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Fri December 27, 2013
Will Holiday Shipping Disaster Change Shopping Habits?
Originally published on Tue January 14, 2014 3:15 pm
More than a few Christmas shoppers were disappointed when their UPS and FedEx were unable to deliver their packages in time for Christmas.
Bloomberg’s Marty Schenker joins Here & Now’s Jeremy Hobson says the failure of the two shipping giants might show that American shopping habits, including a desire to wait until the last minute for the best possible deal, are quickly becoming unsustainable.
- Marty Schenker, executive editor of Bloomberg News. He tweets @mschenker
JEREMY HOBSON, HOST:
This is HERE AND NOW from NPR and WBUR Boston. I'm Jeremy Hobson.
UPS is now promising to refund shipping costs to some customers who didn't get their Christmas packages in time. The company has faced a torrent of customer complaints after a major holiday backlog.
Marty Schenker is senior executive editor at Bloomberg News and he's with us now. Marty, welcome back.
MARTY SCHENKER: Hi. Nice to be back.
HOBSON: So how is UPS responding to this? And what kind of an effect is it having on their business?
SCHENKER: Well, it doesn't seem to be having a tremendous impact on their business. As a matter of fact, we at Bloomberg News always talk about following the money. And if you look at UPS's stock price, it's actually higher than it was before Christmas. So it doesn't seem to be any corporate impact from an investor standpoint. But reputationally there's a big impact.
HOBSON: Well, how did this happen? And we should say, it wasn't just UPS. FedEx has had some problems as well in getting people their packages in time this year. But what exactly went wrong?
SCHENKER: Well, I think it's really retailers and - such as Amazon. And UPS and FedEx created this monster in that customers are now expecting to wait to the very last minute to order things to get the best price. And they're getting guaranteed delivery, which turns out to be not that much of a guarantee for some people.
HOBSON: And also, there were a lot more people shopping online this year. I see that online spending jumped 10 percent this - between November and December of this year. And I'm reading a quote from retail analyst Marshal Cohen, who says shippers really did not do a good job of anticipating the shift in holiday shopping. Is that what happened?
SCHENKER: I think they are a product of their own success, that's right. I think they got lulled into a sense of complacency that they can basically do whatever they wanted when they wanted. And that's obviously not the case, especially when you get $43 billion worth of goods ordered online, which is what happened this season.
HOBSON: The other question is, whose fault is it, Marty? And I have to say, if I were the victim of this and I didn't get the package in time, I'd probably wouldn't call FedEx or UPS. I would call the company that I ordered the product from. And Amazon is the first thing that comes to mind when I think of online shopping. Are they in trouble for this too?
SCHENKER: Well, I think that they too have to bear some of the blame because they - and in fact, they are a victim of their own success, because Amazon has such a sterling reputation for customer service. Everybody who uses Amazon feels so good about the experience that when it's a bad experience, it's really not good for their brand. So they obviously got some help from UPS, owning up to their problems, but still, some of that spills over to Amazon as well.
HOBSON: I bet they wish they have those drones in operation at this point.
SCHENKER: Yeah. That was a great publicity stunt, but you won't be seeing drones delivering packages in our lifetimes, I don't think.
HOBSON: One more thing I want to get your thoughts on, Marty, other news today that Target is saying that the encrypted PIN data from debit cards was among the information that was stolen during that big security breach. This is your PIN number, right?
SCHENKER: Yeah. Well, it's - they're making a fine distinction. They're saying that the encrypted PIN information was accessed but that the key to unlocking those PINs themselves was not. So they're hanging their hat on that and basically asking consumers to feel confident that those PIN numbers themselves are safe and secure. It'll be interesting to see if they feel that way.
HOBSON: Marty Schenker, senior executive editor at Bloomberg News, talking to us about Target and also UPS. Two companies that are in a lot of trouble this holiday season. Thank you so much for joining us, Marty, and Happy New Year.
SCHENKER: Same to you.
HOBSON: This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.