FedEx Corp. (FDX) expects December 2 to be its peak shipping day this holiday season. Most analysts believe this means e-commerce will rob bricks-and-mortar companies of sales. The activity of the last-minute mall shopper could drop, if the figures are any indication. By the same token, Amazon.com Inc. (NASDAQ AMZN) may continue its amazing streak of sharply increased revenue again this year. However, the other way to interpret the information is that the e-commerce businesses of all retailers will be lifted to record levels. That is what traditional retailers have hoped for since Amazon became a force in the market. The question is whether these traditional retailers will be aggressive enough with what they charge for the shipping of products bought online.
The big shipper released its forecast for holiday activity:
FedEx Corp. expects to see its busiest day in company history when it moves more than 22 million shipments around the world on Cyber Monday, December 2, 2013. The 11 percent year-over-year increase will be driven by online retailers feeding the FedEx Ground and FedEx SmartPost networks.
During the busiest week of the year, December 1 – 7, FedEx expects more than 85 million shipments to move through its global networks. This is a 13 percent increase compared to last year’s busiest week. In addition to e-commerce, retail inventory such as personal consumer electronics, apparel and luxury goods will drive this increase in FedEx holiday volumes.
The largest traditional retailers have tried to move into Amazon's Cyber Monday territory for years. Wal-Mart Stores Inc. (WMT) has a program that is a hybrid between e-commerce and regular store activity. Customers who order online and pick up what they ordered at a Walmart location will get free shipping. But any plan that requires the consumer to get into a car has, at best, modest appeal compared to one that delivers orders to the home. Walmart also offers free shipping service to people who are willing to wait six to nine days for their orders, if those orders add up to more than $50. However, that eliminates any chance that the world's largest retailer will get online business the week before Christmas.
Every large retailer has followed Walmart's lead. Most have programs that are no better, and some are worse. Dying J.C. Penney Co. Inc. (JCP) offers free shipping to its stores for a $25 order and to homes for $99. And the shipments do not arrive for four to seven days. J.C. Penney will continue to bleed customers if it is not more aggressive than that.
The chance for brick-and-mortar retailers to grab business from Amazon this year depends as much on the price that these companies charge to get merchandise to customers as on the merchandise these retailers stock. What each traditional company has made clear is that "free shipping" really is not free. That gives them virtually no edge over Amazon at all.
- Professional Services
- FedEx Ground