2014 HOLIDAY SHIPPING TRENDS

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1 2014 HOLIDAY SHIPPING TRENDS Attention US Shoppers: There are only 3 more shipping days until Christmas The peak shipping day was Dec. 15 for the UPS and the US Postal Service, and FedEx s peak is on Dec. 22 Many retailers are offering same- day delivery, and Amazon just announced one- hour delivery in New York City Retailers offer a variety of shipping options for delivery before Christmas, and most offer in- store delivery DEBORAH WEINSWIG Executive Director Head Global Retail Research and Intelligence Fung Business Intelligence Centre deborahweinswig@fung1937.com New york:

2 Holiday Shipping Only 3 Shipping Days Left Until Christmas Attention US Shoppers: There are only 3 more shipping days until Christmas, so please place your orders now in order to receive your goods before the holidays. December 15 was the peak shopping day for most US shippers using regular shipping, however many retailers are still offering shipping for delivery before Christmas. Here, we discuss a variety of shipping methods used by retailers this holiday season, including same- day, in- store pickup, and one hour or less. RETAILERS There is much diversity in terms of the ways retailers can get goods to their customers, from two- day shipping to one- hour shipping to in- store pickup. Some retailers even provide consumers with details on the amount of inventory at specific store locations. The following selected retailers and shippers have announced same- day delivery: Amazon Nordstrom Walmart Barnes & Noble ebay USPS Google Verizon Wireless Once again Amazon is setting the standard (while raising the bar) in terms of shipping methods and customer service. Amazon On the (B)Leading Edge Amazon has long been a leader in its shipping offerings, with multiple options, including free two- day shipping for subscribers to the $99- a- year Amazon Prime service. Amazon already provides same- day delivery, and The Wall Street Journal reported on Dec. 18 that Amazon will offer one- hour delivery for $7.99 and free two- hour delivery, with an initial launch in New York City. Amazon also offers a creative method for picking up packages for those unable to receive FBIC Global publication: holiday shipping 1

3 packages, called the Amazon Locker, which is an electronically operated locker contained in convenience stores, parking garages, including some 24- hour locations. When the package arrives, the buyer receives a code that unlocks the locker. Amazon received much media attention a year ago after mentioning that it was exploring the use of drones for airborne package delivery, and the company is currently using robots from Kiva and Robostow for order fulfillment. IN- STORE PICK- UP Offering in- store pickup of goods has become commonplace, and major retailers offer the service, as seen in the table below. Overview of Shipping Methods for Selected Retailers (as of Dec. 18, 2014) Retailer Next- Day Two- Day Three- Day 3-4- Days Standard In- Store Pickup Best Buy X X X Coach X X X X Costco X X GAP X X X X JC Penney X X X X X Kmart X X Kohl s X X X Macy s X X Nordstrom X X Sears X X Staples X X Target X X X X X Staples has taken customer service one step further and provides a view of the quantity available at nearby stores. Staples Pick Up Today Information 2

4 SHIPPERS Dec. 15 is already behind us, which was the peak shopping day for many shippers. Several shippers were overwhelmed by holiday shipping last year and have added additional capacity this year. The table below contains an overview of selected shippers information. Overview of Shippers Peak Days and Declines Shipper Peak Day Peak Number of Items (Mil.) FedEx Dec US Postal Service Dec UPS Dec Shipping Deadline (Dec.) 17 (Ground) 23 (Express) 15 (Standard) 20 First/Priority 23 (Priority Express) nd 20 (2 Day Air) 21 (Next Day Air) Specifically, FedEx calls this season, the Super Bowl for delivery services. The company projected total delivery of 22.6 million parcels on Dec. 15, up from 22 million packages last year. During the busiest week last year Dec. 7 to 13 FedEx s network forwarded 83 million packages. FedEx plans to make about 50,000 holiday hires this year, up sharply from 20,000 last year UPS expects to ship 34 million packages worldwide on Dec. 22 and 585 million packages in the month of December, up 11% YoY. Six days in December will each exceed 31 million packages, versus 17 million packages on an average day. This year, UPS expects to make 90,000-95,000 seasonal hires, up from 55,000 last year On Dec. 15, the peak mailing day for UPS and the US Postal Service (USPS), the USPS will process more than 640 million greeting cards, letters and packages, up from 607 million items during last year's peak day. From Thanksgiving to Christmas Eve, the USPS expects to deliver a total of 12.7 billion letters, cards and packages FBIC Global publication: holiday shipping 3

5 Deborah Weinswig, CPA Executive Director Head Global Retail Research and Intelligence Fung Business Intelligence Centre Global (FBIC Global) New York: Hong Kong: Marie Driscoll, CFA Christine Haggerty John Harmon, CFA Amy Hedrick Fong Lau Lan Rosengard Jing Wang 4