The Q4 crunch is on.
As the holiday shopping season revs into top gear, promotional product suppliers and distributors are contending with – and adapting to – shipping and delivery challenges sparked by unprecedented demand on carriers and the realities of the COVID-19 pandemic.
COVID-19 has spurred a substantial increase in online shopping in 2020, and that’s expected to ramp up even more during the Thanksgiving-to-Christmas period. Adobe Analytics predicts that 2020 U.S. online holiday sales will reach $189 billion – a jump of 33% over last year.
The huge increase in e-commerce is already straining shippers/parcel deliverers – and more stress is believed to be on the way.
ShipMatrix, which analyzes shipping package data, predicts that about 7 million packages a day could face delays between Thanksgiving and Christmas. It’s a result of shipping capacity being predicted to be at 79.1 million parcels per day but with demand for 86.3 million packages daily. In 2019, total capacity was 65.3 million packages each day with a demand of 67.9 million packages daily.
Promo is contributing to the shipping pressure. With events canceled and other traditional single distribution points for promo infeasible because of COVID-19, the ad specialty industry has pivoted to kitted/drop-shipment solutions that see packages of branded merchandise being sent to each individual recipient. It’s a practice that’s on the rise even more during the holiday gifting season.
‘There Just Isn’t Room’
The upshot is that promo firms are dealing with and expecting more elongated delivery times and delays.
“UPS and FedEx have both forecasted challenges going into December due to the influx of web-based purchases,” said David Miller, president of Hicksville, NY-based Top 40 supplier Chocolate Inn/Lanco (asi/44900). “We continue to see challenges with different carriers. The carriers are having issues with pickups and deliveries due to COVID, including not having enough drivers.”
– 86.3 Million –The number of packages that market demand will call for delivering on a daily basis this holiday season in the U.S. (ShipMatrix)
Louis Massaro tells a similar story.
“It’s going to be a very tough shipping season,” said Massaro, president of Texas-based supplier PMGOA (asi/79982). “Everyone needs to prepare for delays. Distributors and suppliers will be pressed to meet in-hands dates this season because there’s just not enough capacity.”
PMGOA has already experienced issues.
On Friday, Nov. 20, UPS missed a pickup for PMGOA. The supplier contacted UPS about the miss and received a reply from a representative that stated the volume would be picked up Monday, Nov. 23, but with a note that continued:
“My network is on complete lockdown; we won’t be able to accommodate you until after peak. We have equipment issues related to trailer capacity and, as of this weekend, we are already near our capacity stretch limit and we’ve still got to get through this week and next. I’m being asked to reach out and put daily caps on several of my accounts already, which I do not expect to go well. There just isn’t room.”
Import Issues and Staffing Shortfalls
For some suppliers, challenges related to product transport go beyond just getting items from stateside warehouses to end-clients. There are also issues with landing product in North America.
“We are still seeing delays impacting our inbound shipments from Asia,” said David Nicholson, president of New Kensington, PA-based Top 40 supplier Polyconcept North America (PCNA, asi/78897). “There are several factors contributing to the delays – limited availability of containers, shortage of trucks for container delivery, and port unloading capacity, to name a few.”
Despite the hurdle, Nicholson noted that PCNA has replenished inventory on best-selling items and has a wide selection of retail brands and holiday gift items ready to ship, with regular service levels and lead-times generally available, save for a few exceptions.
Staffing challenges are another problem delaying fulfillment, according to industry sources. The issues center on the fact that some suppliers have not filled positions cut during the COVID-caused sales plummet of earlier this year, leaving them shorthanded as demand surges beyond expectation this fourth quarter. Another issue is that, sometimes, contact tracing protocols related to the coronavirus pandemic are resulting in workers being off the job for stretches, sources said.
“I put in a decorated-apparel order with a supplier at the end of October, and they were so overwhelmed they took a week just to respond,” said John Resnick, partner at Boston, MA-based distributor Proforma Printing & Promotion (asi/300094). “When they did, they said they thought they could ship by Dec. 18. That was way too late. I told them to send me blanks and I’ll have it decorated locally, but even with that they said they couldn’t ship until this Friday (Nov. 27). We’re dealing with these types of issues.”
Plan Ahead, Get Creative and Communicate
Of course, promo isn’t helpless amid the shipping crush. While time is already starting to wear thin, distributors can still be proactive, coordinating with end-clients to get holiday season orders in as soon as possible to account for potential delays.
“Fortunately, we have not yet seen any major issues with FedEx and UPS in terms of handling our outbound deliveries, though I suspect this will become more of a challenge as we get into December,” said Nicholson. “My advice to distributors is to plan ahead and allow for more time when placing orders this season.”
“We’re on track for a record November. It seems as if budgets might be coming back or weren’t as impacted as many thought they would be.” – Tony Poston, College Hill Custom Threads
Getting creative with how holiday-time promo initiatives are handled can also help alleviate some of the pressure. Resnick counts a significantly sized craft brewery among his top clients. Typically, the brewer does a Black Friday sale on its branded merchandise. Rather than have a big rush that day followed by a shipping glut/backlog, this year Resnick advised his client to space the campaign out. They started the Black Friday-themed sale a full week before Black Friday itself. It’s led to a rise in merch sales that has outdone last year’s campaign. Plus, the order influx has come at a more manageable, even pace that’s lessening the burden on Resnick’s team and spacing out shipping.
“We got ahead of the game, which has helped on the shipping end and with sales and given us less headaches,” Resnick said.
While certain promo pros fear challenges with delivery could derail some sales this holiday season, that hasn’t generally been happening yet, according to industry executives. In fact, for some, Q4 sales are so far surpassing expectations as clients burn off year-end budget and aim to thank employees and their clients with gifts at the conclusion of what’s been an obviously difficult 2020.
PCNA, for example, has experienced a better-than-forecast uptick in business in recent weeks. Pullman, WA-based distributor College Hill Custom Threads (asi/164578) is beating its expectations, too.
“Over the past eight months, we’ve been able to shift our strategic focus to our corporate clients and to our online stores and kitting, and it has really paid off,” said College Hill President Tony Poston. “We’re on track for a record November. I feel like the holidays are something everyone is looking forward to even more in 2020. It seems as if budgets might be coming back or weren’t as impacted as many thought they would be, so our customers have been prepared. It gives us a good amount of time to get orders written up and our suppliers time to fulfill.”
To keep accelerating business amid the unique challenges posed by this COVID-affected holiday stretch, communication between suppliers and distributors will be paramount.
“There will be some impact to expected shipping delivery dates. However, we continuously share communication from the carriers with our customers so that we can manage expectations,” said Rob Watson, chief experience officer at Avenel, NJ-based Top 40 supplier Vantage Apparel (asi/93390). “Based on this, we feel confident of our holiday shipping deadlines.