Sent Items #109: Monday, December 14, 2020

With 3 Billion Packages to Go, Online Shopping Faces Tough Holiday Test - New York Times

• This holiday season, online shopping will strain the industry as never before: An estimated three billion packages will course through the nation’s shipping infrastructure — about 800 million more than delivered last year. By one accounting, 7.2 million more packages need to be shipped each day this holiday season than the system has the capacity to handle.

• Many brands, both large and small, have yanked forward order deadlines for customers who want to receive items by Christmas and posted reminders on their websites to order early.

• Typically, shipping volumes during the holidays are 30 to 40 percent higher than at other times of the year. But those levels were being reached this year long before people started buying Christmas gifts.

• FedEx said it was hiring 70,000 seasonal employees, and UPS said it would hire 100,000. That expansion pales next to the preparation at Amazon, which said it was building 100 new fulfillment warehouses, sorting centers and delivery facilities across North America. The company has hired 275,000 full-time and part-time workers since the start of the year and 100,000 seasonal workers to handle the increased volume.

• One retailer that sells apparel and accessories has already been grappling with UPS’s capacity restrictions and surcharges, which can add several dollars to a package and increase its overall cost by 25 to 40%. The parcel limits were based on holiday volumes from last year, even though many more people are shopping online this year. Once a day’s quota is reached, remaining parcels must be pushed to the next day.

The Mass Distribution of Covid-19 Vaccines Is Under Way. ‘Everything Has to Come Together.’ - WSJ

• Trucks filled with COVID-19 vaccine vials pulled out of Pfizer's Kalamazoo, Mich., production plant on Sunday morning, part of one of the largest mass mobilizations since the country's factories were repurposed to help fight World War II.

• The effort to vaccinate the nation relies on chemists, factory workers, truck drivers, pilots, data scientists, bureaucrats, pharmacists and health-care workers. It requires ultracold freezers, dry ice, needles, masks and swabs converging simultaneously at thousands of locations across the country.

• To work, every one of the many and complicated links of the chain has to hold… "Everything has to come together – the packaging, the dry ice, the vials, the material itself. It all has to come together to the same place and have enough of it and exactly the right people there ready to take it," said Yossi Sheffi, director of the MIT Center for Transportation & Logistics. "Right now, there's no conductor to the symphony," just many parts that each need to work.

FedEx, UPS to 'split country into two' for COVID-19 vaccine distribution, UPS exec says - Memphis Commercial Appeal

• Shipping giants FedEx and UPS will divide and conquer, and sometimes work together, to distribute COVID-19 vaccine doses throughout the country. FedEx and UPS have split the country into two, knowing exactly what states each have.

• UPS declined to comment on how vaccine shipments will be divided. FedEx said in a statement that vaccine distribution "will be balanced among major cargo carriers and we are one of two primary vaccine shippers in the U.S.”

• FedEx Express has reserved capacity for COVID-19 vaccine shipments and is working with the Federal Aviation Administration to give flights with doses top priority, said Richard Smith, FedEx Express Regional President of the Americas. He added that FedEx and UPS are teaming up to get vaccine doses and related supplies shipped to administration sites.

• Both executives were confident in the companies' massive shipping networks. Smith said FedEx will be able to deliver vaccines to locations throughout the U.S. “absolutely, positively overnight” through FedEx Express, with capacity reserved for the Operation Warp Speed distribution mission.

• “Once the vaccines are approved and ready for distribution, vaccine and related healthcare shipments will be the top priority for the FedEx Express network, with support provided by our FedEx Logistics and Custom Critical teams,” he said.

The Broken Amazon Fulfillment Elasticity - Marketplace Pulse

• This year, Fulfillment by Amazon (FBA) changed from a service sellers can rely on to a service they hope Amazon will allow them to use. An opaque algorithm now decides which products at what quantities are allowed to be in FBA.

• FBA is an on-demand fulfillment service that allows sellers to offload warehousing, shipping, and handling returns to Amazon. Its physical footprint is virtually infinite - it behaves like a cloud computing service scaling with the user’s demands for a fee. The more sellers sell on Amazon, the more items they send to FBA while continuing to pay the same per-unit fee.

• The elasticity of FBA broke first in March when the company started prioritizing the stocking of household staples and medical supplies. To do so, it disabled inbound shipments to FBA for products that do not fall into the essentials or high-demand categories. A few months later, all items were allowed to be shipped to FBA again, but some shipments took weeks to get received. Then, in July, the company imposed quantity restrictions for new products and limited others based on recent sales history. By the end of November, to relieve some pressure from the FBA network, the company started diverting some sales volume to sellers fulfilling orders themselves.

• FBA changed from a virtually infinite fulfillment network that allowed anyone to send in as much inventory as they wanted to one where it is up to an algorithm to decide how many units a seller is permitted. And even then, it might take weeks to get those units received and ready for sale. It became a service that enforces a ceiling on the seller’s sales, rather than allowing the seller the risk of overstocking in exchange for a storage fee.

• Amazon is betting that it has enough sellers that no individual seller running out of stock will materially affect its sales. However, it has been months since FBA operated normally, and many more sellers have made strategic decisions to use 3PLs for more of their sales or invest in building a warehouse than in the years prior.

The Future of Commerce 2021 - Shopify

• There’s a shift happening in the world of commerce. Discover the most important trends impacting the industry in 2021 and beyond, according to Shopify.

• 2020 has accelerated the industry by a decade, permanently altering the way entrepreneurs start, run, and grow businesses, as well as how consumers choose to shop and pay. We’re on the brink of a new era of commerce.

• Commerce is more than a transaction; it’s an interaction. It’s a relationship between a business and its customers. That’s why we pored over data from more than one million merchants on Shopify and collected survey insights from consumers all over the world to get the full picture of what’s coming.

• Shopify has unlocked five key predictions based on the trends we’re seeing from our data. Spoiler alert: be prepared for independent retailers and the next generation of consumers to change commerce as we know it forever.

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