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Sent Items #107: Monday, November 23, 2020

Hi All!

Typically this week would mark the beginning of the Q4/Holiday shopping season, but it feels like the craziness began back in March and April as COVID hit the US.

With Thanksgiving later this week, followed by the “Cyber 5” and BFCM, I encourage all brands to ship early, communicate with your customers and set reasonable ship-by deadlines. 3PLs and Carriers will have (intermittent) failures this holiday season. You work hard at winning a customer and establishing a rapport -- don’t leave your brands’ customer experience to the mercy of your logistics partners (see article below). 

As a reminder, you can find my suggested holiday cutoffs in this google doc and screenshot below:

Plenty of long-weekend reading in this issue. I promise it pairs well with turkey, booze, football and family (virtually, of course). Happy Thanksgiving!!

- Matt

DeJoy teases service overhaul as USPS parcel volume grows 19% - Supply Chain Dive

  • USPS package volume increased 19% (1.2 billion pieces) year over year for the 2020 fiscal year. Parcel volume peaked in April and May — when USPS saw roughly 70% volume growth — and has fallen steadily since. 

  • The board of governors expects package volume to remain flat in FY 2021 — consistent with a permanent elevation of ecommerce volume, though not at the height seen in April and May. 

  • Postmaster General Louis DeJoy said he would roll out his overhaul plan in the coming months, adding the plan would preserve the six-day delivery week and USPS' universal service mandate. He said the service needs to modernize and invest in a new fleet and training for workers. 

Retailers Cut Back on Choices; ‘We Don’t Need Three Types of Red’ - WSJ

  • Bed Bath & Beyond, Kohl’s and others cull styles to combat decision paralysis, unclog supply chains and reduce end-of-season markdowns

  • Coach is cutting its handbag styles by half. Bed Bath & Beyond is reducing its can opener selection by two-thirds. Kohl’s is culling its towel offerings by nearly a fifth.

  • With choices overwhelming shoppers and clogging supply chains, some brands are moving in the opposite direction. They are trimming styles and colors in the hope that by eliminating the decision paralysis that grips customers when they are faced with too many options, they can boost sales and reduce end-of-season markdowns.

  • A Columbia Business School study found that people bought more jam when they were shown fewer choices. Only 3% of consumers who were shown 24 types of jams made a purchase. The purchase rate increased to nearly 30% when consumers were shown just six varieties.

  • Coach used to produce 1,000 handbag models each season, but now is only making 500. They are emphasizing the best-selling colors—black, brown and off-white—and weeding out other shades, avoiding three types of red. By offering fewer styles and focusing on the most popular ones, Coach is hoping it can scale back promotions, avoiding the odds and ends at the end of the season that you are forced to discount.

Why returned goods from your online shopping splurges are ending up on eBay - Fast Company

  • Returns from retailers like Target are now being bulk-sold on eBay, where smaller sellers can buy them up and resell them individually.

  • Online sales typically generate three to five times the returns of brick-and-mortar purchases, where people have more chance to examine goods before they buy. Even before the pandemic, in 2019, more than $300 billion in merchandise was returned to stores including online merchants in the United States.

  • Companies have a serious incentive to make the returns process as easy as possible: Consumers are more likely to continue shopping at stores where they had good experiences returning merchandise. The returns process can be facilitated by online portals such as Optoro,  software that guides consumers to mail in merchandise or drop it off at brick-and-mortar locations. Stores can take items received at their warehouses and stores and more efficiently route them to their next destinations before they take up too much space, whether that means putting them back on shelves for resale, selling them to resellers, or donating them to charity. Optoro offers machine-learning-based tools to help quickly classify returns as they come in.

  • To help move all that excess merchandise, Optoro is partnering with eBay, which is no stranger to helping America selling odds and ends online. The deal isn’t designed to let consumers buy individual returned and unsold items directly from stores. Instead, the deal lets individuals and small businesses buy boxes of unsold merchandise from stores through eBay and Bulq, a division of Optoro that handles online bulk liquidation sale, then quickly turn around and relist those items individually on eBay.


USPS Announces 2021 Rate Hike and New $100 Surcharge - EcommerceBytes

  • The US Postal Service is raising rates in January for Shipping services, including Priority Mail. This follows the previously announced rate increase for Mail service, also taking effect on January 24, 2021.

  • Here's by how much (an approximate average) rates are rising for some popular services: Priority Mail service: 3.5%; Priority Mail Express service: 1.2%; First-Class Package Service (FCPS) Commercial: 6.5%; First-Class Package Service (FCPS) Retail: 4.8%

  • One of the first things that greets readers when reviewing the filing is the following: "For Priority Mail Express, Priority Mail, Parcel Select, Parcel Return Service, USPS Retail Ground, and First-Class Package Service customers, a $100 fee will be assessed on parcels found in the mailstream that exceed the maximum mailable size limit (combined length and girth greater than 130 inches).” This is a new surcharge sellers will have to pay close attention to when mailing packages come mid-January. 

  • Overall, these changes would raise prices approximately 3.5%.

  • New this year for sellers is the USPS holiday rate increase that went into effect on October 18 and runs through December 27, 2020.

Ecommerce Adoption Proving Sticky Throughout the Pandemic - Loup Ventures

  • In late March 2020, Loup Ventures surveyed 245 US consumers to investigate how shopping behaviors were changing as a result of the first month of COVID-19 lockdowns. Back then I referenced a few nuggets from the survey in Sent Items. They recently completed the second iteration of the survey and the bottom line is this:

    • The growth in ecommerce at the beginning of the pandemic is proving sticky seven months later.

    • 82% of consumers have opted to buy more online since the pandemic began, compared to 72% in March.

    • 75% of people now expect to increase their online shopping moving forward, up from 60% in March.

    • The pandemic has accelerated ecommerce adoption by 2-3 years.

  • Their November survey indicates that almost 75% of people (compared to 60% in March) expect to increase their online shopping moving forward. 54% of respondents said they will return to buying most things in stores but plan to buy more online, up from 47% in March. An additional 19% said they plan to continue buying most things online, up from 13% in March.

  • In March, they asked consumers which products they had tried purchasing online for the first time in the past month. In November, they asked consumers which products they had bought online for the first time since the pandemic began. The most popular categories in both surveys were home staples (paper towels, soap, and toilet paper) and groceries, followed by cleaning supplies.


  • The upward move in first-time grocery adoption from 18% to 28% suggests that consumers are increasingly looking to limit their visits to stores and/or benefit from the convenience of grocery delivery.

  • In their ecommerce survey note from March, they laid out a bull vs. bear case for ecommerce, arguing that ecommerce could represent between 21% to 32% of total retail spending in Q2 2020, before settling in the 15%-20% range in subsequent quarters.

  • This forecast was founded in the belief that total retail spending (the denominator in the above equation) would fall by 30% to 40% in Q2 due to widespread store closures, while ecommerce sales (the numerator) would be flat or positively affected by stay-at-home orders.

  • Recent US Census Bureau data have shown that these estimates were too high, as overall retail sales (denominator) bounced back faster than expected. In Q3, Census Bureau data show ecommerce accounted for 14.3% (adj. basis) of total retail sales, about a 2% decline from Q2. 

  • Here is their updated our bull vs. bear case below:


  • In their bull case, the acceleration in ecommerce trends leads to a step-function shift, pulling ecommerce adoption forward by 2-3 years. In their bear case, the ecommerce adoption rate settles in line with its pre-pandemic growth trajectory.

Amazon starts selling prescription drugs, with two-day delivery for Prime members - Vox/Recode

  • When Amazon spent $750 million to acquire the online pharmacy PillPack in 2018, it was clear it had interest in the prescription drug market. Now we know how serious it was.

  • Amazon will start selling prescription medications on its main Amazon website and app on Tuesday, and will offer two-day delivery of these medications to Prime members for no extra fee. Prime members without prescription drug coverage, or with coverage that isn’t great, can also save up to 80 percent on generic and 40 percent on brand-name drugs when paying out of pocket without insurance. Prices with and without insurance can be compared at checkout.

  • Prescription drugs are a $500 billion market in the US, with patients spending $67 billion out of pocket at US retail pharmacies in 2019.

  • By offering the option to purchase prescription drugs through the main Amazon website, it is attempting to appeal to a broader base of consumers who don’t take multiple medications daily but might need a prescription drug in the house. However, Amazon’s online pharmacy offering isn’t a fit — at least not yet — for customers who need a prescription filled the same day for an illness that needs immediate treatment.

  • Launching the new service in the midst of the pandemic, however, may help the adoption curve, with the potential that more people will want to avoid waiting in line at brick-and-mortar pharmacies as Covid-19 infections soar nationwide. 

Retailers Brace for Hefty Holiday Returns of Oversize Goods - WSJ

  • Growing purchases of furniture, appliances and other bulky items are expected to add a new dimension to the annual ritual of returning unwanted holiday purchases.

  • Retailers are setting up dedicated handling sites and striking deals with specialists in reverse logistics on expectations that an upswing in hefty returns will swell.

  • About 25% of all e-commerce purchases get returned, according to Forrester Research Inc. Bulky purchases tend to have a lower return rate than more portable items such as apparel, hovering around 10%, industry executives say.

  • But this year there are far more exercise bikes, lounge chairs and office desks being delivered to homes as people redesign their lives and residences.

  • At XPO, which handles home delivery and returns for customers including Peloton and Whirlpool, heavy-goods shipments this summer outpaced last year’s holiday volumes. The rate of returns has also increased since the pandemic, from about 10% to around 11% on much higher volumes, according to XPO.

  • Cheap and easy returns have become a critical piece of marketing for e-commerce retailers as they try to lure customers. Online clothes shoppers routinely order multiple sizes and colors, shipping rejects back or dropping them off at a nearby store. Returning a 200-lb. sleeper sofa or a flat-pack desk that’s now fully assembled is more complicated, and more costly.

  • The returns rate at Wayfair Inc., which estimates has 9.4% of the online furniture market, has held steady at about 5%, with no “meaningful change…during the pandemic,” a spokeswoman said. Still, the online furniture retailer’s sales are rising so fast that even a steady rate of returns likely means the company has a lot more unwanted merchandise on its hands.

Walmart Marketplace GMV Will Double in 2020 - Marketplace Pulse

  • For the past two quarters, Walmart’s marketplace GMV has more than doubled compared to last year. The marketplace growth has been outpacing first-party sales growth for at least as long too.

  • During the quarter, marketplace sales grew “triple-digits” (over 100%) while overall e-commerce sales were up 79%.

  • The marketplace sales also grew at least 100% in the second quarter, according to the company. In the first quarter, the company said that while overall e-commerce business grew 74%, growth in the marketplace outpaced it.

  • Walmart marketplace has over 64,000 sellers, double since a year ago. The marketplace also provides more than 90% of the 45 million products on Walmart. Still, more than half of the two-day shipping enabled products are by Walmart itself; the marketplace provides the long tail and a growing number of fast shipping items.

All Those Used Delivery Boxes Are a Hot Commodity - WSJ

  • Surge in food and package deliveries during the pandemic is recharging U.S. market for recycled paper and cardboard.

  • Junk mail and discarded delivery boxes have turned into a hot commodity as the paper industry uses them as a substitute for recycled office paper, which became scarce as people work from home.

  • That is a sharp turnaround from two years ago, when the market for recycled catalogs, boxes and newspapers collapsed after China toughened its standards for waste paper imports.

  • Now, U.S. paper and cardboard mills are figuring out how to turn that trash into new toilet paper, coffee cups, paper towels and cardboard boxes. And they have more material to work with as people order more food and packages to their homes during COVID.

  • Many U.S. mills long avoided paper from curbside recycling programs. The low quality of paper mixed with glass, cans and household trash made it difficult to turn into new paper and cardboard. Before China tightened its standards, it had been buying two-thirds of such mixed paper collected in the U.S. The export demand kept prices high, discouraging U.S. paper mills from investing in ways to use more of it. But better screening for contaminants and the rising share of e-commerce delivery boxes in recycling bins have made that mixed paper more attractive, operators say.

  • Corrugated cardboard makes up as much as a third of the paper entering recycling plants from homes in big metro areas, up from 5% a few years ago. This surge in cardboard delivery boxes is helping to make mixed paper more valuable. The longer fibers in the cardboard make mixed-paper pulp stronger, allowing mixed paper to be used to make tissue paper and new cardboard for e-commerce boxes and other containers.

  • Prices for mixed paper have risen from zero at the beginning of the year to about $30 a ton this month on higher demand from domestic mills. That is a financial boost for some beleaguered material processors, trash collectors and cities that have seen revenue from recycling programs plunge in recent years.

  • The overall collection volume from U.S. residential recycling programs is up at least 7% from last year at this time, thanks in part to the mountain of delivery boxes piling up on doorsteps.

  • Recyclers expect prices for mixed paper to keep rising into next year because orders from foreign recyclers and paper mills are increasing. While China won’t accept any U.S. scrap exports after December, China doesn’t recycle enough paper to meet its own paper and cardboard demand, industry analysts say.


Retailers tap mall owner Simon to help make returning online purchases easier - CNBC

  • Mall owner Simon Property Group is working with the returns technology platform Narvar to accept customers’ returns from brands like Levi’s and Gap at the concierge desks at some of its malls.

  • There will be roughly $280 billion worth of returns from this holiday season, according to Salesforce estimates. Retailers are looking for solutions to give shoppers a way to make returns other than through the mail, which packs on shipping and handling costs for companies, and can be more burdensome for consumers.

  • Amazon, as one example, has been working with Kohl’s to accept its returns at hundreds of its department stores. Third-party returns platforms like Happy Returns and Narvar are teaming up with brands to accept their returns at pop-up kiosks in malls, or at places like Walgreens and FedEx. Mall owners are looking for other ways to help, too.

  • When people have a good experience making a return, they’re likely to return to shop from that retailer again, and develop greater trust with the brand. But the reverse logistics of the returns process is probably the weakest area of logistics right now. All companies should be using a physical location to accept returns, because it helps slash expenses and also is less painful for consumers.

  • The biggest U.S. mall owner Simon Property Group said Tuesday it is partnering with Narvar to give customers the option of dropping off returns at the concierge desk at a half-dozen of its malls. To start, about two dozen retail brands will be participating in the platform, the companies said, including Levi’s, Gap, Vera Bradley and Dockers. When initiating a return online, customers for these brands will now begin to see nearby Simon malls as an option, in addition to putting a return in the mail. They’ll simply bring a QR code to Simon’s guest services desk, where a Simon employee will handle the rest of the returns process.

  • According to Amit Sharma, founder and CEO of Narvar, 60% to 70% of returns pre-pandemic were transacted in stores, as most people would prefer to not have to print off a return label from home, nor wait for a refund after receiving confirmation that their returns have been received in the mail.

The implications of shipping direct to consumer - RetailDive

  • On top of high costs, fast and free delivery expectations, and returns, brands also put customer retention at risk by forfeiting control over the last mile.

  • According to an October report from Narvar, 36% of consumers experienced substantial shipping delays during the pandemic. The report also found that the average time between order placement and delivery handoff more than doubled from 1.9 days in February to 4.3 days in April. And even Amazon wasn't immune from experiencing disruptions that caused it to scale back its one-day delivery promises, limit assortment and postpone its annual Prime Day event typically held in July.

  • But even prior to the shipping headaches brought on by the pandemic, DTC brands faced their own struggles: The pressure to offer fast and free delivery

  • Amazon has fueled consumer expectations for fast delivery and to do it at no cost to the consumer. In fact, according to a Scalefast report from early March, 43% of consumers said they would choose to shop with Amazon over a DTC brand because Amazon offers cheaper or free shipping, while 36% preferred Amazon because it ships faster.

  • A large purchase like a sofa is delivered and set up inside the home, so a poor delivery experience can really make or break a customer's perception of a brand. But that also places control of the last-mile experience into those third parties, which may not have a vested interest in creating lasting bonds with the customer. Anything that goes wrong in the experience — not showing up on time, tracking mud in the home or damaging the product — the customer will associate with the brand itself. A bad delivery experience is basically throwing away all the effort that has been made in acquiring the customer. Making the customer have a great experience online and then losing that momentum with the customer at the moment of the delivery. 

  • Brands employing last-mile delivery personnel also allows them to have a physical touchpoint with customers if they don't operate offline. The delivery trucks driving around cities serve as an additional marketing channel. When direct-to-consumer brands lack street presence in the form of stores, you could think of their trucks as street presence in the form of mobile billboards.

  • But taking on the responsibility of handling last-mile can introduce new obstacles, including limiting a brand's ability to enter new markets both domestically and internationally.

  • And for the categories that ship smaller goods that don't require setup upon arrival, the benefits of an in-house delivery service may not outweigh the costs involved. Instead, those brands should focus on other aspects of improving the customer experience, including packaging and how a brand presents its products when someone from its team isn't handing the package to you.

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© 2020 Second Marathon Consulting, LLC
Matthew Hertz is the founder of Second Marathon.

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