Jason & Scot Show Episode 238 Holiday Shipageddon

A weekly podcast with the latest e-commerce news and events. Episode 238 is a discussion of holiday retail challenges with Scott Silverman and Ken Cassar.

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This holiday season will be a mixed bag for retailers. Health concerns are likely to drive many more consumers online, but can retailers and shippers, who are already experiencing Cyber-Monday levels of e-commerce handle the increased volume?

Scott Silverman (@scottsilverman) of CommerceNext and Ken Cassar (@kcassar) of CassarCo join us to discuss the holiday season, including a CommerceNext survey of 1,000+ consumers, and 60+ digital retail executives to understand how aware they may be of shipping delays, trade-offs they’d be willing to make in order to get free shipping, etc.

• Jason wrote a related article “Holiday 2020: A Mixed Bag For Retailers” in Forbes this week
• The twitter thread that kicked off this discussion
• Lowes locker announcement that Scot mentioned
• Deloitte Holiday Forecast
• Salesforce Holiday Forecast

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 238 of the Jason & Scot show was recorded live on Thursday, October 1st, 2020.

Transcript

Jason:
[0:27] Welcome to the Jason and Scott show this is episode 238 being recorded on Thursday October 1st 2025
man this year is going fast I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot W:
[0:45] Hey Jason and welcome back Jason Scott show listeners.
Welcome to the first day of Q4 2020 hopefully your q3s were all ahead of plan and your seems to our sales were decent given that we’re in a pandemic.

[0:59] Jason back way way back I don’t know if you can remember back this far back in episode 235 we talked about some of the factors that could impact holiday.
And surfaced this kind of concern that we may be running out of shipping capacity before we really get too deep into the holiday.
I have coined that shipaggedon.
So that is really interesting and we’ve got a lot of Twitter and and listener trap in questions about this so it seems to be top of mind with everyone.
So we decided here in episode 238 to do a bit of a deep dive on this,
and we decided you know that you and I know enough about shipping to get trouble but we needed to bring some more folks into the conversation so we’re really excited to have on this episode.
Two experts and they’re also regular listeners of the show Scott Silverman who Probably sounds familiar to a lot of you and then Ken kassar.
They have both been watching this closely and they just did a consumer survey of over a thousand people to understand the consumer side of this how they’re thinking about.
I’m shipping delays shopping earlier late that kind of thing,
but then they also did a survey on the digital executive side to understand how our merchants and retailers and Brands thinking about this.
So excited to have you guys on the show Welcome Scott and Kim.

Scott S:
[2:21] Thanks for having us.

Ken:
[2:23] Glad to be here.

Jason:
[2:24] We are thrilled that I have you guys and we’re excited to jump into it
but as you know we like to always start by giving the listener a little bit of background about the guests so Scott I’d love to start with you your name will be familiar to listeners because you were a guest
way back in episode 66.
So quite some time ago and then you have you made cameos on a number of shows since then some listener questions shows and others
um would you mind reminding the the listeners a little bit about your background and e-commerce and what you’re doing today.

Scott S:
[2:59] Sure well super excited to be back on the Jason and Scot show I have been in the e-commerce digital retail industry for over 20 years,
describe myself now is a digital retail connector I spent about 10 years Running Shop dot-org which was the previous,
online group of the national retail Federation I did that until,
2010 and since then I’ve been doing things on my own that are related to,
bringing e-commerce leaders together for information sharing learning shit and
networking including putting together a conference called Commerce next which focuses on customer acquisition and growth,
and and that’s been I’ve been spending quite a bit of my time on that and that’s really where this survey came from and we’ll get into that a little bit more in a bit.

Jason:
[4:00] Very cool and always apropos to talk to you around holiday e-commerce because amongst your mini claims to fame you actually coined the term Cyber Monday did you not.

Scott S:
[4:14] I was the co-inventor with Ellen Davis from NRF and that I was the inventor of Cyber Monday.com which is a fundraising affiliate site.

Jason:
[4:27] Yeah there was actually run by shop dot-org and later interrupt that raised a ton of money for scholarships for kids in the digital space.

Scott S:
[4:36] Yeah absolutely.

Jason:
[4:37] So some very cool stuff so I was great to have you back on the show Scott and then Ken this is your first time on the show but your analysis has been on the show a number of times because you
have been one of my secret weapons can you introduce yourself to the audience.

Ken:
[4:52] Yes I am Ken cassar I
have been in the retail industry for 25 or so years but made the jump to e-commerce and 1998.
At the time I was working for BMG Direct that’s 11 CDs for the price of one
decided that Direct Mail probably wasn’t going to have the promise that e-commerce had and jumped over to a strategic advisory company called Jupiter research at the time in the subsequent 25 years I’ve spent
most of my time in sort of this weird intersection of data analytics and strategic.
Opportunities and strategic threats that come out of that focused on the retail industry working with both Brands and retailers spent 10 years with Nielsen five years with Racket and intelligence
and now I have my own Consulting shop called cassar Co
and we work with retailers Brands and the vendors that support them helping them understand what is happening in the retail industry again with a focus on e-commerce with a focus on that
intersection of data and strategy.

Jason:
[6:05] Awesome and we are excited to jump into some of the original research you have but I do want to frame up the topic just a little bit to make sure all our listeners are catched up in the highly unlikely event.
That some of them haven’t listened to every episode sequentially so.
About a month ago FedEx had their their quarterly earnings call and they tweeted some interesting growth data about their company and.
They were showing some pretty impressive growth in 2018 they added 5.7 percent additional parcel capacity for the year,
in 2019 they added 7.8% additional personal capacity and then they were talking about for 2020 with this unprecedented e-commerce demand because of covid that they were actually adding.
11.4% additional personal capacity so significantly more capacity than they add in a normal year which is all good news.

[7:07] I pointed out to Scott on Twitter that well that’s great news.
That’s way less capacity than e-commerce is growing right so while FedEx was adding 5 to 8% a year e-commerce was growing.
Thirteen to fifteen percent a year and this year the most conservative estimates are for 18% growth.
You know the last couple quarters we’ve seen.
Depending on how you want to count between 45 and 80% growth and so my my hypothesis was.
Man if there’s more e-commerce demand in Q4 than there was in Q3.
There’s going to be a significant comeuppance because the none of the carriers are going to be able to flex to have the capacity to fill all the extra e-commerce orders.
And so the sort of test that hypothesis a little bit,
I actually reached out to another vendor in our space ship Matrix and ship Matrix is a software tool that a lot of e-commerce sites use to manage their shipments so they see a big chunk of all the,
the parcel capacity that gets sent out to FedEx UPS USPS and Eamon Amazon.
And they they track on Time Performance so they told me that in 2019.

[8:25] FedEx ups and the post office all kind of hover around this 95 to 98% on time rate and that for the last six months of the pandemic.
They’ve been averaging more like 92% so down.
Cut three to five percent worse performance than they normally have so the The covid increased demand has already hurt there on time performance.
Their data actually shows the Amazon struggling even more that Amazon normally has a 95% on Time Performance for their two-day deliveries and that they’re now running at 85% so they’re down like.
10% so to kind of wrap that up.
Covid is forced a bunch of people to shop online we’ve been trying to ship a lot more packages.
The none of the carriers have the ability to flex.
As quickly as the e-commerce demand does and so there’s there’s great concern about what that means
for holiday and that’s what prompted us to do this show today talking about the holiday 2020 and the impending shipping nightmare.

Scot W:
[9:37] Yeah this good framing Jason and you know if things are buckling and Q 3 and Q 2 what’s going to happen in q 4 if we usually that incrementally drives on top of what you’re seeing in the earlier quarter so.
That’s a good time to kick it over to Scott Silverman maybe maybe start us off with how how you guys came up with the idea for the survey and what the impetus was.

Scott S:
[10:02] So we’ve been leaning into research through the entire pandemic with Commerce neck so
I think we had some of the earliest data available at the end of March in terms of hearing what retailers were experiencing from the pandemic and we’ve been doing check-ins
between you know that period and now.
But in the middle of August we were talking to one particular retailer who was hearing from a lot of other colleagues that,
they were expecting some kind of shipping capacity,
announcement or policy from UPS and and or FedEx there were a lot of rumors that it might be around 30%.

[10:50] Then this is on you know there’s a lot of things to unpack here there’s the surcharges the increase demand that’s going to come from shipping and just generally there’s just more.
Shopping that’s going online during the pandemic is as we all know.
And so we thought we really needed to be helpful to our community get and try to provide some,
some data for them and we thought we could do something where we would look at both consumers so we have a partnership with bizrate insights and they did a survey
for us with over a thousand consumers and then
tapped into our community and had 63 retail Executives and a variety of different categories they generally were skewing on the larger side like a
a hundred million or higher in terms of annual revenue and that allowed us to get a pretty good picture of what everyone was experiencing at the same time,
you know I’ve known Ken cassar you know probably that you know over 20 years,
and he you know I learned that he was spinning up cassar,
and we thought maybe we could work with Ken to have him do some of the analysis on the data so we ended up working with Kanna I’ll let Ken kind of walk through some of the,
the high points of what we learned.

Ken:
[12:17] Well thank you and and and Scott when you hit first reached out as like Scott’s so he’s in heat the guy that invented Monday but Cyber Monday which is which is a much much better thing than than my.

Jason:
[12:28] Let the record show I like the guy that invented Saturday a lot more than Scott.

Ken:
[12:32] Indeed but the but yeah now I was really excited to be able to dig into this stuff and the what was interesting here is we were able to field kind of simultaneous studies with that looked at
how consumers were feeling and how Merchants were failing at the at the same time with specific regard to the shipping issue
and and the and you know and I think you know probably the most interesting finding at least the best place to launch from is when we asked.

[13:05] Merchants about their biggest consumer related concerns and we also asked about logistics which we’ll get to but we asked about their biggest consumer related concerns for the 2020 holiday season
the top of the left the top of the list was
their concern about consumers expectation of fast free delivery coupled with
shipper related issues 63% of the retailers that we surveyed had cited that and kind of double clicking in when we asked about concerns that Merchants had around fulfillment specific delivery specific issues
the the biggest.

[13:48] Challenges or concerns came back to shipper related issues the first 60 percent of merchants said that they were concerned that shippers make app deliveries during Peak demand
and and number two short a very very closely behind they worry about shipper surcharges straining profitability
when we click over to the consumer data
we see good reason for retailers to be worried about this because when consumers are asked about their expectations the promotions that are going to move them in this year they’re the things that will motivate them are certainly free shipping
followed by a whole bunch of other issues but the but the but they want to make sure that they’re getting free shipping
and in with the elevation in e-commerce demand that we’ve seen and I think everybody has kind of different numbers but what’s pretty clear is that after a period of dramatic elevation things have come down a little bit but we’re moving into holiday that is historically the
most significant crunch on the e-commerce out of the business so I think everybody from both the merchant side as well as the consumer side are concerned about what this holiday season is going to look like.

Scott S:
[15:04] If I could just jump in just like adding to the consumer side one of the questions we asked was if you’re planning to spend time with fewer loved ones over the holiday season is in you could expect,
that was a pretty high number almost half of the people said that that was the case which,
means that there’s going to be a lot of people buying gifts remotely instead of buying gifts in a store and then you know.
Taking them to you know Grandma’s house where you’re having Christmas dinner or whatever you’re going to do and exchanging gifts so I that seems to be placing even more pressure on this current situation.

Jason:
[15:45] Yeah and I think you asked a terrifying follow-up question which was hey if you’re not going to be visiting family in person do you do you plan to give as many gifts as usual or fewer.

Ken:
[16:00] We did ask about holiday budgets and and the and amongst our survey respondents,
it was mid 30s percent call the number of dump my head but the but mid 30s or so had said that they intended to spend less on gifts this holiday season.
The having.
Been tracking this sort of behavior for quite a while consumers consistently say that they intend to spend less during the holidays
then they actually then they actual earlier than previously but the but this year is so different that I’m more inclined
to believe it this year than any other year and I’m pretty.
Believing of the forecast that I’ve seen that show a relatively soft overall holiday season unless you’re an online retailer and then it seems that it’s going to be a very very different story this.

Jason:
[16:57] Yeah and can debunk this if I’m wrong but my hypothesis so always take consumer surveys about how they’re going to behave with a huge grain of salt of course the in general I would say,
consumers dramatically underestimate how much they’re going to spend on themselves for holiday so they always say they’re going to spend less,
and then they end up buying more items for themselves.
But they overestimate how much they’re going to spend on other and so my my fear is if you’re not going to be looking your aunt and uncle and cousins in the face across the table.
And in your survey they’re already saying they’re planning on gifting less than they probably really are going to be gifting less.

Scott S:
[17:47] Well I mean one counter to that is I heard this today an interesting thought is that.
All of the money that people would be spending traveling to you know on airfare and hotels and such and such could.
Could potentially be.
You know rerouted no pun intended into gift purchases so maybe that would give some more Credence to people spending a little bit more money because they’re going to have a little bit more money having traveled less.

Jason:
[18:20] Yeah no I think that’s valid and super interesting.
To me that that goes into this bucket that that you guys call that in your report and of course Deloitte and others have talked about I think Cowan brought up this year as well a super common description of this holiday is bifurcation.
And one of the ways that’s described is hey there are a bunch of consumers that had probably planned an expensive vacation they’re not going to take and so they may have more discretionary.
Spending to invest that they might be more inclined to improve their home or.
You know buy more toys or invest in the new video game platforms that are coming out this year like there’s this these this whole host of categories that could benefit from this.
Affluent consumer with extra cash and and like without doing a deep dive in the macroeconomic situation.

[19:15] Savings rate are uncharacteristically high so there.
There’s a premise that there are savings dollars to invest in Holiday of consumers choose to do that right so that could be the upside of the bifurcation is,
affluent consumers could spend more and they’re certain categories like toys Electronics.
Home Improvement food that could all benefit from that the downside of the bifurcation is.
The bottom 25% of all wage earners still have a 16% unemployment a million people just applied for unemployment this week for the first time.
The enhanced benefits are expiring there’s a hundred thousand Disney and Airline workers about to get laid off.
And all of those consumers are likely burning through that high savings rate and they could shift into.
Real recession mode and you know feel a lot of economic insecurity in there for.
Legitimately spin spin the last for a holiday and then of course there’s holiday categories like fashion.

[20:26] You know probably are going to be hurt by the fact that there’s not going to be a lot of parties to go to this year all the Halloween people are probably going to be hurt by the fact that the CDC.
Says you shouldn’t go trick or treating.
And side note the CDC came out this week and said going to a retail store to Thanksgiving shop the week of Thanksgiving is a high-risk activity that should be avoided.
So lots of weird Trends driving more spending and less spending so how do you how do you figure out how all those are going to net out I guess is the magic question.

Ken:
[21:02] Bi and you know the I had done some analysis of credit card data from a partner of mine Affinity Solutions a few months ago and
we were looking at the the changes in spending over time at looking at different income groups
in this this was March through April through May through June and July and it was absolutely incredible to me how much more volatile the spending was Andrew and apparently responsive to government stimulus lower-income groups were and and they are absolutely the folks that are the most at risk at this point
in the economy and and so we need to watch that really close.

[21:44] Polly and the unemployment rate I think more than anything else is the number that we ought to be paying attention to right now when I look at the overall Census Bureau spending numbers
they can lull one into complacency the while
April and May were dramatically below the previous year by June and July we were up by August we were flat and
remember during August we started to see some of the government benefits being curtailed
the I think we want to keep a really really close eye on some of the numbers that are coming out,
and I think that at least for a few months it seems highly unlikely to me that there’s going to be a political solution
that is that is going to help kind of pad what could be a difficult time and and so I generally worry more than I am optimistic with conflicting signals.

Scot W:
[22:39] Yeah yeah that’s good to keep an eye on everything let’s jump into the survey you when you kind of went to the highlights there I thought was interesting where.
You know consumers we have this friction consumers want fast free shipping and they don’t and they want it all the way through the 24th right and then retailers are worried about being able to provide that.
Where are we you know where is consumer expectation Amazon raise the bar of this year from two days for Prime to one day it’s not on every skewb they’re kind of constantly trying to implement that and then the pandemic shifted a bunch of that around.
Um and then converts it on the other side of the coin where are the bulk of the Retailer’s from your perspective Landing.

Scott S:
[23:24] Yeah I can jump in on that I mean you can Sky you can probably you know let us know you know like how much of the.
Shipping infrastructure that Amazon owns itself but I think it’s safe to say that they’ll be less affected,
by this then all the other retailers but what we’re hearing from the Retailer’s,
and a lot of you know some of this is in the survey some of this is just anecdotal and from conversations is there’s a number of things that are trying to do I mean I think everyone,
you know once to manage expectations I was talking to someone from Land’s End and they were talking about adding additional Communications,
from when the order was placed to when the order gets delivered to keep consumers aware of where the package is,
we’re hearing about retailers that I think would like.
Get shot people to buy earlier I don’t know,
I think that’s a you know a mixed one whether that can be accomplished or not because I think consumers have some pretty.
Deep habits there especially around the holiday they’re always expecting really good deals around.

[24:40] You know Black Friday Cyber Monday or as you get later into December I heard one example from B&H Photo that,
they talked about do offering a guaranteed best price which I thought was pretty creative so to you know make customers feel a little more comfortable that,
they’re not going to see a lower price later in the holiday season but there’s always that cat and mouse game going on between customers and retailers and the customers waiting until the end thinking that they’re going to get a really good price and on top of being
procrastinators,
and you know and we can kind of go did you know into all of these but I think they’re also looking at you know backup carriers alternative carriers certainly,
I think as you were mentioning earlier and if that was Jason or Scott about,
the curbside and buy online pick up in the store being a little bit of an outlet where you’re less dependent on the carrier’s things like lockers I don’t know,
how prevalent that’s getting we didn’t ask that I wish we would have it would have been interesting to see if any of the retailers are actually going to you know you know be able to use lockers to alleviate a little bit of the pressure.
So yeah those are some of the things that we’re hearing about.

Scot W:
[26:04] Yeah it’s two follow-ups there so Amazon’s at about sixty percent sixty six percent of their own packages now,
but my senses and there’s been some blog posts in their never super specific I think they’re pouring on as much on to that as they can at these at the individual they’re adding dsps and they’re adding capacity at the ESPYs.
So I think of the ones Jason went through they’ll have the most ability to add delivery capacity I don’t know if it’ll keep up with the demand though.
I think I saw this week this is kind of irrelevant news items that Lowe’s announce they’re going to try to put Lockers in a lot of stores and.
The school they looked they looked a lot like Amazon lockers I don’t know what vendor they’re using or if they kind of built their own Jason do you did you see that.

Jason:
[26:47] No you busted me I actually did not see that.

Scot W:
[26:50] Maybe I imagined it who knows.

Ken:
[26:53] I didn’t catch that one either the I did actually try to measure that back in my racket on days and and so this was two years ago.
And we’re just looking at Amazon and it was a surprisingly small percent of Amazon orders were going through lockers
but but fast forward a couple of years with more availability and with retailers that have more prevalent brick-and-mortar locations it could be a could be a different story
you know one of the one of the things that had really kind of struck me from the research that we did we the consumer side we asked consumers
about we stated
many retailers are going to be facing issues this year with shipping capacity and costs what
trade-offs would you be willing to make in order to be able to get free shipping and 38 percent
of the consumers that we surveyed said that they’d be willing to go to a local store to pick up an order 31 percent said that they would be willing to wait longer for an order to ship and I think for a lot of retailers not sent not named Amazon that is going to be the key to the holiday season.

[28:07] Trying to press consumers toward lower cost lower pressure options that will that will that will hopefully make the whole Enterprise
operate more effectively but we’ll see to Scotts Point earlier will see how well they’re able to get consumers to budge from their past habits
historically have been skeptical that consumers will change their their past behaviors in any dramatic way however in a year where
when I go to the grocery store they tell me which way to walk down particular aisles and I’m compelled to buy brands of toilet paper that I’ve never heard of before the it may be it may be a different story than in the past.

Jason:
[28:53] Yeah so let’s poke on some of those those ways returns are going to try to change and how successful they’re likely to be but before I do that the,
the our show intern chimed in while you’re answering that last question and annoyingly pointed out that Scott was right that that was announced last week plans to add lockers and 1700 stores,
and apparently as part of that announcement they disclosed that 60% of all their own online orders are Bulbasaur are fulfilled by store so makes makes total sense for them.
Um so so going back to ways retailers would like to change shopping behavior for the pandemic you guys alluded a little bit to retailers would like Shoppers to start.
Shopping earlier and I feel like we’ve already seen a ton of efforts on the part of retailers to make that happen right so.
Amazon is announced Prime day which is the 14th and 15th of October so for Amazon for all intensive purposes.

[29:55] Thanksgiving huh promotions of already started because they have pre-primed a sales running right now they’re going to run into this big to two-day Prime thing and I assume they’ll roll right in a holiday.
Walmart and Target have both counter-program sales the day before Prime day or a couple days before Prime day.
Um Target Home Depot and a bunch of other retailers have announced they’re not going to have one day giant doorbuster sales for Black Friday because.
None of the Retailer’s wanna encourage a giant line outside their stores and a lot of their stores are unrestricted capacity so they can’t let a ton customers in the store anyway and so instead of one day doorbusters on Black Friday.
They’re doing two months of sales starting in October so so there’s tons of promotional activity to try to entice the The Shopper to buy early the retailer wants that Chopper to buy early because that means there’s.
More days and more shipping capacity to fulfill that order there’s a whole variety of things that that are safer for the retail or if they can get him to shop early.
Um the magic question though is our consumers going to believe the retailer like when a consumer sees a deal now or they going to say hey there’s going to be an even better deal on.
On Black Friday or later and and therefore don’t stop start early or can this promotional activity.

[31:18] Change that behavior like do you have a sense for what’s what’s really likely to happen Ken in terms of of holiday shopping shifting earlier.

Ken:
[31:28] Yeah it’s a you know I I’ve got to say that like when.
When I think back to analyses that I’ve done where I’ve looked at holiday spending on a day-to-day basis
year over year where you anchor on Cyber Monday it
amazes me how consistent that curve has been I spent
five years when I was at Racket and trying to find interesting things to say about the fact that patterns were as consistent as they were either over here
and and so it is an uphill battle I believe that the unofficial beginning of the holiday shopping season this year is
Prime day or prime days however when I think about it and and that all retailers need to kind of Orient themselves around that I do not believe that necessarily means that retailers need to
explicitly counter program against
Amazon and Amazon’s promotions but they need to realize that that is the beginning and collectively spreading demand out as much.

[32:40] It is critical the I think that this year more than any other there is going to need to be a Harmony between marketers and,
infrastructure folks or operation folks like we’ve never seen before the marketing folks have got a not be myopically focused on driving sales they need to think about when those sales that are occurring and and and they’ve got a,
bring to bear all of the powers of this persuasion that they’ve developed not to get people to buy but to get people to buy
at an appropriate time.
And they have all the headwinds of the habits that they’ve developed over the course of years where consumers have justifiably come to expect the best deals to come later in the season it is a it is no small challenge.

Scott S:
[33:28] What we had a webinar on this topic where we shared this data and one of the panelists was the CMO from B&H Photo Jeff gerstel.
And he made a really thoughtful comment related to this and he’s the CMO.
But he said really you should be asking yourselves a year from now you know what did you do to satisfy your customers most and if you’re in a
position,
you see that at the maybe there’s a small percent of orders that are high risk for being fulfilled you walk away from those and let someone else take those and potentially fail,
but really focus you know on the orders that you feel most confident you’re going to be able to do an amazing job with and think long-term the about,
how you’re going to build your brand over time and how people are going to remember you and and don’t,
take on too much this particular holiday I mean it I think it’s.
You know foreign for just about every marketer out there to not,
really you know put their foot on the gas during the holiday season but this might be the one year where you want to back off a little bit and lay off the gas.

Jason:
[34:45] No that’s a great Point Scott and I actually think that that is I mean that’s excellent advice and I do get a sense that that’s the way the majority of.
Retailers are leaning I’ve spoken to a lot of retailers that are anticipating having earlier cut off days than usual so.
Um the last day though except in order and still promise delivery for Christmas.
People are just assuming like you know the service levels from the post office are going to be really unpredictable.
The you know the capacity from the other carriers as we’ve already discussed and so they’re they’re trying to be conservative because they would rather sell less stuff than,
be the the retailer that ruined Christmas by taking a bunch of orders and not delivering and I think the carriers are thinking the same thing I think.
FedEx and UPS are being really aggressive with their clients and saying hey you have to sign up for a quota of how many packages you can ship you’re not going to be allowed to ship more packages than your quota.
Like they don’t appear to be looking to grab every order they possibly can they appear to be being really conservative to make sure that they can deliver all the orders they grab so I feel like.
That that might be the way that folks are leaning in general this year.

Scott S:
[36:02] And then there’s going to be some products in categories where there’s still going to be an inventory problem and I mean we’ve had,
you know folks you know from a guitar manufacturer talked about you know the shortage is that they’ve had we’ve all heard about bicycles and I don’t know if bicycles are you know the.
You know factories have been able to kind of get back and begin to bring more into the market but,
you know I think some retailers are going to be thinking about well,
maybe this is an opportunity to sell more you know be more exclusive sell things that full price not be as aggressive on discounting there’s so many different things going on this holiday season it’s going to be really interesting to watch.

Ken:
[36:46] Yeah in one one data point that that I do want to share from our Merchant survey,
we had asked retailers where they intended to cut off non expedited shipping because of course.
Expedited shipping for many retailers is available up until two or three days before Christmas but you’re going to pay through the teeth for it but non expedited shipping is really I think where the rubber hits the road.
Fifty-two percent of the merchants that we surveyed plan to cut off.
Or set their non expedited cut offs between December 14th and 17th and then another 25% between December 18th and 21st so those are the folks that are kind of living out on the edge.

[37:33] This year more commonly the 14th to 17th is the is where those cut offs
seemed to be coming kind of related to that is shipping speed and and here we asked merchants and that same survey
how what their standard non expedited shipping commitment was
and sixty-three percent of the merchants that we surveyed had that shipping commitment at four days or more
and and so the so unfortunately I don’t have a comparison relative to last year but to me this feels consistent with last year where we had historically been seeing some pressure to get faster and faster so I’m feeling conservatives amongst retailers.

Scot W:
[38:23] Very interesting that’s a symbol of our listeners are obviously on the retailer brand direct to Consumer side seems like we’re all four of us are in agreement that this can be a particularly rough year for this this ship again.
Some best practices we’ve surfaced are moving up your last delivery date sounds like the consensus from the survey was December 14 to 17.
We’ve talked about improved Communications.
The you know being really clear about what’s expedited and and not expedited both piss curbside ship from store,
what are some other things that you guys are either hearing from the survey or anecdotally that folks can do to help.
Get out of the freight train that’s kind of coming out of here.

Scott S:
[39:09] I mean I just you know old-fashioned you know contingency planning you know being flexible and where your,
moving your resources if you need folks to go into your fulfillment centers and you know pack more,
boxes or things like that which I don’t even know how that’s going to work with covid but yeah I mean I think that’s we’re hearing quite a bit of that as is just,
being prepared for a lot of different scenarios and be flexible with your team be able to do as much as you can it’s.
Sounds cliche cliche ish but I think that’s also a big part of it.

Ken:
[39:56] Yeah the and I think a lot of I think a lot of the pressure that
had been a lot of the e-commerce related pressure that had been sitting on the e-commerce fulfillment centers and the past.
Are going to are going to shift this year to the store because of curbside and Papas and then also when we ask Merchants whether those with stores with their they plan to ship
significantly differently items from stores relative to passed to last year 41 percent said that they were significantly increasing the throughput of shipments from their stores and and so you know I think for retailers
it’s more than ever the focus for e-commerce is going to come back to the store and and retailers have got to get
training employees early they’ve got to cross train employees they’ve got to be prepared for a whole mess of different unpredictable scenarios and if I were running a large retail chain I would I would start my hiring a couple weeks early to make sure that people were ready
to deal with situations that they’ve never dealt with before and to be as adaptable as possible.

Scot W:
[41:13] Yeah it’s interesting we’ve had this.
Kind of debate for a long time that the you know the omni-channel are harmonized retailers whatever you want to call them they had this a set of stores that they were under utilizing this the pandemic kind of a weird.
Unintended consequence I guess of the pandemic could be that they’re finally going to lean on those stores another interesting kind of option that we saw in the news this week was Sephora announced a partnership with instacart.
So a lot of people are kind of saying alright we’ve got both purpose and,
curbside but that still you know requires people to come to like a mall like setting where the parking you know during holiday it’s always really particular tricky and then,
a challenge with Opus is the you’re going in waiting in line to get in the store because the reduce capacity.

[41:59] So the instacart thing is interesting because there’s these last mile networks that have been built up for either grocery delivery in the in the example of instacart,
or than there you have shipped and others Postmates kind of straddles both then you have all the food delivery companies.
And and then you have Uber of course and and even maybe lift down the road you could see all those guys kind of playing a role in last-mile just kind of interesting the.
The other side of the story there though is one of the fastest growing from a GMB perspective in the pandemic has been Shopify and their merchants.
So I wonder if they’ll be under the most stress the pure play a kind of SMB,
you know they really have no they’re not like Amazon and they can build their own thing Shopify is kind of.
Helping a little bit they have their own fulfillment centers but they’re there are all those guys are going to be relying on USPS FedEx and UPS.
And they not going to be able to go out and buy the big what do you call it Jason where you pre buy it the.
Whatever that is they’re not going to be able to go kind of pre biocapacity like the other guys do you guys agree that that’s going to be the most Under Pressure quadrant here.

Ken:
[43:12] It’s an under-pressure quadrant.
If you decide strategically that you want it to be if you want to try to compete with when I saw that Sephora news I was thinking what do they really want to be competing with Amazon in
on that level of service or do they want to compete on their product
and the availability of product and their ability to help consumers understand and and I think there are a lot of retailers out there that could potentially be over investing in getting products to Consumers quickly
where they perhaps ought to be investing a little bit differently in the consumer experience and
and and I certainly believe that there is a segment where immediacy matters a lot but,
just my probing through consumer surveys leads made over the years with some kind of you know
longitudinal view of it feel like there’s latitude now like there hasn’t been before and consumers are going to have a tolerance for a slow boat and and and and retailers really ought to take
advantage of it unless they happen to be competing very very directly with Amazon and they’re only two guys that I can think of that fall within that bucket.

Scott S:
[44:27] There’s you know the other way of looking at the the instacart deal is.
You know it’s an outlet for you know when you know your most dependable.
Carriers are going to be stretched then and you’re looking for a series of outlets to kind of flatten it out a little bit and put less pressure on the existing carriers.
And I haven’t looked closely at that particular partnership I don’t know if the if it is going to be like the same fast delivery time or you know would instacart be able to.
You know take all day to get something to somebody or even the next day or something like that.

Jason:
[45:15] Yeah no Scott I actually think you’re right in this case that obviously there are lots of.
Last mile delivery service is that historically have hung their hat on you can get the stuff fast as with by us that we can get it to an hour after you order it or whatever but I think for this holiday what we’re seeing a lot is.
Um
Retailers that just need to find a safe way to sell more of their store inventory so the thing people forget about sometimes I know you guys understand this but if you have a fulfillment center and a thousand stores and you have.
10,000 Jason and Scot show mugs to sell.
You’re going to have 5,000 of those spread out across those stores and you’re going to have five thousand of them in the Fulfillment center so getting.
Ten ten thousand orders at the Fulfillment center doesn’t help you have half your inventories in the stores or vice versa like you have to match that Supply to demand so.
Like retailers can’t win by just having all their no man shift online they would have a bunch of inventory tied up in stores.
That they then wouldn’t be able to sell and so curbside pickup Barb opus.
Are super appealing because they give you that e-commerce experience and they’re still selling the store inventory and I think some retailers are just concerned.

[46:34] Consumers aren’t going to want to do.
Boba’s are curbside because of safety issues or inconvenience issues with driving in the mall over holiday and so to me I think a bunch of these retailers that have added.
Last Mile home delivery for this holiday,
are really just trying to make sure that more of their inventories of liquid and that they can sell it so if Sephora can get instacart to drive stuff home for people that let them sell more of their inventory I know Bed Bath & Beyond is,
also did a deal with instacart and shipped I.
And we actually had a vendor on the show a year ago episode 166 called ship see in this is that’s exactly what they do they’re like an aggregator,
that that you know pull together like 60 of these Regional companies that can drive that stuff to you and.
Fulfill those orders to you so I think the service level might not be same day it might just be.

[47:29] Relatively cheap easy way to deliver store inventory.
But I want to Pivot for a second because earlier in the conversation you brought up what to me is another interesting point that we haven’t talked a lot about yet which is inventory issues so.
Pandemic hits in March people aren’t sure you know how this is going to be impacted like one of the early predictions was.
Oh man these doors are closed for two months they’re not selling any of their inventory holiday we’re going to be flooded with inventory and it’s all going to be super cheap because everyone’s going to have clothes from the wrong season that they’re trying to sell.
And what it looks like to me is happened is a bunch of retailers.
Got really cautious early in the pandemic and dramatically curtailed their holiday orders and so I actually think we’re staring at the opposite problem I think.
A bunch of retailers are really lean on inventory this holiday and and we potentially in the latter half of holiday might start running into.
Availability and supply chain problems do you guys get any sense about inventory issues and did that come up in the survey of the the digital execs at all.

Ken:
[48:44] Yeah you know it’s funny the concerns about in stock on key items.
We’re highlighted both from our Merchant and consumer surveys the it wasn’t
necessarily at the top of the list but it’s pretty close to the top of the list it was number two on both
and and so yeah that is absolutely a big issue the my advice to retailer is this year is,
identify your key inventory items and I mean maybe it’s the top hundred maybe it’s a top thousand items but the but those where you believe you’ve got any risk of being out of stock you’ve got to think like neck like Netflix and Netflix when you type in a movie
The Big Lebowski and they don’t have that movie they’ve got
hundred other suggestions movies like The Big Lebowski retailers have got to be armed with alternate suggestions for out of stock items I think in order to be successful because I I agree that out of stock issues are going to be rampant
this year.

Scott S:
[49:46] I don’t envy the position the retailers are in I mean it obviously it’s super challenging,
you know in a variety of different ways but on the inventory issue.
Like we’re seeing a lot of news you know of this second wave of covid happening and what if that really gets bad and there’s like another full-blown lockdown in December
then you know what happens what if they have to shut down fulfillment centers are in now they’re over inventory,
there’s so many different you know scenarios that could happen right now it’s it’s a really challenging time.

Scot W:
[50:27] Cool it wouldn’t be a Jason Scott show if we didn’t talk a little bit about Amazon and I know the prime day announcement probably came after you did your survey but wondering if you guys have a point of view of.
This new kind of October ish Prime day.

Scott S:
[50:44] Well what we did here the retail mean when we ask the retailers.
They didn’t have the exact date I think they knew it was going to be in early as October but we ask them if they are going to participate with their own sales or they’re going to sit on the sidelines and the majority
said they were going to sit on the sidelines so,
I thought that was interesting we’ll see if it actually happens there there were a number of people that said they were undecided so there you know now that they have the specific date
we may see a lot of those undecided you know decide that they’re gonna actually going to participate especially if they feel like,
this really is the beginning of the holiday shopping season and it’s a way to,
get some of those orders in get people shopping earlier to spread things out have,
you no longer period to get products out to them so I don’t can do you have anything more you want to add based on what we saw in the research.

Ken:
[51:45] Yeah I do
in it just an addition to what to what you’re saying it’s got the you know this Prime day is a I do think it’s going to be a significant sales day I just actually saw the emarketer
forecast for Prime day and and they’re they’re anticipating a pretty significant increase and
and and you know and I think that that it’s easy to dismiss that as well that’s before the holiday season but,
but it’s not it that is I believe going to chip in to holiday sales for those that are prepared I think consumers are going to be prepared this year and and yeah that I think that is going to
again Amazon is almost starting the holiday season with
a 10-yard advantage on the on the rest of its competitors because of the traction that they’ve had with prime day in the and the past.
And so as everybody else really does have a bit of an uphill battle out of the out of the gates.

Jason:
[52:44] And gotcha now can I’m not sure Sports metaphors work when covid has ruined all the professional sports leagues but.

Ken:
[52:51] And when you mix your metaphors all over the place.

Jason:
[52:54] Just using so that dovetails perfectly to our last question and I’m going to have to make it a lightning round question because we’re getting close on time but I do want to get just kind of the 32nd overview from each of you.
We’ve been talking a lot about this increased e-commerce demand for Holiday from the very beginning of covid there’s been a huge increase e-commerce demand and the most common way I hear retailers describe it is.
Every day has been Cyber Monday right so you know Salesforce talked about that across their whole platform Shopify,
you know said that they’re running it higher than then Cyber Monday rates Amazon traditionally says that Prime day is a bigger Peak than Cyber Monday so,
in this world when we’re all on a tidal wave that’s already bigger than Cyber Monday and Cyber Monday is coming up.
Like what’s gonna happen right like it are we going to have a peak on top of peak and if so will retailers be able to execute or.
Like is is all that demand already cooked in and we’re just going to see you know the the very high level we already have sustained through holiday so maybe I’ll start with you Scott do you have a.
A guess on how that’s going to play out.

Scott S:
[54:11] I mean I do think there’s going to be a peak on a peek I think the retailers are planning for this.
They’re doing you know trying to get capacity trying to do these all these other things get people to shop earlier,
I think it might be an opportunity to not be as aggressive on discounts to,
you know sell closer to full price and and you know maybe more profitable potentially you know helping,
you know to subsidize a little bit of the profitability that’s not going to happen from stores so I think that’s a you know an interesting scenario I’m calling it interesting scenario because I don’t have like a,
I don’t want to be that confident to say that I think that’s actually going to happen for sure.

Jason:
[55:02] No I wrote it down that’s your prediction can what about you what do you thinks gonna happen.

Ken:
[55:08] Yeah I mean I think I think the pressure on e-commerce operations I think it’s got to be relentless this year
the in for bigger for bigger retailers that have larger operations where they can absorb e-commerce pressure into broader store operations those are folks that have a lot of work to do but they’re fortunate
and for other retailers I think it’s going to be a combination of working overtime being Scrappy trying to figure out how to do this and to Scott Silverman’s point trying to throttle demand at times in order to in order to make sure that it doesn’t
that it doesn’t bring the walls of the Fulfillment center is collapsing down.

Jason:
[55:47] Yeah I I tend to agree I think there’s going to be a peak on a peak there’s going to be a little bit of a bifurcation the.
The retailers that invested in elastic capacity and move to the cloud are probably way better situated than the retailers that are running their e-commerce site on their own Iron right now so that that’s going to be interesting and of course.
Nobody nobody has done holiday Readiness like load testing with these kinds of loads so it’s this is going to be a very Live Test.
But I think that’s going to be a great place to leave it because we have once again used up our allotted time.
Scott can really enjoyed having you on the show and talking about this super important issue we’re going to have to stay close to it for the rest of holiday.
As always have listeners have any questions or comments about the stuff we talked about today we’d love it if you’d hit us up on Twitter or our Facebook page and will continue the conversation,
and as always if you enjoyed the show please jump on the iTunes and give us that five star review that’s the holiday presents cotton I most want and it doesn’t require any shipping whatsoever.

Scot W:
[56:57] Ken has got really appreciate it where can folks find you online if they want to follow your thought leadership.

Scott S:
[57:05] Well let’s see I’m on Twitter but don’t post a whole lot.
I mean I think you know the the we can give you a link for your show notes where people can download the study
that we’ve been referencing quite a bit but Commerce next.com is where you know you can see a lot of the other research that we’ve been doing and the
webinars that are rooted in research and so on I would say yeah Commerce next would be the best place to find all that information.

Scot W:
[57:36] Okay again.

Ken:
[57:37] And you’re always welcome to go to cassar co Cas SAR co.com where when I remembered to I post all thought leadership that I had that I create.

Jason:
[57:50] That’s awesome I will put both of those links in the show notes and until next time Happy Commercing!