By Lisa Baertlein
(Reuters) – On-time delivery rates fell for Amazon.com Inc (NASDAQ:AMZN) van drivers in the latest week, consulting firm ShipMatrix said on Wednesday, but the online retailer said its performance was “far better than what’s being reported” even as it dealt with record Cyber Monday orders and regional winter storms.
Amazon van drivers delivered 93.7% of U.S. packages on time during the week ending Dec. 7, down from 98.2% during the prior week that included Thanksgiving, ShipMatrix said.
Amazon called the ShipMatrix data “inaccurate”.
“Some deliveries were briefly impacted by weather but we worked quickly to re-balance capacity across our network,” spokeswoman Rena Lunak said in a statement.
This holiday season is a crucial test for Amazon’s in-house delivery operations. Retailers are racing to secure sales with speedier delivery and other promotions. Amazon.com rolled out one-day shipping in April. A few months later, FedEx Corp (NYSE:FDX) canceled its air and home delivery agreement with the world’s leading online retailer.
Amazon van drivers handle the lion’s share of Amazon’s own deliveries, which often originate from local hubs in primarily urban areas. They are expected to drop off roughly 275 million packages between Thanksgiving and Christmas, more than double last year’s number, according to ShipMatrix.
SMALL MARGIN FOR ERROR
Analysts have warned that Amazon’s decision to accelerate delivery speeds just months before the busiest time of the year would dial up pressure on the company.
“The more you ratchet down (delivery) time frames, the less margin you have for error,” said Evan Armstrong, president of supply chain consulting firm Armstrong & Associates.
Many Amazon shoppers pay $119 a year for “free” one- and two-day Prime shipping.
“If you ordered on Amazon and it’s late, Amazon’s going to get the blame,” said Cathy Morrow Roberson, founder of consulting firm Logistics Trends & Insights. “I don’t think this year people are going to be as forgiving as in the past.”
PRIME CUSTOMER DISAPPOINTED
Lacheal Wright waited eight days for the Vtech writing tablet, Nerf toys and hard-to-find Bumblebee Transformer figure she ordered from Amazon on Cyber Monday. Those Christmas gifts for her son were originally slated for delivery on Dec. 5 but arrived Dec. 10.
Wright, 37, whose home in Cincinnati is 20 minutes from two Amazon warehouses, said she had been looking all over for the Bumblebee Transformer and said that was the only reason she did not cancel the entire order. Now that it has arrived, she plans to cancel Prime.
“I pay for Prime. I expect it on time,” Wright said. Her area, which is home to Amazon’s air hub, had snow the weekend before Cyber Monday. A check of that week’s weather showed precipitation of less than 1 inch.
Amazon’s logistics unit in just a few short years has built a U.S. network with hundreds of facilities, nearly 50 leased airplanes and some 30,000 delivery vans.
“Since Amazon is a retailer, fulfillment company and delivery carrier (all-in-one) … delays could be resulting from delays in the fulfillment of the order,” ShipMatrix President Satish Jindel said.
On-time delivery rates during Cyber Monday week were 92.7% for United Parcel Service Inc (NYSE:UPS), 90.4% for FedEx Corp and 92.3% for the U.S. Postal Service. UPS said it experienced weather-related delays in multiple regions during the week. The company and other nationwide carriers move packages greater distances and are more exposed to disruptions than Amazon van drivers who handle short “last-mile” deliveries.
UPS, USPS and other carriers are expected to deliver 180 million Amazon packages during the holiday season, according to ShipMatrix, which has been using proprietary software to track on-time deliveries since 2013.
In 2013 an unexpected surge in Amazon packages swamped shippers, delayed gifts and prompted the Seattle company to take control of delivering merchandise to people’s homes.
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