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Shipping Wars: Retailers to Push Order Deadlines Later

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UPS Posts Positive Quarterly Earnings, And Forecasts A Strong Holiday Season
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By Krystina Gustafson | @KrystinaGustafs

The 2013 holiday shopping season was largely defined by its price wars. And while those are sure to continue this year, another type of battle is already starting to take shape: Shipping wars.

Despite a slew of late deliveries last holiday -- the result of last-minute delivery promises and a series of snowstorms -- retailers are looking to get a leg up on the competition by pushing Christmas deadlines for online orders even later in the season.

According to a new study by the Kurt Salmon consulting firm, which surveyed more than 100 retailers with revenue greater than $750 million, 26 percent will guarantee Christmas delivery for orders placed one to three days ahead of time. That's up from 17 percent in 2013. What's more, nearly 50 percent will guarantee on-time delivery for Christmas orders placed by Dec. 20. That's also up, from 37 percent last year.

Overall, these changes mean retailers plan to push back the final order date for guaranteed Christmas arrival from an average of 6.9 days to 5.5 days.

"Retailers are making ambitious promises in order to capture last-minute online sales," said Steve Osburn, retail strategist at Kurt Salmon. "But if you compare average delivery times with last-minute promises, there is a gap that retailers will need to account for."

The findings come as carriers FedEx (FDX) and UPS (UPS) are warning retailers against the 11th-hour delivery promises that lead to shipping delays. Experts remain torn as to whether retailers will listen. While some argue they will heed the warning to protect their brand and build trust with shoppers, others say they'll be unable to resist the temptation as the competition intensifies.

Earlier this season, a Shop.org study of 55 online retailers found that nearly 80 percent of respondents were planning earlier deadlines.

Jarrett Streebin, founder and CEO of EasyPost logistics company, remains skeptical. "I think [the carriers are] really sort of whistling in the dark," he said.

Last year, retailers said about 15 percent of orders arrived late. They're aiming to trim this to 8 percent in 2014.

Companies are also competing over free shipping offers, which Target (TGT) kicked off last month by offering free shipping on all online orders through Dec. 20. According to Kurt Salmon's study, 76 percent of retailers are already offering some form of free shipping, compared with 35 percent last year.

Forrester Research (FORR) predicts online sales will hit a record $89 billion during the final two months of the year, meaning carriers will be met with even more volume. Both FedEx and UPS are boosting their holiday hiring to accommodate the expected increase.

 

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