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Surge in Online Sales Puts Pressure on Retailers, Shipping Services

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Surge in Online Sales Puts Pressure on Retailers, Shipping Services

Online sales for the 2020 holiday season started strong on Black Friday, coming in at a record-breaking $9 billion.

That spending represents a 22% increase over a record $7.4 billion spent online in 2019. Traffic to physical stores fell by 52% on Black Friday, according to Sensormatic Solutions. A few days later, Cyber Monday sales hit $10.8 billion.

Online shopping has continued to be a popular alternative to shopping in stores amid COVID-19. On Super Saturday, or the Saturday before Christmas, foot traffic to physical stores fell 39.1% and was down nearly 40% for the entire weekend, compared to the same weekend last year.

“Super Saturday weekend was perceived to be the beginning of a return to brick-and-mortar due to concerns over online shipping cutoffs,” said Brian Field, senior director of Sensormatic’s global retail consulting practice, in a Dec. 22 report by The Wall Street Journal.

“However, many consumers elected to stay home.”

RETAILERS’ RESPONSE

Retailers have rolled out services that are intended to make last-minute shopping easier, such as curbside or contactless pickup for shoppers who don’t want to enter stores. For example, Macy’s lowered the price of its DoorDash same-day delivery service to $5 from $10 for Dec. 15 through Dec. 23 and is offering contactless curbside pickup through Christmas Eve.

So many consumers are shopping from home that delivery services like the U.S. Postal Service are struggling to keep pace with Christmas deliveries. For parcels expected to arrive between Dec. 13 and Dec. 17, on-time scores were 92.1% at FedEx, 94.9% at UPS and 86.1% at the Postal Service, according to ShipMatrix. However, all scores have declined in the last two weeks.

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POSTAL SERVICE PUSHED TO THE LIMIT

ShipMatrix estimated that about six million extra packages per day were being added to the Postal Service because of restrictions imposed by large, private carriers. Truckers are waiting for up to 48 hours outside of some Postal Service facilities to drop off packages, according to employees on a conference call.

Although the surge in online shopping has been especially taxing to the Postal Service, it has been a lifeline for small businesses. Shares in Etsy and Shopify have surged during the pandemic, surging more than quadruple and triple respectively. Both platforms host small businesses that have been able to leverage the technology as they shift to an online focus.

Unsurprisingly, masks have accounted for a decent chunk of sales throughout the pandemic; Etsy reported that masks made up 11% of overall gross-merchandise sales in the third quarter.

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