Retail

The Ample Evidence Behind a Christmas Shipping Surge


The FedEx hub at Los Angeles International Airport on Dec. 2

Photograph by Jae C. Hong/AP Photo

The FedEx hub at Los Angeles International Airport on Dec. 2

The wave of e-commerce that swamped FedEx (FDX) and United Parcel Service (UPS) just before Christmas day may have been unprecedented, but it should not have come as a huge surprise.

U.S. consumers offered plenty of hints in recent weeks that they were keen to shop from their couches. Store traffic and spending on and around the Thanksgiving holiday was dismal by many measures. But online shopping on “Cyber Monday” surged 21 percent over 2012 levels, according to IBM (IBM).
 
On a mass scale, that trend should have been evident to any economist or supply-chain consultant willing to zoom out from anecdotal reports and semi-scientific surveys. Here’s a 30,000-foot look that shows store traffic has been on a pretty steady decline over the last seven months. In that time, U.S. consumers on the whole spent more money than they did in 2012.

Looking at this on a more granular level, delivery services likely received warnings about the volume of sales from retail partners. Amazon.com (AMZN), for instance, said on Thursday that it saw a spike in new customers of Amazon Prime, an annual membership that offers unlimited free, two-day shipping on many items. More than 1 million new people signed up for the service in the third week of December, according to Amazon.com.

Demand was so high, Amazon said, that the company had to put a temporary hold on Prime registrations to ensure that services for incumbent members weren’t adversely affected by the throng of newcomers. Arguably, the giant Web store might have considered hitting the pause button a little more often. Today, Amazon is rushing out $20 gift cards to shoppers who didn’t receive their gifts as early as promised.

FedEx, too, felt the shipping storm approaching. According to a conference call with analysts last week, the express delivery service set records for the total number of packages handled in one day on three dates before Christmas week: Dec. 2, Dec. 9, and Dec. 16.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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Companies Mentioned

  • FDX
    (FedEx Corp)
    • $174.38 USD
    • 6.60
    • 3.78%
  • UPS
    (United Parcel Service Inc)
    • $110.93 USD
    • 2.38
    • 2.15%
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