The Friday Report: February 15th, 2019

Amazon Reportedly Plans Fee Reduction to Compete with FedEx and UPS

According to the Wall Street Journal, Amazon Shipping is planning to slash fuel surcharges and additional home delivery charges.  The information was based on an email sent by Amazon to New York area shippers.  Recently fuel surcharges for ground vehicles were reported to be 6.5% for FedEx and 7% for UPS.

In 2018, FedEx eliminated residential surcharges for the holiday season.  During this same time period, UPS charged a $.28 peak fee, a one cent increase over the 2017 holiday surcharge.  Research has indicated that retailers are not loyal to their current shipping carriers.  With the news that Amazon Shipping was entering the market, surveys found that 55% of respondents indicated that they would consider switching shipping carriers.

Consumers Report Expectations about E-Commerce Purchases and Delivery

Over the past decade, online sales have increased at a steady pace.  E-commerce now account for close to 10% of total retail sales as of 2018.

A new survey by Hanover Research and LaserShip indicates that consumers ranked free shipping, fast delivery times and easy return policies as the most important factors when selecting online retailers.  Fifty percent of the 1000 consumers surveyed reported that they had abandoned an online shopping cart based on high delivery fees.

Millennial and Gen Z consumers indicated that they were willing to “pay a premium” for fast shipping.  Survey respondents reported that they expected online purchases to be delivered in three days or less. By 2020, Millennial and Gen Z workers will make up approximately 70% of the workforce.  

Walmart Gets Ready for Grocery Delivery Using Custom Cargo Vans

Launching a new pilot with Udelv, a driverless car company that uses electric cars designed specifically for deliveries, Walmart continues to work to bring grocery deliveries to its customers in an area northwest of Phoenix Arizona.  Other companies in the Walmart testing ground include Ford and Alphabet’s Waymo.

Grocery delivery service is currently available in nearly 100 cities and can reach 40% of U.S. households.  Walmart plans to increase online delivery availability to 800 more stores later this year.  Curbside pickup is available at more than 2100 U.S. stores and is targeted to reach 3000 in 2020.