5 ways that this year’s ‘Cyber Monday’ shook up logistics

It’s been a full week since ‘Cyber Monday’ came around on the calendar, once again netting record-breaking online sales. E-commerce retailers slashed prices and more shoppers than ever avoided the usual bedlam of brick-and-mortar stores, opting instead to shop online. But on the logistics side of the coin, last week was frenetic, with warehousing and delivery companies going into overdrive, kicking off the first inning of what could be the busiest holiday season yet. With the perspective of a few extra days, the events of what some are calling ‘Cyber Week’ underscore the extent to which e-commerce has become a central part of the U.S. economy, and how the logistics sector is adapting. So what have we learned? Here are a couple of developments that stand out for the logistics-oriented observer: Logistics companies pulled it off! We’re still on the first lap here, but according to Adobe, which tracks data through its analytics services, e-commerce sales were up 16.8 percent compared to last year, and this Cyber Monday was likely the largest online shopping day in U.S. history. You hear that sound? That’s the sound of jets, trucks and robots working full tilt to deliver packages – not the sound of unhappy customers complaining on the internet. But those happy shoppers are the product of some serious planning. FedEx, for example, expects to handle between 380 million and 400 million packages this holiday season, and they say they’ve got the seasonal manpower ready to take on the additional volumes. U.S. Retailers brought in nearly US$6.6 billion on Cyber Monday alone, according to Adobe’s estimates. But what makes this year different is that sales extended out in both directions, meaning that the weeks before and after also racked up record numbers. If consumers weren’t waiting in the cold for stores to open, retailers figured, they would be just as happy shopping for deals on their own terms, and timelines. They were right. Adobe found that digital sales between November 23-26, Thanksgiving week in the United States, hit a record high, bringing in $13 billion in digital sales, up 14.4 percent year-over-year (y-o-y). There’s a logistics component to that trend, as well. If retailers are staggering their sales, that eliminates the sorts of surges that ended up causing the bedlam of 2013’s holiday season, when the major integrators weren’t able to get packages to consumers, because volume exceeded capacity. Amazon was – unsurprisingly – the biggest winner. On Monday, Amazon said it sold "millions" of Alexa-enabled devices, leveraging its growing number of Prime subscribers to rack up more sales than ever. Amazon is on track to capture up to 50 percent of total e-commerce holiday sales this year and its name has become synonymous with e-commerce in the U.S. – and a lot of other countries. However, the Seattle-based retailer’s grip on the market didn’t stop other retailers from moving into its territory. A report by Market Track price study, conducted for Reuters , found that prices at Walmart's website are now, on average, 0.3 percent more expensive than Amazon, a serious decline from last year, when their prices were 3 higher than Amazon's. What’s more, deals are about as deep as they can go, as evidenced by roughly flat promo percentages, according to FRB & Co. retail analysts led by Susan Anderson. Nobody wants to pay for shipping anymore, and that’s going to put a lot of pressure on warehousing and delivery companies to cut costs. Since Amazon.com is already pushing its human workforce to their limits , robots are going to pick up that slack on the warehousing side. Salesforce found that 85 percent of orders they tracked over the day offered free shipping. In fact, free deliveries are so commonplace now that the majority of retailers are offering it without minimum orders. But that’s only half of the story. It’s not safe to call Cyber Monday a success until the returns have been processed. E-commerce customers are increasingly treating online shopping as a cyber changing room, and no-questions-asked returns are increasingly common. For retailers like Amazon.com and Walmart.com, which have extensive reverse logistics infrastructure in place, that’s no problem – in fact, it’s a major selling point. Customer are much more willing to buy if the risks are lower. However, for smaller retailers, especially those just making the leap into cyber sales, its more complicated. While they can outsource their reverse logistics with companies like UPS’ recent acquisition, Optoro, reverse logistics tie up a significant amount of their inventory in “sales” that will never add to their bottom line. For mom-and-pops, those numbers matter, and so the next hurdle for the industry will be reducing costs on the returns side, and making it a welcoming space for smaller companies.

5 ways that this year’s ‘Cyber Monday’ shook up logistics

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