UPS (NYSE:UPS) is adding an extra surcharge for packages shipped to homes between December 17 and 23 this year. The cost, which includes a 27-cent charge for ground packages, 81 cents for next-day air and 97 cents for two- or three-day delivery, could make a major impact on ecommerce retailers during the holiday season.
Obviously, that period of time is exceptionally popular for online shoppers. So businesses could be forced to make adjustments to cover the cost. One option would be to switch delivery services. But that might not be an easy or beneficial move for every business, depending on the situation.
It’s also possible for businesses to pass some of that extra cost onto shoppers, not just to cover the surcharge but also to encourage some shoppers to make purchases earlier in the holiday season where there aren’t those extra costs and businesses won’t be as stressed for time and other resources.
Companies could also get a little creative with their shipping options to take some of the burden off of shippers. For example, instead of offering two-day shipping for every purchase, you could give customers the option of receiving their package a bit later in exchange for free shipping or another incentive. This could be especially popular with shoppers who buy gifts early in the season but don’t need them right away.
UPS Adding a Surcharge to Cover Extra Costs
From UPS’s perspective, the move is intended to offset some of the cost of the busy period before Christmas. The fact that so many gifts are delivered all at the same time means shipping providers need to invest in extra trucks, delivery drivers and plenty of other resources
While the company would love for shoppers to simply spread out their purchases a bit, or for retailers to find ways to get packages to customers throughout the holiday season instead of all at once, it doesn’t expect a small surcharge to make a major impact.
Greg Brown, president of UPS’s retail sector told Reuters, “I don’t think it’s going to change buying patterns dramatically. What we’re trying to help retailers do is shape demand a little bit.”
So the busy shipping season right before Christmas is likely to stay busy. This means small businesses have to find their own ways to adapt and cover the extra costs.
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Aira Bongco
The demand for quick delivery for Christmas is so high that a surcharge is just right. It will help the people who deliver items explore other options to get stuff delivered.
Annie Pilon
It could, but it could also just lead to higher prices for businesses or annoyed customers, especially since a lot of them probably aren’t aware of the surcharge at this point
David
This surcharge is insult to injury, having a long history of challenging their performance on the simplest of deliveries, my experience has resulted in seeking alternate businesses to avoid dealing with ups, fedex and the like. My area has been deemed remote and is subject to delivery at will, in spite of being 10km from a depot. Often parcels, and documents are left for as many as 5 business days after arriving to their depot and the suggestion is that I ought to just swing by and pick them up if it is such a problem. Well that would be just fine, but we paid you to deliver the items, i do a fair volume of busines and would expect a little more respect from a company such as this. Perhaps just a drop in the pond, but all those drops made the pond…..
Annie Pilon
Wow, that does sound terrible!
The problem I foresee is communication. How do online retailers convey that they’ll be increasing prices if you want it shipped the week before Christmas? The people buying at that point don’t have the option of going back in time so they’ll just pay the fee and be slightly annoyed/frustrated so that maybe next year they’ll act sooner.
Annie Pilon
Yes, that’s a great point. A lot of people will probably be willing to pay it if they are shopping at the last minute and have no other option. But getting customers to understand the reason behind the charge definitely seems like a challenge