Coined by the hosts of The Jason & Scot Show, this portmanteau is shorthand for a situation where Americans max out our shipping infrastructure, and holiday orders — even ones placed well ahead of the order-by dates marketers highlighted in their drip campaigns — arrive late.
Is #Shipageddon really coming? Maybe.
As we all know, the pandemic has strained American mail carriers. Online shopping has skyrocketed in popularity; by one estimate, the pandemic has accelerated the rise of online shopping by about five years.
In one year.
That alone has placed a massive burden on shipping carriers. “The work associated with getting... volume out the door is exponentially more complex” when people buy online, Jay Sauceda, CEO of third-party logistics company Sauceda Industries, told MarketerHire.
Think about it: When people buy from brick-and-mortar stores, one massive truck delivery to a store’s loading dock can supply thousands of households.
When people buy online, supplying thousands of households with what they need suddenly requires thousands of deliveries.
Now it’s Q4 — a high-point for retail sales every year — and shoppers are flocking to e-commerce more than ever. This BFCM, Shopify experienced 76% year-over-year sales growth; overall, e-commerce revenues during BFCM rose about 23% year over year, Adobe Analytics reported.
Total BFCM revenues were down by about the same percentage this year, though — because in-person sales cratered. Foot traffic in brick-and-mortar stores was down about 50% from 2019, Sensormatic reported.
“The stores were really ghost towns,” David Bassuk, global co-head of the retail practice at consulting firm AlixPartners, told the New York Times.
Meanwhile, shipping carriers were “drinking from a fire hose,” Sauceda said.
Could the pressure get so intense that our shipping infrastructure falters? And what does that mean for marketers? We asked Sauceda and his colleague in the 3PL space, ShipBob CMO Casey Armstrong.
Why #Shipageddon Might Not Happen
For his part, Armstrong doesn’t see much cause for concern this year. “Things have been going rather smoothly” at ShipBob, he told MarketerHire the day after Cyber Monday.
Sauceda, too, feels prepared. So far. Thanks to careful forecasting, his warehouses are shipping “twice the volume that we did last year,” he said — and his team isn’t having to stay as late as they did in 2019.
The key thing, Armstrong said, is for merchants to understand the different mail carriers’ cutoff dates for guaranteed holiday shipping, and their 3PL’s cutoff dates, too (if they’re using one).
Beyond that, he doesn’t see much cause for stress and second-guessing. He and Sauceda cited several reassuring signs.
The major carriers have been hiring for this since March.
“The carriers overall are managing [the holiday orders] actually rather well,” Armstrong said. “They've been on a massive hiring spree from the beginning.”
In July of this year, for instance, FedEx had already hired tens of thousands of new workers and package handlers to meet pandemic demand. And for the holiday season, they hired an additional 70,000 workers.
As of Black Friday, meanwhile, Amazon’s workforce had risen 50% year-over-year, thanks to more than 400,000 new hires — most of them warehouse workers, the New York Times reported.
In other words: There’s not a manpower shortage.
Mail carriers just handled a trial crisis pretty well.
“Think of all the mail-in ballots during the election,” Armstrong said. The holiday shipping surge had already begun in October and November, and the influx of mail-in ballots — more than 64 million in total — only intensified the strain.
But “the carriers navigated that well,” he noted — including USPS. “They’ve had a lot of practice in 2020.”
Most e-commerce shops have encouraged early ordering.
“The narrative in both in the mainstream media and from a lot of the brands is... buy earlier,” Armstrong said.
Abercrombie & Fitch, for one, listed a holiday shipping cutoff date of December 4 in mid-November.
That’s early! So early that they have since extended their deadline to a fuzzier promise — to deliver by Christmas “for a limited time only.” Still, better safe than sorry.
The biggest order influx has already happened, so there’s time to get on top of things.
“Typically the two biggest [shopping] days every year are by far Black Friday and Cyber Monday,” Armstrong said.
The orders received on those days exceeded carriers’ capacity this year, he noted — which does mean delays. But there’s no huge rush this early in December.
“I don't think that this is our highest tension time,” Sauceda said, the week of Cyber Monday. “Consumers kind of expect that orders get backed up around [now].”
And “hopefully the carriers can catch up to the demand” by the end of December, Armstrong said.
Why #Shipageddon Might Actually Happen
None of that sounds like an asteroid on a collision course with Earth, does it? (Quick Armageddon plot recap: An asteroid is on a collision course with Earth.) But there are also some unique uncertainties and roadblocks that 3PLs and shipping carriers face this holiday season.
For one, there’s the perennial problem of shoppers procrastinating. That could mean “a lot of pent up demand that's going to pop in that final week” before carriers’ cutoffs, Sauceda said.
The carriers have surely built in some buffer for that, he said, but they’re still likely to be unusually strained that week. They have the most responsibility for storage and transit, and imperfect information about their clients’ sales goals and promotions.
That’s true every holiday season, but it’s particularly difficult this year for a few reasons.
It’s hard to forecast right now.
Data from past holiday seasons isn’t as useful for forecasting as it normally is, because we’re living through an unprecedented situation — a hybrid yuletide-slash-global-pandemic.
It’s already odd. In an effort to spread out shipping volume, BFCM sales started all the way back in October, with Prime Day and other early-bird promotions. But shopping, as we already discussed, has skewed heavily online.
How will all these different, unusual phenomena stack together? Hard to say.
“Everything about this calendar is funky,” Sauceda said.
Shipping infrastructure is inflexible — at least in the short-term.
Forecasted dips and valleys in demand are normal for shipping carriers — but if order volume far exceeds forecast this month, “I can't hire people fast enough to solve that problem,” Sauceda said.
That means delays.
Even hiring only solves problems of a certain scale. If order volume exceeds the forecast by tens of a percentage point, Sauceda said, he can staff for that. But if order volume overshoots forecasts by hundreds of percentage points, Sauceda said, that can require extra warehouse space for package sorting.
(Right now, it requires even more extra warehouse space than usual, due to social distancing.)
Boosting square footage is a big, slow-moving project. “The leasing on a hundred-thousand-square-foot building takes months, not weeks,” Sauceda said.
Delivery vehicles are in short supply.
Carriers need trucks, cars and vans for last-mile delivery, and they’re all competing with each other for them. It’s so tense that carriers may ask employees to deliver packages in their own vehicles, following in Amazon’s footsteps.
The shipping giant launched Amazon Flex back in 2015, an Uber-esque effort to outsource deliveries to gig workers — but even as the program expanded the tech giant’s capacity, it created problems, too. Unmarked vehicles and plainclothes delivery people can spook customers, and create safety issues for delivery drivers.
At least at Ice T’s house.
(Vehicle tracking systems can solve for some of this.)
A coronavirus vaccine could complicate things.
Pfizer and Moderna both recently applied for emergency COVID-19 vaccine approvals from the FDA — and the companies may begin shipping vaccines across the U.S. before the year is out.
Armstrong’s sense is that the number of vaccine shipments will be “relatively nominal” compared to the number of e-commerce packages, though — think tens of thousands of vaccine packages, compared to tens of millions of e-commerce ones.
Still, these shipments could tie up disproportionate bandwidth if they require special treatment — which they might. Some vaccines need to be stored at temperatures as low as -80 degrees Celcius (emphasis on Celcius!). These would require powerful cooling infrastructure, plus delicate handling — vaccines will likely be shipped in glass vials.
So What Does All this Mean for Marketers?
No, marketers probably won’t be delivering packages on December 24, but they can still help prevent #Shipageddon, Sauceda said. An ex-marketer himself, he said that “marketers have a stronger role to play in making sure that the logistics teams are successful than they think.”
So, what can they do, exactly? He and Armstrong laid out a short list of essentials.
Communicate clearly with logistics teams….
Marketers should check in constantly with their logistics teams, sharing when they’re running big promotions, how they’re setting shipping expectations with customers and what overarching sales goals they’re trying to hit.
They should ask constant questions about what’s feasible, too. When it comes to sales goals, especially, “it may be unsafe for us to hit them if they're too extravagant,” Sauceda said.
Ensuring warehouse workers can social distance appropriately (and sleep!) comes first.
...in metrics they care about.
Logistics professionals want to know two things, Sauceda said: How many orders are coming, and how many items per order?
Not too hard, huh? “Marketers talk about that all the time,” he said.
The problem is that their forecasts include a ton of other metrics, too, like average order value and lifetime customer value. The key is to screen out the excess, and share only relevant metrics.
Send realistic messages to customers.
Like “Order early!” It’s really that simple, Sauceda said. Specifically, encourage customers to buy this week, he suggested; orders placed next week are technically still guaranteed by most carriers, but they’re more of a gamble.
After cutoff dates pass — or even before! — Sauceda also recommends incentivizing customers to pick up their orders in stores. (In masks, of course.)
If you run out of product, do it in style.
Yes, it’s great to maximize sales — but if you run out of product, you can do it in a strategic way that elevates your brand long-term. Just like a long line, a “Sold out!” sticker signals exclusivity; Armstrong said that some brands, especially in the luxury space, purposely sell out during the holidays.
“Even if you're not like a luxury brand and you run out,” he said, “you can still try to tap into that FOMO and start getting a bunch of pre-orders, so that once you do get inventory, you can sell it all out again.”
Just say no to free gifts.
It’s much easier to ship 10,000 identical hats than it is to ship those same hats, plus the buyer’s choice of a free gift.
Introducing free gift options “turns it into 10,000 unique orders,” Sauceda said. That slows fulfillment down considerably.
It’s crunch time; respect that. Before you make enticing promises to customers, consider the logistics of fulfilling them at scale, in a warehouse, during peak shipping season. In other words, skip free gifts with purchase, he advises — and definitely skip gift wrapping.
“Don’t ask anybody to do that,” he said.