business news in context, analysis with attitude

Responding to yesterday's pieces about Christmas e-shopping issues as well as Target's continuing troubles, one MNB user wrote:

The amount of shopping I’ve done at Target has been waning the last couple of years.  So I was not one of the people worried that my credit card had been compromised.  However. I did find their weekend offer of 10% off all purchases intriguing.  My iPod had died and this seemed like a good time to  get a new one.  So I ventured to our local mall on the Saturday before Christmas (something I general avid like the plague).  When I got the electronics department the manager told me that the offer was good on everything in the store except Apple and Boise products (supposedly in the fine print somewhere, but could never find it after the fact.)  But the manager said it probably doesn’t matter because they only color in stock was pink.  The manager admitted they were having problems with in-stocks on the items consumer really wanted to buy.

So my recent experience with Target is that there is a reliability question with their credit card system, their promotion to get people back in-store was not completely true and there really isn’t any reason to go back because they have in-stock issues with the products I’m most interested in.  Staying at home with Amazon et al continues to look better all the time.

From another reader:

Kevin, there is going to be a lot of finger pointing by all parties with regards to shoppers not getting the last minute gifts which they were guaranteed by Christmas. I have no dog in the race, but as a Consultant, I did poke into the infrastructure of how it all works out of my own curiosity.

The delivery carriers (UPS, FedEx, etc) all hired short term help. They rented trucks from U-Haul and others. Many deliveries occurred well after what is normal; most of us know exactly when our FedEx delivery truck comes and often I saw them 2-3 times / day and consistently delivering after 8pm at night. I talked to 8 different drivers who all said they were incredibly busy and the expectation placed on them was to get every package delivered before they returned to their facility. I was told that everyone in the local area facilities was working overtime and flat-out as they get every package out that came in that day.  Now, 8 different driver discussions doesn’t yield statistically significant research, but it pointed out to me that the problem was more likely upstream, less likely in the delivery city.

My own knowledge of airline scheduling tells me that part of the problem could well be how these airplanes can be redeployed, if at all, to handle more through the distribution (package transmission) process. When many short delivery orders are received, the airplanes can’t easily be redeployed / repositioned. There is no doubt that this is a potential issue and one not easily solved. Some will say “then ship it on a commercial carrier” but freight always goes 2nd priority to checked baggage.  (And, it’s hard to imagine drones being the answer; let’s set that futuristic idea aside for the moment.)  There simply aren’t enough freight-only 747’s and A-380’s to redeploy for package transmission on a moments notice.

While some of the online sellers are saying it isn’t their fault, it is hard to imagine that the online sellers won’t conclude they must cut off Christmas guarantees sooner in 2014. It will be interesting to see these changes next holiday season.  Let’s hope they don’t conclude an option “for an extra fee of $x, we’ll GUARANTEE you get it by Christmas Eve”. I’d rather they have a guarantee that says “If we guarantee it will be there and it can’t, then we’ll pay for you to pick up the same item (model number) at the closest retailer”.  Now, that would be an online reseller who means customer service.

Since Amazon doesn’t make any money anyway – and Wall Street seems OK with mediocre profits from Amazon – I think Amazon could set an “amazing” standard with this guarantee, don’t you think?

MNB user Don Skiver wrote:

How many of those little ones were disappointed on Christmas day when “Santa” couldn’t deliver their presents on time???  I do shop online too, but “when it absolutely, positively, has to be there” I prefer bricks and mortars . . .

This assumes that stores don't have out of stocks. Seems to me that the real problem is people who wait too long to shop … though as I've said, it isn't a winning strategy for retailers to blame customers for anything. (Not being a retailer, I can blame anyone I want.)

MNB reader Pete Deeb wrote:

I think the Holiday season of 2013 will be a season of learning for the entire E retail supply chain including the consumer. Rather than placing and/or accepting blame the E retailers and the shipping companies should do some joint analysis and some future projections based on the exponential growth of this segment of Holiday business. I am not sure anyone could have predicted the volume this year BUT the future should see improved performance. As for consumers they need to be realistic in their expectations. To your point I am sure many of these purchases were substitutes for the people you see in stores on 12/24 every year.

And from another:

My husband and I were just having this same discussion over the last couple of days.  We really utilized our Amazon Prime membership and every single package was delivered on time.  I happen to be one who waits until the final hour to buy Christmas presents so Amazon Prime is a life saver.  I have to say that although they were working tirelessly, every UPS or FedEx driver whom I crossed paths this Christmas were as friendly as could be and I thank them for their service.  The retailers were the ones promising last minute deliveries and they caused the flood of last minute deliveries to pile up.  I agree with you, Jeff Bezos will figure out a solution before the end of 2014.

MNB user Howard Leader wrote:

I am a 60 year old guy who understands the convenience, but seldom uses the Internet for buying gifts. This year I decided to buy gift boxes for my adult children and have them get them prior to Christmas. I ordered food baskets from Wine Country USA on the 11th of December, with free delivery by the 20th. One package delivered on time to New Jersey. I checked the delivery status with UPS for the 2nd package to Austin, and was told the delivery committed by UPS on the 20th ,  was now delayed to the 24th. I knew my son was leaving Austin on the 21st and no one would be there to receive the package. Alarmed, I got on the phone to Wine Country, and without any hesitation, they offered a replacement basket to be shipped overnight to where my son would be (at the in laws) in Midland, TX.  UPS again failed to meet their overnight commitment and the delivery was finally made in 2 days, and was received on the 23nd.

The customer service from Wine Country way exceeded my expectations… Not only did they address my concerns,  upon his return to Austin, my son found the original package waiting for him on his porch. The gift that kept on giving!

From another:

I wanted to send a note to let you know how much I appreciated your comment regarding late Christmas deliveries,

“And I'm not sure that parent who waits until two days before Christmas to order that game that the kid absolutely has to have … well, I'm not sure that this parent has a legitimate complaint."

I watched and read all of the news stories about how all of these customers were let down and how angry they were and all I could think was that if their gifts were so important and critical to the success of Christmas for them, then why did they wait until the last minute to order them?  And don’t even get me started on how somewhere the meaning behind Christmas must be lost on these people if their holidays were ruined because of a gift snafu.  Personally, if this had happened to me, I would have seen it as a teaching opportunity for my kids, not an opportunity for me to get angry and complain about being a “victim”.

On the importance of valuing people on the front line as assets, not costs, one MNB user wrote:

Hasn’t Costco proven this concept, time and again?

I talked recently to the Costco Club Manager in Brandon, FL who told me they finalized their seasonal part time staff early in November and didn’t expect any seasonal workers would become full time staff because they had no transition of full time staff. I learned from someone else that every seasonal staff member hired came from other retailers.

Costco’s model of few SKU’s, creating “want merchandise”, and being ahead of the season works. But so does the way they treat their staff. Its likely one of their best kept secrets to growing sales /store.

MNB reader John Domino wrote:

I have agreed with you for many years, although I dare say that most of my Harvard B -School classmates may be just coming around to the "labor force as critical asset mentality."  Some of the companies in the food industry that have the highest P/E ratio's and market capitalizations are Costco and Whole Foods, both of whom invest in better wages, better benefits and employee empowerment.  These investments lead to less turnover, a more motivated and energized staff, better customer service, higher customer loyalty, higher sales, and ultimately higher profits.

Many HR departments stammer on about the virtues of employee engagement, hire multi-million dollar consultants, and waste millions on hollow programs that have little meaning or impact.  However, when it gets close to the end of a quarter, or sales drop off by .5%, the first reaction at these companies is to cut labor, cut training and always to team up with their primary competitors in the market to negotiate wage cuts in the next union contract.  A real culture of respecting and empowering employees is not easy and does not come naturally for many retailers (especially where they have a unionized work force with union leadership that is stuck in a 1970's mentality), but those that do (and this is a real advantage for many independents) lay a foundation for long term success.

Yesterday's MNB contained a discussion about e-reading vs. using paper-and-ink books, leading one reader to write:

Adding to the dialog in this morning’s “Your Views”, I want to let you know that my mom, who just turned 90, has been a voracious reader all her life and has lately been struggling with traditional books because of arthritis in her hands. Holding the weight of traditional books, especially heavier ones, has become a hindrance to reading. She and my father were given an iPad Air for their November birthdays (he’s 91 now) and she, especially, seems to have fallen in love with reading books on the new, light weight medium. It’s also such a blessing that both of my folks are willing and able to learn a whole new technology in their 90s! They download books from the local library and have discovered how easy it is to do.


Good for them.
KC's View: