Shippers face backlash over delayed gift deliveries

12/28/2013

NEWYORK — The failure of United Parcel Service and FedEx to deliver packages in time for Christmas has exposed the perils of retailers promising to get last-minute gifts to customers.

Chains from Kohl’s Corp., to Amazon.com, to 1-800-Flowers.com offered gift cards and refunds after shoppers took to social media to vent their frustrations at missed shipments. On its Web site, UPS said the volume of last-minute air packages exceeded its capacity to process them.

Merchants battling for market share during a ho-hum holiday season have been trying to outdo one another with deep discounts and promises that shoppers can wait as long as they want to order gifts online. While analysts say the shipping snafu is unlikely to make Americans abandon online shopping, they say parcel-delivery companies will have to boost capacity and retailers may need to seek alternatives to prevent a recurrence.

“You had a perfect storm of events from the consumer side, the retailer side, and the shipping side,” said Craig Johnson, president of Customer Growth Partners LLC in New Canaan, Conn. “Normally those kinds of schedules are all kind of prepared or coordinated with the carriers.”

On Dec. 21, Barnesville, Minn., resident Bernadette Odden ordered videos for one of her daughters from Amazon, which promised to deliver them on Christmas Eve. They never arrived. Ms. Odden, 35, called Amazon and received a $20 credit.

“I don’t think Amazon should take the fall for UPS’ screwups,” she said in a telephone interview. “From now on, I will possibly check which courier is being used.”

UPS is conducting an analysis of what caused the delayed air shipments, said Peggy Gardner, a company spokesman.

“We’re looking at all aspects this year and talking with our shippers as part of the process following every peak season,” she said. Ms. Gardner declined to discuss the number of shipments that missed the scheduled delivery day.

In an email, FedEx said it had shipped 99 percent of its ground deliveries on time and didn’t specify a percentage for its air shipments.

UPS’ status as the world’s largest package-delivery company wasn’t enough to absorb rapidly changing consumer behavior. Americans are waiting longer and longer to pull the trigger on purchases, said Marshal Cohen, chief retail analyst at NPD Group, a Port Washington, N.Y., research firm.

“We have watched retailers groom the consumer to wait,” he said. “It’s like rewarding bad behavior. You’re saying to the consumer, ‘the longer you wait, the better the deal, don’t be fooled.’ ”

Merchants — even Amazon, which has spent billions on fulfillment centers — rely on parcel-delivery companies.

“Amazon’s mistake is they are a victim of their own success,” said Michael Pachter, an analyst at Wedbush Securities Inc. “They have given us such amazing service for so long that we rely on it and wait to make our orders. Amazon should probably tell people that they have second-day service but they don’t trust the third-party vendors.”

1-800-Flowers.com reached out to customers as soon as it learned shipments were going to miss the delivery deadline.

Amazon also offered customers $20 gift cards and refunds on purchases that UPS didn’t ship on time.

Kohl’s will fully cover the cost of all items not delivered on time, said spokesman Jen Johnson.