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Like a tired but diligent old battle horse, the US consumer shook off worries about debt levels and opened the wallet for the peak shopping frenzy of the year.
Industry groups, operators and observers had predicted a subdued Cyber Week, with projections of a 5.4% rise over 2022 sales volume. Instead, the five-day shopping marathon, from Thanksgiving t0 Cyber Monday, yielded over $38bn in sales, up 7.8%.
Online shopping provided most of the momentum. On Black Friday, US shoppers spent $9.8bn, 7.5% more than a year ago, as online sales rose 8.5%, while in-store buying increased 1.1%.
And despite the unexpected surge – largely attributed to deep discounts (up to 31% on electronics and 27% on toys) – no bottlenecks in fulfilment activity have been reported. Tepid demand before the event kept the brakes on rate increases and caused parcel carriers to recruit significantly fewer seasonal workers than last year.
It is unclear how the shopping momentum will unfold in the weeks ahead. Some observers have expressed optimism that shoppers are still looking for bargains, but the National Retail Federation (NRF) seems less sanguine. It has stuck to its earlier projections of a 3-4% increase in retail volume for November and December, which suggests the momentum may wane.
In that case, any congestion in the fulfilment pipeline should be short-lived, giving the carriers room to focus on the inevitable second part of the peak season: returns. Estimates from retailers are for 20% to 30% of items returned. For UPS, returns have grown 25% since 2020. However, last year the rate of online purchases that were returned dropped to 17% from 21% in 2021, the NRF reported.
The big players have beefed up their returns capabilities. In mid-November, Amazon integrated returns management platform ReturnGo with its Multi-Channel Fulfilment (MCF) service, which could speed up the processing of returns of purchases, as MCF does not have an automated returns module. MCF provides sellers with fulfilment services for orders placed outside of Amazon’s marketplace. By automating and simplifying the returns process through ReturnGo, the e-commerce giant has strengthened its reach to third-party sellers.
UPS took a big step forward in the returns segment in October, with the acquisition of Happy Returns from PayPal, with the intention of offering a consolidated returns service to large retailers, such as Happy Returns customers Levi and Land’s End.
The takeover also turned the network of UPS stores into drop-off points for Happy Returns, alongside established points, but it was set to cut out the FedEx Office stores, which had been a major component of HR’s drop-off points. At the time of the acquisition, UPS commented that it was expecting the Happy Returns-FedEx relationship to “wind down quickly”.
FedEx has broadened the reach of its consolidated returns service, which catered only for large shippers, with thousands of parcels coming back. The threshold was lowered to shippers with “just a couple of hundred returns”, according to FedEx.
Meanwhile, some players are pushing into the ‘first mile’ of returns. In October, Uber rolled out a return parcel collection service in nearly 5,000 US cities through its Uber Connect same-day delivery arm. For a fee of $5, or $3 for members of its Uber One programme, its drivers collect up to five prepaid and sealed packages at a time and drop them off at a local post office, UPS or FedEx location.