Peak Bulletin 2022
Gauging the Pulse of eCommerce Delivery
The Peak Bulletin puts together unique insights on carrier updates, industry happenings and parcel volumes based on GFS proprietary data.
This year, we’ve taken it up a notch to share a wider perspective on what’s happening across the industry with guest commentary and proprietary data from IMRG, UK’s leading authority and largest eCommerce membership community.
Read on to see if Week 48 withstood the fire of forecasts and if it matched up with its ‘predecessor’ 2021.
GFS data perspective on parcel volumes and delivery performance across the industry
In more recent years, Week 48 and Week 49 have seen the highest volume for the year. Is it the same for retailers this year or have they just scraped through?
VOLUMES: PUMPED UP OR TONED DOWN?
Data on parcel volumes — are numbers up to or above expectations and industry forecasts, or have they caved under the excruciating uncertainties of 2022?
Our headline volume has been in line with expected forecasts, however, we have seen significant variations across retailers and carriers with volume swings due to the Royal Mail strike on Black Friday resulting in a surge of volume entering carrier networks on Cyber Monday.
Some carriers have suggested their volume on Cyber Monday was far greater than forecast. Initial analysis shows that the increase has not come from their largest retailers but in SME volumes, which is linked directly to retailers switching volume from Royal Mail.
Week 48 volume increased by over 8% versus week 47, which is lower than in the previous years — the week-on-week increase in 2021 was almost double this level.
Volume across this weekend was 30% lower than the Black Friday weekend; this was to be expected as fewer retailers were working over the weekend with a reduction in weekend collection requests.
This variation reiterates that Black Friday sales volume was flatter than expected with lower sales across the weekend running into Cyber Monday. As we’ve mentioned before, this could be a direct result of Black Friday sales starting much earlier in 2022 with volume spread over a longer period.
The “mood” of digital shoppers this week and how it’s driving performance metrics across product categories.
UK shoppers are potentially saturated and overwhelmed with intense Black Friday messaging, but interest is still up as consumers are trying to find the best deals they can to save in the run-up to Christmas. Online searches for Black Friday sales rose by a quarter since last year as customers look to save money (Audit Lab).
The pressure is ON for parcel deliveries — how are carriers faring in the race to the customer’s doorstep?
The increase in parcel volume means some carriers are now advising that there may be a one-day delay in delivering to some postcode locations, and courier recruitment in the impacted areas remains a challenge.
Some carriers have now increased incentive payments for people joining with loyalty bonuses for working through until Christmas.
Volume is being managed to ensure that any delay and backlog is minimised.
The delivery mix has seen a small change between Next Day and 2-day services, with the proportion of parcels shipped on a Next Day service increasing by 4%.
Overall, carriers are reporting that they’ve had a strong weekend delivery performance. Whilst there might still be some delays at the start of the week, Hubs and Depots are in a strong position to support another week of high volumes.
Was Black Friday week a little better than we anticipated for online retail?
In September, IMRG carefully curated a total market and categories forecast for the 21st – 28th November 2022.
The total market defied the gravity of extenuating circumstances, such as the cost-of-living crisis and the World Cup clash, scoring a positive territory revenue result of +0.3% YoY (Year-on-Year), albeit still very low.
While clothing generally performed better than other online retail categories throughout 2022, in the last little while we have seen its growth drop away. In Black Friday week the category performed worse than expected (0%), at -1.1% YoY.
In comparison, health & beauty had a fantastic time considering it was one of the earliest categories for live Black Friday campaigns this year. In keeping up the weekly momentum, the result was +3.8% YoY.
Simultaneously, electricals had their fair share of joy as they experienced a growth of +2.8% YoY. Perhaps they have the football extravaganzas to thank!
While it is not as steep as we predicted, home & garden did see a decline of -0.7% YoY. This negative territory figure is compared to 2021, a pandemic year that saw more customers stuck indoors, and thus they might already have relatively new furniture. Also, high-budget items might not cut people’s Christmas wish lists this year.
Now that the dust has settled on the Black Friday peak, what actually happened is becoming clearer.
We were anticipating a decline of -5% in online revenue for the week. The day of Black Friday was indeed down -5.5%, but growth for the week as a whole was flat (+0.3%). While this may sound like a disappointing result, it is ahead of forecast and, in the context of this year, means that demand in November was ahead of where it has been for most of 2022.
Prior to November, we had only recorded positive growth in two weeks over the summer, which was driven by extreme heatwaves due to spikes in garden and clothing sales. In November, we recorded three weeks of positive growth in a row – two of them lower than a single percentage point, but positive nonetheless – and in 2022 that has been very hard to come by.
Andy Mulcahy, Strategy and Insight Director, IMRG
SIT TIGHT AND WATCH
We ask the questions we’d like answered this week
While things look positive and this is good news for retailers on the surface, it does leave a question mark over December and January trading, as volume might have been pulled forward to take advantage of discounting.
And at GFS, historical data shows Week 49 has traditionally tracked higher than Cyber Monday week. Some carriers however are now anticipating a drop in volumes versus last week as the next Royal Mail strike is on Friday, 9th December. Watch out for our Issue #4 to see how these anticipations are met.