As holiday shoppers blitz through the final weeks of the winter peak shopping season, a survey from the postal and shipping solutions provider Stamps.com shows that 40% of U.S. consumers are unaware of holiday shipping deadlines, leaving them at risk of running into last-minute scrambles, higher shipping costs, and packages arriving late.
The survey also found a generational difference in holiday shipping deadline awareness, with 53% of Baby Boomers unaware of these cut-off dates, compared to just 32% of Millennials. Millennials are also more likely to prioritize guaranteed delivery, with 68% citing it as a key factor when choosing a shipping option this holiday season.
Of those surveyed, 66% have experienced holiday shipping delays, with Gen Z reporting the highest rate of delays at 73%, compared to 49% of Baby Boomers. That statistical spread highlights a conclusion that younger generations are less tolerant of delays and prioritize fast and efficient shipping, researchers said. The data came from a study of 1,000 U.S. consumers conducted in October 2024 to understand their shopping habits and preferences.
As they cope with that tight shipping window, a huge 83% of surveyed consumers are willing to pay extra for faster shipping to avoid the prospect of a late-arriving gift. This trend is especially strong among Gen Z, with 56% willing to pay up, compared to just 27% of Baby Boomers.
“As the holiday season approaches, it’s crucial for consumers to be prepared and aware of shipping deadlines to ensure their gifts arrive on time,” Nick Spitzman, General Manager of Stamps.com, said in a release. ”Our survey highlights the significant portion of consumers who are unaware of these deadlines, particularly older generations. It’s essential for retailers and shipping carriers to provide clear and timely information about shipping deadlines to help consumers avoid last-minute stress and disappointment.”
For best results, Stamps.com advises consumers to begin holiday shopping early and familiarize themselves with shipping deadlines across carriers. That is especially true with Thanksgiving falling later this year, meaning the holiday season is shorter and planning ahead is even more essential.
According to Stamps.com, key shipping deadlines include:
December 13, 2024: Last day for FedEx Ground Economy
December 18, 2024: Last day for USPS Ground Advantage and First-Class Mail
December 19, 2024: Last day for UPS 3 Day Select and USPS Priority Mail
December 20, 2024: Last day for UPS 2nd Day Air
December 21, 2024: Last day for USPS Priority Mail Express
Retailers are deploying multiple carriers to deliver their packages, delivering lightning-fast delivery times this winter as peak season 2024 is off to the strongest start for e-commerce parcel handling since Covid-19, according to industry statistics from supply chain visibility platform provider Project44.
That success comes as the last mile peak season ramps up, spanning November to January as the year’s highest annual volumes are driven by holiday shopping, returns, and events like Black Friday and Cyber Monday.
Proejct44 measures retailers’ and e-tailers’ performance in managing that rush with a metric called “delivery time,” which comprises fulfillment time—from order placement to shipment readiness, including picking, packing, and upstream transit—and transit time, which is the journey from the warehouse to the customer.
And in November 2024, the average delivery time was just 3.7 days—a 27% improvement from November 2023 and a 33% improvement from November 2022. That reduction shows a long-term trend where delivery times have decreased as online shopping grows and customer expectations rise, the report said. That move has been largely a reaction to Amazon’s standardization of 2-day shipping, which has reshaped the market, pushing companies to optimize processes and enhance satisfaction.
Speed isn’t the only metric that matters, as customer satisfaction and retention also hinge on on-time performance—the accuracy of the initial ETA provided at order placement. Therefore, building and maintaining a healthy e-commerce customer base requires both delivery speed and delivery predictability, Project44 said.
To deliver that performance—while mitigating shipping risks and increasing capacity—shippers increasingly use multiple carriers, the firm said. Counting by the average number of carriers used per account, carrier diversification has risen by two carriers per account since 2021, with a 5% increase between October and November 2024 as shippers expand their networks for peak season. According to Project44, this trend is fueled by the growing availability of smaller carriers like OnTrac, Deliver-it, and Veho, alongside established players such as UPS, FedEx, DHL, and USPS.
To be sure, customers still file complaints about last-mile delivery performance, but complaints about delayed deliveries have dropped 8% since 2022 and are 1% lower than in 2023, Project44 said. The top complaints are: delivered but missing (28%), delayed (28%), carrier complaint (17%), damaged (14%), customer service (%), returned to sender (4%), and incorrect items delivered (4%).
Having survived the demand surge of the pandemic and its aftermath, the parcel express market is undergoing an evolution of unprecedented proportions as the nation’s largest express carriers struggle to address multiple challenges—from a growing cast of new competitors, to rationalizing their networks and reining in surging costs, to dealing with flattening e-commerce volumes and a stubborn weakness in U.S. manufacturing and industrial output that’s putting a damper on parcel growth.
Shippers have serious issues with the high cost of parcel service, exacerbated by a flurry of surcharges and changes implemented for this peak season, says Bart De Muynck, principal at strategic supply chain consulting firm Bart De Muynck LLC. “If you are doing high volumes in peak season, those increases mean tens of millions of dollars in extra parcel shipping costs,” he says.
In response, shippers are diversifying their carrier bases and continuing to adjust and adapt their supply chain operating strategies, with a hard focus on how and when parcel shipments are delivered and by whom.
“They’re looking at more regional providers for better rates and service,” De Muynck observes. “With new players coming into the market, especially in the last mile, that has created a lot more options for shippers.” That in itself is making parcel planning and management a much more difficult and complex endeavor, he adds. “And that means you need more technology to manage multiple providers effectively.”
TURBULENT TIMES
The parcel shipping market is undergoing an evolution that is fundamentally changing the structural foundation of the business, observes Satish Jindel, principal at ShipMatrix, a consulting firm that provides parcel data and analytics.
“We are in the most turbulent time people have seen in the last 40 years,” he says. “The competition [that the major parcel carriers] are facing is unlike anything they have faced before. So they’re struggling to figure out who the competitors are, how [those competitors] will affect them, and how they need to respond.”
Among the competitive challenges: the surging growth of Amazon’s own parcel and small-package delivery business, and competition from big retailers like Walmart, Costco, Home Depot, and Target, which have launched their own last-mile delivery services, fulfilling e-commerce orders directly from retail stores for delivery to local customers.
Then there are crowdsourced last-mile delivery services like DoorDash and Roadie, which contract with drivers in their own vehicles to make local same-day deliveries for a wide range of businesses. And not to be forgotten are the regional parcel carriers like OnTrac (formerly LaserShip), which operate off lower cost bases and are expanding their coverage, as well as hyperlocal delivery firms that focus exclusively on an individual metro area.
All these developments come in response to the demands of consumers who continue to fuel modest growth in retail spending—a consistent share of that, roughly 16%, represented by e-commerce sales—and the reality that short-distance home delivery of just about anything is here to stay. And that growth opportunity is enticing more players to jump into the BtoC last-mile market.
TRADING DOWN
Shippers and third-party logistics service providers (3PLs) are employing a laundry list of strategies and tactics as they try to rein in rising parcel shipping costs. At the same time, they are reworking the menu of e-commerce shipping options they offer to consumers, who are increasingly forgoing next-day delivery in favor of slower, deferred service if it will save them money—and help the environment.
Micheal McDonagh is president of parcel services at 3PL AFS Logistics. He, for one, wonders how long the big parcel carriers can keep raising prices (and surcharges) before it becomes untenable and begins eroding their customer base.
“The biggest thing for me with UPS and FedEx is how do they expect to keep customers, with the increases [and surcharges] they are [imposing]?” he says. “Their price increases are forcing shippers to look at other alternatives. Plus, they are generally less flexible about when they will take your parcels. They are more rigid with their cutoff times, and [their deadlines] are typically earlier than what some regional carriers will offer.”
McDonagh estimates that with the large parcel carriers, parcel transport costs have increased 33% in the past five years.
Such rate jumps are increasingly difficult for shippers to absorb, McDonagh says, especially when shippers typically set their budgets at the start of the year, only to get hit “in the last quarter [by] a raft of surcharges and zone changes they didn’t plan for.”
That’s driving two trends among shippers and the 3PLs like AFS who manage freight and parcel transportation for their customers.
“We are telling our customers to look at the U.S. Postal Service as an option,” McDonagh says. While the Postal Service may not be as quick, “[it is] cheaper,” he notes, adding that shippers are making that tradeoff to save money. He believes that the USPS is the nation’s largest parcel carrier, handling an estimated 6.6 billion packages annually. By his accounting, UPS handles 4.6 billion and FedEx 3.9 billion.
The other trend is shippers “trading down” in service selection. “Shippers are reacting to the high cost of premium services and moving freight into the lower-cost … deferred ground services,” he notes. In addition, many retailers have curtailed the practice of offering free shipping for every e-commerce order, instead setting minimum order levels to qualify for free shipping or only offering free shipping for deferred two- or three-day service so the package can go via ground. For parcel carriers, this trend means that shipments moving via premium next-day service—which provide more revenue and higher margins—are being replaced with lower-revenue shipments.
Shippers are also reimagining their shipping practices—instead of shipping small lots every day, they’re consolidating shipments and dropping them with carriers once or twice a week. That tactic helps the shipper negotiate lower rates with the carriers, who are not making as many stops to pick up parcels.
“If you can mode-shift to slower services like the Postal Service or economy ground, you will save money,” says McDonagh.
He also cites opportunities for shippers to reduce costs by examining how they package and box orders. Parcel shipments often arrive in a box that’s larger than necessary and contains excessive amounts of filler material. “How much are you paying to ship air, and what’s the cost of that unused space?” McDonagh asks. Among other things, the need to eliminate wasted space has led to the growth of automated packaging systems that will scan the product as it comes down the line and then custom build a box to that product’s dimensions.
OFFERING CHOICES
Chris Kina, senior director and analyst, logistics, customer fulfillment, and network design for the consulting and advisory firm Gartner, has spent 30 years as a logistics practitioner, working for Gillette, Procter & Gamble, and KB Toys before joining Gartner three years ago. In his conversations with logistics executives, Kina has detected a shift in strategies in response to today’s market. “We are seeing clients begin to look more and more at segmentation of their last-mile provider networks ... by region, by state, by metro area,” he says. “The question they are asking is, ‘Who can meet my service expectations at the lowest cost?’”
It’s a trend driven by increasingly powerful, sophisticated, and capable technology platforms. These systems are designed to handle everything from order management and inventory visibility, to shipment and delivery route optimization, to shipment enroute visibility on the delivery side, to customer feedback. And virtually all communications between the shipper, delivery driver, and customer take place via smartphone.
“These advanced technologies [and the real-time nature of their functionality] are the key to making it all work in this new environment,” he says.
Bart De Muynck agrees with Kina’s observation, sharing one example of a new technology that’s rising to the challenge of a more complex and fragmented parcel market. De Muynck points to Shipium, a company launched by Amazon alum Jason Murray. According to De Muynck, Murray is building an Amazon-like platform for parcel optimization and carrier management—and is targeting as customers businesses that ship dozens to thousands of parcels a day from many locations.
“It’s parcel optimization that provides for the most efficient allocation of freight from many locations across multiple carriers,” by examining the requirements of a shipment, then looking at the broader carrier network to find the best combination of service and price, he says.
The platform also allows the shipper to model its parcel volumes against its carrier network to develop an optimized price/service tactical plan for shipping. “It is reducing [parcel shipping costs] by as much as 20%,” De Muynck adds.
Gartner’s Kina also emphasizes how parcel shippers and managed transportation providers are deploying various tactical and strategic developments that add flexibility and options as shippers figure out the best delivery models for their business.
Those include the use of small electric vans or bicycles for inner-city deliveries; locker systems at convenient retail sites, which serve as consolidated dropoff locations and customer pickup points, versus a truck making a residential stop; and cloud-based route optimization models and other tools, all of which “maximize the ability to select, manage, and deploy multiple forms of sources for delivery carriers,” Kina notes.
Where is the market headed? In Kina’s view, “five years from now, the U.S. market will have more of a European flavor …. [It will be] much more fragmented around regional and local carriers, crowdsourcing [services], and technology solutions that help make deliveries of BtoB and BtoC shipments more efficient.”
Another rising trend: Consumers, concerned about cost and sustainability, are seeking more choices, opting for deferred deliveries and consolidating their e-commerce purchases into a single large delivery on a designated day of the week—which Amazon is already doing.
“Assuming everyone wants their shipment the next day is not a viable business strategy for any shipper,” Kina says. “Consumers will typically accept delivery in three days as long as you … are consistent with it. If they want expedited, they will [specify] that and often pay for it.”
PLAYING THE LONG GAME
Many sources interviewed for this story shared their intentions to move away from putting all their parcels in one or two big carrier buckets, instead seeking to diversify their carrier base to improve service, gain flexibility, and better control rising costs.
Yet that’s not a strategy for everyone.
“We play the long game,” says John Janson, vice president of global logistics at SanMar, the nation’s largest provider of branded promotional apparel. “We set a carefully crafted strategy and stick with it. We don’t put out a bid and change it from one year to the next. We develop and nurture strategic relationships with our core carriers, and we lean on those,” he says.
SanMar, which ships almost exclusively to businesses, deploys a supply chain featuring 13 distribution centers across the U.S., which, during this year’s peak season, will ship over 100,000 packages nightly. UPS is SanMar’s principal parcel carrier.
For Janson, one philosophy he’s never wavered from is being a shipper of choice. “I believe there is still currency around being a desired shipper, making our freight as attractive as possible to the carrier,” he emphasizes. “It’s easy when times are bad, but it pays dividends [when capacity is tight]. It’s an investment in our carrier partners and [in] ensuring we get the quality of service our customers demand.”
He agrees with Jindel and others that in the parcel industry, “there is more dynamic change happening right now than at any time in recent history.” And the BtoC last-mile home delivery market—as opposed to the BtoB arena, where SanMar generally plays—is seeing the most significant change, he adds, noting that “there are some really interesting developments on the horizon.”
He points to how Walmart has teamed up with The Home Depot on its “GoLocal” delivery-as-a-service business, giving Home Depot customers (and others) another option for same-day or next-day last-mile delivery. And as more retailers take Walmart up on its offer, that will help build more density in that network, reducing per-package costs and providing more revenue opportunity for the network’s delivery drivers.
Then there is Amazon, which Janson notes is also offering third parties access to its logistics services and parcel delivery network.
Essentially, Amazon’s pitch is “Let us deliver all your packages,” not just those generated as an Amazon reseller, he says. And while the pitch may sound enticing, Janson offers a word of caution. “Do you want Amazon to have access to all your final-mile delivery customers? And if you are using Amazon as a reseller and a logistics provider, how deep [do you really want that relationship to go]? I think it’s a risk.”
More than half of home deliveries to U.S. online shoppers arrive either late, damaged, or at the wrong address, totaling 53% of orders with one of those issues, according to a study from e-commerce software vendor HubBox.
Specifically, almost one in three (27%) home delivery packages are currently delivered late, while almost one in six (15%) online orders are delivered to the wrong address. The results come from Atlanta-based HubBox, which works with networks and carriers to provide retailers with pickup access to over 400,000 locations worldwide.
Furthermore, the survey of more than 1,000 U.S. shoppers revealed consumers’ top five home delivery pain-points: 1. Orders delivered to the wrong house or block (37%), 2. Packages left with neighbors they don’t like or don’t speak to (30%), 3. Item arriving damaged (28%), 4. Delivery is late (27%), and 5. Having to wait at home for deliveries (25%).
According to HubBox, those frustrations have pushed nearly half (49%) of shoppers to consider out-of-home delivery collection points to overcome poor delivery service.
“Shoppers expect seamless experiences throughout their buying journey – and nowhere more so than in delivery and the last mile where shoppers’ anticipation of receiving their order is highest,” HubBox CEO Sam Jarvis said in a release. “Retailers that offer flexible and convenient delivery experiences, such as pickup points or BOPIS, (Buy Online Pick Up in Store) stand a better chance, and, if they can’t meet these expectations, they risk significant lost sales and future loyalty.”
In addition, more shoppers now expect compensation for late deliveries; over half (53%) expect money off their next order if a delivery is delayed, while 63% expect delivery charges to be waived and another 54% expect a free delivery code for their next order.
“Late deliveries don’t just erode hard-won customer loyalty. Increasingly, as retailers are having to compensate customers for delayed orders, they eat away at already slim margins – and this at a time when the cost of fulfilment is rising and some carriers are charging additional fees for home deliveries,” Jarvis said. “By diversifying fulfilment options, such as adding local pickup, retailers can ensure demand can be met across their network even during peak trading periods such as Black Friday and the Christmas holidays while ensuring consumer experience is maintained.”
The consulting and startup incubation firm Rainmakers has acquired the on-demand delivery and logistics technology company Shipsi from Auctane, which provides shipping and fulfillment solutions.
Shipsi says its technology gives retailers the power to offer same-day shipping by mobilizing last-mile networks to deliver goods. That allows small stores to compete with retail giants by providing two-hour delivery services, the firm says.
Through its acquisition, Shipsi now plans to augment that system by adding artificial intelligence (AI) to its platform. Specifically, by combining AI with dark warehousing strategies, the new management team aims to expand Shipsi's geographic reach and further reduce delivery times, even in areas outside major metropolitan centers.
"Final mile instant delivery is one of the most interesting and largely untapped areas in e-commerce and retail today,” Rye Akervik, the CEO of Shipsi, said in a release. “We've seen our partner retailers boost their sales by an average of 18% - a clear indicator that consumers are hungry for the kind of instant gratification that, until now, only a few retailers could provide. With Rainmakers' AI expertise, we're not just leveling the playing field; we're changing the game entirely."
Terms of the deal were not disclosed, but the partners said that Shipsi will remain integrated with products and services from Auctane, a global logistics giant that processes $200 billion worth of transactions across 3 billion shipments annually. This continued relationship ensures that Shipsi will have the scale and resources to rapidly deploy its enhanced AI-driven delivery solutions, they said.
As retailers seek to cut the climbing costs of handling product returns, many are discovering that U.S. consumers shrink their spending when confronted with tighter returns policies, according to a report from Blue Yonder.
That finding comes from Scottsdale, Arizona-based Blue Yonder’s “2024 Consumer Retail Returns Survey,” a third-party study which collected responses from 1,000+ U.S. consumers in July.
The results show that 91% of those surveyed acknowledge that a lenient returns policy influences their buying decisions. Among them, Gen Z and Millennial purchasing decisions were most impacted, with 3 in 4 consumers stating that tighter returns policies deterred them from making purchases.
Of consumers who are aware of stricter returns policies, 69% state that tighter returns policies are deterring them from making purchases, which is up significantly from 59% in 2023. When asked about the tighter returns policies, 51% of survey respondents felt restrictions on returns are either inconvenient or unfair, versus just 37% saying they were fair and understandable.
“We're seeing that tighter returns policies are starting to deter consumers from making purchases, particularly among the Gen Z and Millennial generations," Tim Robinson, corporate vice president, Returns, Blue Yonder, said in a release. "Retailers have long acknowledged that they needed to tackle returns to reduce costs – the challenge now is to strike a balance between protecting their margins and maintaining a customer-friendly returns experience."
Retails have been rolling out the tighter policies because the returns process is so costly. In fact, many stores are now telling consumers to keep unwanted items to avoid the expensive and labor-intensive processes associated with shipping, sorting, and handling the goods. Almost three out of four consumers surveyed (72%) have been given this direction by a retailer.
Still, consumers say they need the opportunity to return their purchases. Consistent with last year’s survey, 75% of respondents cite the most common reason for returns is incorrect sizing. Other reasons cited by respondents include item damage at 68%, followed by changing one's mind or disliking the item (49%), and receiving the wrong product (47%).
One way retailers can meet that persistent demand is by deploying third-party returns services—such as a drop-off location or mailing service—the Blue Yonder survey showed. When asked what factors would make them use a third-party returns service, 62% of consumers said lower or no shipping fees, 60% cited the convenience of drop-off locations, 47% said faster refund processing, 39% cited assurance of hassle-free returns, and 38% said reliable tracking and confirmation of returned items.
“Where the goal is to mitigate the cost of returns, retailers should be looking for ways to do more than tightening their policies to reduce returns rates,” said Robinson. “Gathering data and automating intelligent decision-making for every return will bring costs down through more efficient transportation and reduced waste without impacting the customer experience. That data is also incredibly valuable to reduce returns rates, helping retailers to see the patterns of which items are returned, by which customer segments, and why; and to act accordingly.”