SYLVIE DOUGLIS, BYLINE: NPR.
(SOUNDBITE OF DROP ELECTRIC'S "WAKING UP TO THE FIRE")
SALLY HERSHIPS, BYLINE: Meaghan Thomas lives in Louisville, Ky. She is the co-owner of a small online business - just her and her partner - Pinch Spice Market. And recently, she got the kind of email that, if you are a small business owner, you do not want to get.
MEAGHAN THOMAS: It said, I purchased your spice, and your store said it would be here by December 1 through 12, exclamation point, exclamation point, exclamation point. This is December 3 and no spice, question mark, exclamation point times three. There's lots of exclamation points here. And then he just signed his name and said, not happy.
CARDIFF GARCIA, HOST:
OK, impatient there much, email correspondent? The window for delivery was December 1 through December 12. It's only the 3, all right? There's still time. But it is the case, sadly, that people do not like it when something takes a long time to deliver. That's very true.
HERSHIPS: Yes. Welcome to retail. And as you have probably figured out by now, Meaghan's company sells spices. And as you can also tell, one of her customers is unhappy because the order he placed is what he considered to be late. And to be clear, this was not Meaghan's fault. She got the order out on time. The problem here was shipping.
THOMAS: Shipping right now - it has been great up until about a week ago.
GARCIA: Yeah, that's when Black Friday hit. And because of the pandemic, online sales have just exploded this year, and not just for holiday shopping. For example, according to a study from Adobe, last year there was a bump between October and November, as you'd expect, when online grocery orders went up 10% for Thanksgiving. This year, that same bump was 560%.
(SOUNDBITE OF MUSIC)
GARCIA: I'm Cardiff Garcia. And as you just heard, I'm joined today by Sally Herships. Sally, you've brought us this great story. Welcome back.
HERSHIPS: Thank you. I'm on time.
GARCIA: You are on time. You're always super on time. No reason for any super impatient and rude and obnoxious emails. But back to the show.
The story you've brought us, Sally, is about how e-commerce is growing far more quickly than expected and how that has led to a kind of classic economic problem of supply and demand and how they are out of sync.
HERSHIPS: Yeah. So this summer, back when the country was in the middle of this huge economic crisis, emarketer.com projected that online sales would increase this year by about 20%. But sales are growing so quickly they have almost doubled that number. And not surprisingly, shipping companies are having trouble keeping up.
GARCIA: And, of course, the holiday season is now upon us. For lots of businesses, this is such a critical time of the year when they can make a huge chunk of their sales in just a couple of months. And so today on the show, we are checking in with one small business to see how it is coping with the shipping shortfall, and we are going to take a look at the holiday shipping landscape overall. That's right after a quick break.
(SOUNDBITE OF MUSIC)
GARCIA: We all know what it's like when we order something online, and it's late. It's a pain in the you know what. You know, for retailers, shipping delays can set off this kind of ripple effect of these far more serious and expensive problems - for example, returns. Those pants that were too small or the sweater that turned out to be kind of a weird color - you or I might just shove that in a box and send it back to the retailer. But if the box holding that sweater is stuck in a warehouse somewhere, then it can't be sold while it's just sitting there, obviously. So for retailers, these shipping delays can end up sort of tying up all their money.
HERSHIPS: Yeah, and Meaghan, the co-owner of the spice business, says one of her biggest fears from shipping delays is losing customers. She says most of her customers - 65% - return. And for the most part, those customers are understanding about delays. But it can be hard to hold onto new customers when what they ordered is late or it doesn't show up at all.
In one respect, though, the pandemic has helped Meaghan's business. She has had incredibly rapid growth. Sales are eight times higher for her than last year. But now, coming up to the holiday season, shipping is really crushing her. She uses the post office, so she's had a taste of this back during the summer when the Trump administration started cutting the post office budget.
THOMAS: On a scale of one to 10, the delays were a nine or 10 at times. It's the worst we've ever seen it.
HERSHIPS: Meaghan says the packages of spices - they were just not moving. 10% of the packages were getting delayed, and 5% or sometimes even more were just getting totally lost.
THOMAS: What we would do - we ate that cost. We want our customers to be happy. It's not their fault that this is happening. So we would ship out another package of their spices for free.
HERSHIPS: They also gave out coupons to customers - $10 off as a way to say, hey, I'm sorry your package is delayed. And all of this is obviously really expensive.
GARCIA: This is sort of a classic problem where supply and demand don't match up. In this case, demand for shipping services has just shot up, and supply just hasn't caught up yet. And so one of two things tends to happen in a situation like this. Either the price of the product - in this case, shipping services - goes up, or the product itself, these shipping services, just fail to materialize. And that's what's happening here. We do not have a big enough supply of shipping services. And businesses - especially small businesses, which have already taken such a beating from the pandemic - are suffering.
HERSHIPS: And so with this shipping shortage looming and the holidays coming up, Meaghan says she did a number of things to prepare. Remember, she and her partner had this big cash cushion standing by. So she says first they bought the supplies they needed, like tins and bags for spices, ahead of time so she doesn't have to deal with shipping delays. And she also found this very special workaround.
THOMAS: We've become friends with a lot of the people working at the post office. It's helped to drop off some spice samples, too, and kind of - I'm not going to say bribe, but it is a bribe, I am going to say bribe - to kind of get to the front of the line. And sometimes they can do that. Sometimes they can't.
HERSHIPS: Why not just use FedEx or UPS?
THOMAS: So we use USPS primarily...
HERSHIPS: So this is a big question to answer. So I'm going to jump in and summarize part of what Meaghan said here, which is that the USPS is awesome and affordable, and that for small businesses like hers, other services like UPS and FedEx can be more expensive.
GARCIA: Yeah, and there's another part to this, which is that FedEx shared an email with us which says, in part, and I'm quoting, "while FedEx is known for its speed and reliability, we encourage our customers not to wait until the last moment to ship their holiday gifts to friends and family and to shop and ship early this year." That's basically FedEx admitting that, hey, there could be problems with shipping delays this year, and it is still going to cost you an arm and a leg. So even the big companies could be dealing with delays this year. And, Sally, I think it's only right that we let Meaghan get to the other part of the answer to this question.
THOMAS: We really don't have a lot of sway with UPS and FedEx. They give a lot of priority to big box stores who have contracts with them for heavy discounts and for priority shipping, meaning they get kind of ahead of the line. So it's really hard to compete with that.
HERSHIPS: I emailed both companies to ask them about this. FedEx says it doesn't discuss customer agreements publicly. UPS says that Meaghan's statement is not accurate, and it's really working to help small businesses which have been hit extra hard by the pandemic.
GARCIA: Now, we can consider Meaghan to actually be kind of lucky. After all, she has a cash cushion to help her business get through this. A lot of companies don't. And they may have to take out loans, and that could cause its own set of problems.
HERSHIPS: Yeah. And speaking of problems, I got an update from Meaghan a couple of days ago. She says the shipping delays are getting worse for her company. Twenty percent of their orders are delayed up to four days right now. Packages are getting lost. She is working around the clock, doing customer service, dealing with questions like that email we heard earlier. She was up until 2:30 in the morning the night before she sent me this email. So she and her partner just decided they are going to offer UPS shipping to their customers and eat half the cost.
GARCIA: So we have some simple advice for everyone, which is order your holiday presents now, as soon as possible, unless you want Santa to have to work overtime this year, which might even make him late. Sally, thanks for bringing us this story.
HERSHIPS: Thanks for having me.
(SOUNDBITE OF MUSIC)
GARCIA: This episode of THE INDICATOR was produced by Nick Fountain and fact-checked Sean Saldana. THE INDICATOR's editor is Paddy Hirsch, and THE INDICATOR is a production of NPR.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.