Nov 28, 2014
Reading time
2 minutes
Download the article
Click here to print
Text size
aA+ aA-

Online shopping spree could create delivery problems

Nov 28, 2014

Britons are being warned to place online holiday-season gift orders much earlier this year to avoid disappointment, as doubts emerge about the ability of delivery companies to handle an expected surge in volume.

UK online sales this holiday season are expected to jump 18 percent, according to the Centre for Retail Research (CRR), as more shoppers use mobile apps to order clothing, books and gadgets.

Delivery firms say they are boosting capacity and coming up with new ways to handle a last-minute rush, but the high cost of temporary labour and vehicles also makes them cautious about over-investing.

"I think there will be an acute problem this year," said Joshua Bamfield, the CRR's director.

Holiday demand aside, the government estimates the trucking industry is short of 60,000 drivers, in part due to new certification rules.

Justin Zatouroff, head of logistics at KPMG, says firms may be forced to turn away business if e-retailers exceed volume forecasts.

Signs of strain are already emerging.

UK Mail Group Plc, whose customers use eBay Inc and Amazon.co.uk, is not accepting deliveries for Dec. 25 and Dec. 26. Collections made on Christmas Eve will be delivered only by Dec. 29.

Meanwhile, parcel companies are coming up with new ways they hope will help them get over the hump.

United Parcel Service Inc and Yodel, for example, are allowing customers to pick up parcels at places such as petrol stations, newsagents and convenience stores - a method called "click-and-collect" - thereby saving on the cost of delivering to single addresses.

Click-and-collect could make up 25 percent to 40 percent of online non-food sales this Christmas, said Alex Smith-Bingham of consulting firm Capgemini.

Such sales - popular with shoppers, who need not stay home to accept delivery - will be worth about 3 billion pounds ($4.7 billion) this year, up from 2.1 billion pounds last year, according to eBay.

UK Mail and DPD, part of France's La Poste, have come up with another solution - one-hour slotted delivery.

E-retailers too are coming up with new contingency plans.

Items bought from 65,000 eBay sellers can be collected from Argos stores, while Amazon has signed up for newspaper wholesaler Connect Group Plc's same-day parcel delivery service.

Despite all the planning, driver and distribution staff shortages mean any sudden volume spike could create problems.

"There are signs in the market that emergency/unplanned cover is becoming subject to shortages," said Simon Harper, operations director at TNT UK, a unit of TNT Express NV.

An indication of demand will emerge over the next few days.

Visa Europe expects Britons to spend 518 million pounds online using Visa cards on Friday, making it the biggest day ever for e-commerce in the UK. The credit card company said it expects a further 500 million pounds to be spent on Monday.

$1 = 0.6370 pounds

© Thomson Reuters 2023 All rights reserved.