Amazon.com, Inc. (NASDAQ:AMZN) is offering refunds on shipping charges or $20 gift cards to consumers after the United Parcel Service, Inc. (NYSE:UPS) failed to deliver packages on Christmas.
Amazon evaluating performance of the delivery carriers
The e-commerce giant emphasized that the orders of the consumers were processed by its fulfillment centers in time for the holiday delivery, and shortcoming was committed by the transportation networks of the shipping companies. Mary Osako, spokesperson for Amazon.com, Inc. (NASDAQ:AMZN) said the e-commerce giant is evaluating the performance of the delivery carriers.
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According to United Parcel Service, Inc. (NYSE:UPS) it would be able to deliver the majority of the delayed packages today, and it will refund all of the air and international shipments placed during the peak season, but there will be no refunds for ground shipments. In addition, the company has no guarantee for ground orders made after December 11.
UPS explains reason for failed deliveries
United Parcel Service, Inc. (NYSE:UPS) explained that the volume of its air packages exceeded its capacity immediately before Christmas. The company said it would resume is normal delivery schedule today.
Craig Johnson, president of Customer Growth partners LLC commented, “You had a perfect storm of events from the consumer side, the retailer side and the shipping side. At the last minute this year, a number of retailers extended their cutoff date to get there by the 24th. Normally those kinds of schedules are all kind of prepared or coordinated with the carriers.” According to him, the retailers tried to compensate for a “mediocre” holiday shopping season.
Amazon to cut out middle man?
When asked if retailers like Amazon.com, Inc. (NASDAQ:AMZN) would be able to cut out the middle man, Jonson told Bloomberg, “It’s entirely possible that Amazon could basically vertically integrate downstream to the shipping and fulfillment. They have their own distribution centers so they are not far away from it.” However, Johnson noted that it would be a challenge for the e-commerce giant to develop its own fleet and it is still more efficient to contract out to United Parcel Service, Inc. (NYSE:UPS) or the United States Postal Service (USPS).
Last October, United Parcel Service, Inc. (NYSE:UPS) and FedEx Corporation (NYSE:FDX) estimated that a shipping capacity of approximately 129 million packages and 85 million packages, respectively, is achieved during the first week of December. The companies also anticipated a second holiday rush during the week before Christmas. According to FedEx 99% of its ground packages were delivered on time.