Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Surging online orders slow Wal-Mart delivery network

Published 12/06/2017, 08:03 PM
Updated 12/06/2017, 08:03 PM
© Reuters. FILE PHOTO - A customer pushes a shopping cart at a Walmart store in Chicago

© Reuters. FILE PHOTO - A customer pushes a shopping cart at a Walmart store in Chicago

By Eric M. Johnson and Nandita Bose

SEATTLE/CHICAGO (Reuters) - Wal-Mart Stores Inc (NYSE:WMT) said on Wednesday that soaring online purchases have caused delays in its distribution network, reflecting the challenge retailers and delivery services face in handling strong peak-season ecommerce demand.

"The week of Thanksgiving is an incredibly busy time for all of retail," "With massive volume going through our system, there were some orders that took extra time, much like other major e-commerce sites," Wal-Mart spokeswoman Danit Marquardt said of the week of Thanksgiving.

"A vast majority of orders are shipping on time now," she added.

The backlog reflects the degree to which Wal-Mart, United Parcel Service (NYSE:UPS) and other companies struggled to handle peak ecommerce volumes despite months of preparation and major investments to expand and upgrade distribution facilities.

"This shows they've got more volume and they are not hitting some delivery windows, but it is not going to affect anyone's Christmas," said Satish Jindel, President of ShipMatrix, Inc, which analyzes shipping data.

Wal-Mart declined to comment on the number of customer orders impacted.

One senior FedEx (NYSE:FDX) employee said Wal-Mart's national distribution network had fallen behind in processing some four million customer orders, though he declined to elaborate on how this impacted FedEx deliveries.

A FedEx spokesman declined to comment.

"The FedEx networks are performing as designed," the spokesman, Glen Brandow, said.

UPS, which declined to comment on Wal-Mart's backlog, has also unveiled a number of surcharges in recent years, seen as a way to manage the higher costs associated with e-commerce.

Adobe Analytics forecasts a record $107.4 billion holiday season for online orders, the first ever to cross the $100 billion mark, it said on Wednesday.

FedEx said it expected to deliver 380-400 million packages globally during the peak shipping season.

FedEx rival UPS has shifted more employees to certain markets to work through temporary delays caused by high volume and expected to clear the backlog this week, the world's largest package delivery company said on Tuesday.

UPS and FedEx have invested billions to upgrade and expand facilities in part to handle the boom in ecommerce business over the last decade, leaving investors chaffing over the expense.

© Reuters. FILE PHOTO - A customer pushes a shopping cart at a Walmart store in Chicago

Wal-Mart, the world's largest retailer, offers free two-day shipping on millions of items when the order size is over $35. The retailer said online sales surged 50 percent in the last quarter.

Latest comments

trying to separate chaff from grain here: wmt seems to have issue with fee's charged by carriers. it wasn't backlogged orders. my opin, is wmt is a short. ymmv.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.