surge in online sales this holiday season

Marielle Segarra Sep 22, 2020
Heard on: Marketplace
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A FedEx driver makes deliveries in Manhattan on Sept. 17 in New York City. While consumers have come to expect free shipping, it's costing companies. Spencer Platt/Getty Images

Retailers prepare for a surge in online sales this holiday season

Marielle Segarra Sep 22, 2020
A FedEx driver makes deliveries in Manhattan on Sept. 17 in New York City. While consumers have come to expect free shipping, it's costing companies. Spencer Platt/Getty Images
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This holiday season, 45% of people said they plan to do the majority of their shopping online, according to a new survey from the consulting firm AlixPartners. That’s a 15% jump from last year.

Meanwhile, Deloitte is predicting that e-commerce sales this holiday season will jump between 25% and 35%.

That surge might seem like good news for retailers, since a lot of people are still planning to shop. But it’s also going to be an enormous headache.

The thing is, it’s cheaper for retailers when you shop in-store. We generally don’t pay more for products to be delivered to our homes. Because we’ve all come to expect free shipping, said Rod Sides, who leads the retail and distribution practice at Deloitte.

“For me, if I get to the end of a shopping cart, and I see a shipping charge in there, I’m likely to abandon the order because I can go somewhere else and they’re gonna include it in the price of the product,” Sides said.

But shipping isn’t free for retailers, he said. They have to pay people to pick an item, pack it and get it to your house.

That’s going to be even more expensive this year. Because of the pandemic, we are expecting a huge jump in online orders — and it’s more than shippers can handle.

“Residential delivery companies don’t have the trucks or the capacity to handle all of these orders,” said John Bonno, a managing director at AlixPartners.

So UPS, FedEx and the U.S. Postal Service are all tacking on surcharges for business shipments this holiday season — ranging from 20-something cents to a few dollars per package. That’s going to cut into retailers’ profits.

And this is not just about cost. Retailers also need to make sure they can actually get these packages to customers by the holidays. So they’re renting warehouse space, turning stores into fulfillment centers and trying to get you to shop earlier.

“That means that you may see more holiday sales earlier this season than in years past,” Bonno said.

Think Black Friday in October.

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