The National Retail Federation is forecasting holiday sales will increase between 4.3% and 4.8% for a total of $717.45 billion to $720.89 billion. The forecast compares with an average annual increase of 3.9 percent over the past five years. According to the group, holiday sales in 2017 totaled $687.87 billion, a 5.3% increase over 2016. Don’t let this year’s lower expectation compared to 2017 fool you. This year’s holiday season will be another super busy one for all involved, with e-commerce once again being the star but perhaps with a twist as physical locations emerge as an additional tool in which to compete against the likes of Amazon.
Indeed, this year retailers are stepping it up in their race to take on Amazon by utilizing stores as well as offering fast and free shipping. For example, Target is offering free two-day shipping, with no minimum purchase or membership required, from November 1 to December 22. Meanwhile, beginning this month, Walmart is partnering with its top sellers on Walmart.com's third-party marketplace to offer free two-day shipping on eligible orders over $35.00.
Walmart is also simplifying returns by giving customers the option of printing return slips from its website for items purchased from third-party sellers on the Walmart website or dropping off packages at Walmart stores and Walmart will return the items on behalf of customers. In both cases, return fees will vary depending on the items and the sellers.
According to Target, its goal is to make shopping easier for customers. As part of this goal, Target acquired same-day delivery company, Shipt in December 2017. Available in over 200 markets, customers can place orders for more than 55,000 products through the Shipt app or online. Shipt personal shoppers will complete orders at Target stores and deliver them to customers' doors.
Target is also making its drive-up service available at roughly 1,000 locations across the U.S. Customers who do their shopping through the store’s app can head to a store within the hour and have the items brought out to their car.
So how is Amazon responding to all of this? They too announced they would expand free shipping to everyone for the holiday season. However, Forbes noted that the ‘fine print’ behind the announcement was that in order to get free shipping, customers would have to wait for the standard 5 to 8 business days for delivery. Hmmm……not so sure how successful this will be but a brilliant strategy the e-commerce behemoth is doing is mailing out its first toy catalog, reminiscent of the old Sears holiday catalogs of years past – sure to put a smile on many a child’s face.
Amazon is also taking more control of its own logistics. Now with about 40 leased airplanes, Amazon will utilize all of them as they work to make good on their 2-day delivery promise for Prime members. Additionally, it is undertaking more of its last mile delivery network through its Delivery Service Partners program. Drivers will wear Amazon-branded uniforms and the vans will sport Amazon Prime logos — but the business will be owned by the entrepreneurs themselves and contracted by Amazon to complete deliveries, according to Amazon.
But that’s not all; it appears that Amazon is now undercutting UPS and FedEx shipping rates in Los Angeles. Known as Amazon Shipping, Amazon currently handles only small package shipments between third-party merchants and Amazon warehouses and does not include final delivery to customers' homes. Perhaps the service will be extended to customers’ homes by the holiday period in 2019 and provide customers with an additional option for last mile delivery service.
Fast, free and retailers’ not so secret weapon – physical stores – will all be on display during the holiday season. How well they all do will be determined on the financial ledgers of each company. Can Walmart and Target beat Amazon? Not this holiday season and perhaps never. But, each retailer will give it their best and customers will benefit from the expanded service offerings.