2024 Short Holiday Season, Online Shopping Create Record Package Surge

The National Retail Federation (NRF) predicts that holiday sales in 2024 will grow between 2.5% and 3.5% compared to 2023, with more purchasing coming from online shopping which is expected to grow by 9%. The surge in package volume with increased sales, more online purchases, a shift in Hanukkah timing, five fewer shopping days, and an increase in returns will create a higher volume of packages that need to be processed. Layering into the substantial increase in holiday package volume is the higher prioritization and expectation of faster delivery speeds by consumers.

Holiday Package Volume Surge

Regarding preparation, FedEx stated it has implemented comprehensive measures through collaboration with major customers and operational enhancements, including a modernized infrastructure. “Our global team of more than 500,000 members is ready and excited to ensure holiday shipments are delivered securely and on time,” said Jason Brenner, senior vice president of Digital Portfolio at FedEx. The company has optimized its network for large package handling and invested in advanced technology to address potential disruptions.

Fast And Free: Holiday Shipping’s Double Standard

Other factors contributing to a higher volume of packages are free and expedited deliveries, and threshold policies that retailers use to increase purchasing. Consumer demand is strong for faster delivery times with 55% of consumers willing to pay for same-day delivery, and 45% willing to pay for next-day delivery, according to the FedEx Whitepaper, Ecommerce Insights and Trends. “Cost-saving on delivery is a priority for many, but there is still strong demand for faster delivery when urgency is a factor,” stated Brenner.

Consumer delivery preferences reveal a nuanced balance between speed and cost, according to Brenner. The key for retailers, Brenner explains, lies in strategic timing. “Retailers can navigate this by identifying when to offer premium shipping options that consumers value and are willing to pay for, while still maintaining standard, cost-saving delivery for other purchases​. This balance maximizes customer satisfaction by aligning delivery speed with willingness to pay,” said Brenner.

Winning the Free Shipping Game For Holiday

Consumer willingness to increase cart size for free shipping creates a strategic opportunity for retailers to optimize threshold policies. By analyzing customer data and testing various minimum order values, companies can find the sweet spot that encourages larger purchases while maintaining profitable operations. “Retailers can leverage consumer data to optimize thresholds and maximize both revenue and customer satisfaction by testing different order minimums,” says Brenner. He emphasizes that success comes from strategic implementation: “By strategically adjusting thresholds based on consumer behavior, retailers can drive higher cart values and meet customer expectations, resulting in increased revenue and stronger customer loyalty.”

E-Commerce Drives Holiday Higher Returns

On the topic of reverse logistics (largely returns at this time of year), FedEx anticipates substantial return volumes driven by e-commerce growth. “Increased e-commerce volumes often correlate with higher return volumes. Given the continued growth in e-commerce, returns during the holiday season are expected to remain significant. Regardless of the time of year, our data shows that offering free returns is a top purchase influencer for online shoppers,” explains Brenner. In the fall of 2024, FedEx launched its FDX platform which includes an automated returns process. In one case, there was a 30% reduction in manual effort and a 40% decrease in customer service cases”, stated Brenner.

Holiday Returns Management Gets a Smart Upgrade

The holiday return rate is projected to be 20.4% of total retail sales, according to the NRF and Happy Returns report. While retailers are staffing up fulfillment centers to handle increased returns, hiring untrained seasonal staff at high labor rates may not prove to be successful in getting returned merchandise back in stock in a timely manner. However, leveraging specialized returns solutions like Happy Returns can significantly enhance operational efficiency and customer satisfaction during peak seasons.

“We aggregate returns at a regional Return Hub before shipping in bulk, which streamlines the process of receiving returns; on pallets, sorted into individual bags, with labels that correlate to advanced shipping notices delivered electronically, making it much faster and easier to check in returns, prepare them for resale and restock the shelves,” says David Sobie, CEO and co-founder of Happy Returns.

The company’s innovative approach combines box-free drop-off locations with streamlined processing, allowing merchants to manage reverse logistics more effectively while reducing strain on store and warehouse staff. “Our drop-off service for online returns can reduce the burden of extra visits to a merchant’s stores during the busy holiday season,” says Sobie.

Future-Proofing Holiday Delivery

As retailers, reverse logistics companies, and shipping providers prepare for an unprecedented surge in 2024 holiday package volumes, success hinges on the delicate balance of speed, cost, and service efficiency. Companies like FedEx and Happy Returns, a UPS company, lead the way with innovative solutions that address forward and reverse logistics. The integration of automated processes, strategic shipping options, and specialized returns management demonstrates the industry’s evolution in meeting consumer demands for faster delivery and seamless returns.