FedEx reports drop in SmartPost volume

FedEx yesterday announced a jump in fourth quarter profits, but it also noted that its SmartPost product, a partnership with the USPS, had lost volume:

FedEx SmartPost average daily volume decreased 8% while net revenue per package was up 8% due to rate increases and improved customer mix, partially offset by higher postage costs.

While it wasn’t enough to significantly damage FedEx Ground’s profitability, the news is a reversal from past reports crediting growth in SmartPost with boosting the company’s overall success. Just a year ago, SmartPost daily volumes had jumped 25% thanks to increased ecommerce shipments. That may be a worrying trend for the USPS as it tries to capture “last mile” package delivery volumes to help offset letter mail losses.

Read more: FedEx – News Release.

Video: Postal services dealing with game-changer as global e-commerce takes flight

31.03.2014 – The recent Bali agreement’s promise of increased global trade is pushing postal services to listen closely to customers and work more effectively with all stakeholders to meet the expectations of consumers and merchants wanting to ride the e-commerce wave.

Listen to the customer, offer integrated postal solutions and provide simple and reliable customs and delivery procedures, said several participants at a forum on global e-commerce organized on 26-27 March 2014 by the Universal Postal Union, the United Nations specialized agency for postal services.

More than 250 delegates from the United Nations family, including the World Customs Organization, the International Telecommunications Union and the United Nations Conference on Trade and Development, as well as leading e-tailers, e-commerce associations and Posts provided insight into the challenges of cross-border e-commerce, still in its infancy compared to domestic e-commerce. Continue reading

FedEx CEO Blames Customers for Poor Holiday Delivery Performance

Fedex logoFedEx CEO Fred Smith blamed the company’s disappointing holiday performance on a combination of bad weather and sloppy customers yesterday.

From the Wall Street Journal:

FedEx Corp. Chief Executive Fred Smith took a tough line with e-commerce companies on Wednesday, saying they need to shape up sloppy shipping practices or risk losing customers.

A significant part of the industry’s Christmas-delivery mess, he said, stemmed from problems on the part of retailers.

Retailers, he said, claimed that packages had been tendered to FedEx and rival United Parcel Service Inc. for delivery to their customers before they actually were. In addition, labels were often affixed incorrectly or items weren’t properly packaged and subject to damage, the executive added, sounding like the Marine Corps veteran that he is, while speaking on an earnings conference call with analysts.

Retailers’ shortcomings on their side of the delivery equation “is a big part of the e-commerce business that really didn’t get enough publicity last year because they were an integral part of the problem even more than the weather and the carrier performance,” the FedEx chief said.

Read more: Wall Street Journal

WSJ: Rampant Returns Plague E-Retailers

The Wall Street Journal reports that along with the boom in ecommerce shipments has come a flood of returns:

Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc. expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers.

The stakes get even higher during the holidays, when return volume peaks. So this year, chains are digging through past transactions to weed out chronic returners, train shoppers to make better decisions or stem buyer’s remorse.

The Journal says that e-retailers are coming up with imaginative tactics to deal with customers who return large numbers of orders:

constant returners may see fewer discounts in their inboxes, while their high-spending neighbors land the better offers.

The rise of free shipping and returns has coincided with a surge in online sales of clothing and footwear. In the past, retailers would charge online shoppers $5 or $10 fees for delivery and returns to cover the cost of shipping and handling. The rise of more lenient policies by online shoe retailer Zappos.com and parent company Amazon.com Inc. helped prompt customers to turn their living rooms into dressing rooms, as shoppers in many cases aren’t on the hook for shipping fees in either direction or the back-end cost for returns.

Retailers say people who return a lot also typically buy a lot. But that isn’t always the case, and the burden appears to be growing.

Read more: Rampant Returns Plague E-Retailers – WSJ.com.