Yodel suggests slower Christmas deliveries be the norm

YodelYodel have published a press release covering the 2014 Christmas season with some additional colour around why they were forced to suspend collections for two days in order to manage the unexpected peak following Black Friday.

There are a couple of stand out points – retailers were way out in their forecasts (46% higher than predictions) and Yodel chief Dick Stead states that the only solution is that the next day delivery model has to change when volumes spike in this manner – couriers simply don’t have the capacity to handle one off events and naturally can’t be expected to build capacity which for the rest of the year will lay idle.

We’d be interested in your views on automatically extending delivery times at peak. We know many couriers unofficially already do this, but if they had plans in place to publicise slower than expected deliveries and it helped them handle the volumes how would that affect your business? Obviously we’d also need marketplaces such as eBay and Amazon to be involved to protect from feedback from delivery delays, but would your customers accept that “next day” doesn’t always mean next day after Black Friday?

We don’t normally publish full press statements verbatim, but in this instance it’s full of useful insights we’re making an exception below:

Black Friday and Cyber Monday transform peak for parcel carrier industry

Yodel delivers 40 per cent more parcels over peak sales promotion weekend

Over 15.5 million parcels were successfully delivered by Yodel, the UK’s leading independent parcel carrier, between 1 – 24 December – a year on year increase of 11 per cent in figures released today.

On Yodel’s busiest day, 1st December, over 1.2m parcels were delivered to customers across the UK, over 40 per cent more than the carrier’s peak day in December 2013, and the carrier accepted more than 600,000 parcels over and above the forecasted levels agreed with retailers over the Black Friday weekend.

Christmas shopping predictions made by Experian and IMRG[1] as late as 25 November, while anticipating online spend to set new records, underestimated the level of sales on Black Friday (28 November) by 46 per cent, when £810 million was spent online, exceeding original estimates of £555 million.

Online sales for Cyber Monday (1 December) also exceeded original forecasts by over 10 per cent with £720 million spent online, compared to estimated figures of £650 million[2].

Advance notification of promotions, coupled with a mild winter, meant that shoppers waited before they started buying presents and investing in their winter wardrobes, resulting in low parcel volumes during November. The flash sales then triggered a huge and unprecedented spike in parcel volumes coming into Yodel’s network over the Black Friday, Cyber Monday weekend compared to 2013.

Dick Stead, executive chairman of Yodel, said: “The Black Friday phenomenon, which overtook Cyber Monday as the peak online shopping day for the first time, has changed the Christmas peak model, possibly forever, as consumers are changing their online shopping habits, condensing them into a shorter time period.

“We’re reviewing our performance and will be working with our valued retail clients on next year’s Peak plan, setting out a new blueprint for Christmas operations going forward.”

The carrier’s decision to defer some collections from its clients for two days while it processed the excess parcels which came in as a result of the flash sales and transferred volumes from other challenged carriers, was well publicised.

“We control the number of parcels coming into our network by agreement with the etailer and through managing the number of collection vehicles we send to each of our clients,” explains Dick.

“Over the Black Friday weekend the number of parcels on the incoming trailers increased dramatically, over and above forecasted levels. We agreed to process the additional 600,000 parcels to help our clients and ensure their shoppers received their purchases as soon as possible.

“We did this on the understanding that parcel volumes would start to tail off after the sales. When they failed to decline as predicted, we took the bold but necessary move to defer some collections, which allowed us to recover and process all of the parcels within 48 hours.

“By Christmas Eve we had not only delivered on our promises but also successfully delivered an additional 388,000 parcels, which were not due until after Christmas, ahead of schedule;” continued Dick.

Planning for the peak commenced back in January 2014 when Yodel invested heavily in a detailed Christmas operations plan. The carrier then upscaled resources to match retail forecasts, boosting the workforce by over 5,000, putting over 700 additional vehicles on the road and procuring 13 extra sites to handle the increase in parcel volume.

“We know there are many lessons to be learnt by the retail and carrier industries for Christmas 2015. The model of next day delivery as standard for all orders simply has to change when volumes unexpectedly increase to such an extent, in a capacity constrained business.

“We have seen that the majority of retailers are unable to accurately forecast future demand. The carrier industry cannot be expected to take all the risk, investing in building networks that are capable of handling unspecified peaks.

“Working together, we need to find a method of spreading volatile parcel volumes to match the industry capacity, while delivering a high quality service that meets everyone’s requirements. That may mean that 48 and 72 hour services become the standard during peak periods, and where required, next day deliveries are available for a premium,” continued Dick.

“We’d like to thank our dedicated team for their efforts this year and rising to the new demanding challenges of an ever evolving and growing online shopping era.”