* Strong early holiday sales bode well for UPS, FedEx
* Record e-commerce, m-commerce drive deliveries
* Lean brick and mortar inventories may need replenishing
By Lynn Adler
Dec 1 (Reuters) - A combination of brisk online orders for items from tablet computers to Omaha Steaks and thinly stocked shelves at conventional stores is lending a fresh dose of holiday cheer for shippers United Parcel Service and FedEx.
Blockbuster sales on Black Friday and Cyber Monday largely exceeded analyst expectations, raising the likelihood that the two largest package delivery companies will notch record delivery volumes during the 2011 holiday season.
Analysts will now keep a close eye on whether an expected late-season rush to grab new discounts in the final days before Christmas lifts UPS and FedEx above their expectations for the season.
The holiday season has become increasingly important to shippers as shoppers shift more of their business to e-commerce and m-commerce -- buying more goods via the Internet or mobile phone. This puts more small packages on trucks and planes operated by FedEx and UPS, both of which have shipping contracts with most of the biggest e-tailers.
UPS has contracts with 21 of the top 25 e-tailers, based on rankings from Internet Retailer magazine.
In addition, retailers - pressured by uncertain economic conditions - have generally kept leaner inventories, and this boosts their reliance on speedy shipping services to help them fill immediate upticks in demand.
The two companies ship goods, such as Kindles and ski jackets, directly to consumers for a wide array of Internet or catalogue companies such as Amazon and Lands' End. Traditional big box retailers, such as Best Buy , also are relying on UPS or FedEx to ship items like digital cameras and video games directly to customers.
Cyber Monday online sales jumped 22 percent to a record $1.25 billion, closely watched Web tracking firm comScore Inc said. IBM Benchmark, an International Business Machines Corp unit, estimated a higher 33 percent increase..
UPS is seeing a gradual shift in doing business directly with individual consumers, rather than dealing with the businesses that sold most of the goods they purchased. About 35 percent of UPS's domestic volume is "B to C", or business to customer, rather than business-to-business shipments. Fifteen years ago, that share was just 10 percent.
For the entire season, UPS expects bricks-and-mortar business to grow in the low single-digit percent area, compared with the double-digit growth forecast on the online side
"UPS and FedEx both were planning on 5 to 10 percent parcel volume growth in the December peak period this year versus December peak last year," said Benjamin Hartford, senior research associate at Robert W. Baird in Milwaukee.
"That's supported by the leanness of inventories, the continued penetration of e-commerce deliveries, and their models supporting both of those activities in the holiday shipping season."
FedEx and UPS both set records in the 2010 holiday season.
UPS did not forecast volume for the full season, but expects "peak week" volume, for the seven days leading up to Christmas, to rise 6 percent and is hiring 10 percent more seasonal workers this year than last to handle the extra business.
FedEx sees a 12 percent jump in holiday deliveries to record volume this year, driven by ever-growing online sales and a gradual economic improvement. It is hiring nearly 18 percent more seasonal workers this year.
"We certainly are helping brick and mortar stores replenish their inventory at any given point," said UPS spokesman Norman Black. "The more the online sector strengthens and grows and becomes an even more important part of retailing, the more important a factor it is to our business."
"Because of the recession, retailers learned they would have to do some discounting, find some way to entice people to buy, and they wanted to do that as absolutely long as they possibly could to Christmas," said Black.
UPS expects to deliver 25 million or more packages on at least five of the last 10 days before Christmas. Last year it had only one day of that magnitude.
Consumer confidence is rising from depressed levels, but the early holiday sales rush in response to aggressive promotions could be followed by a lull until more deals are announced just before the holidays, economists and retail analysts agree.
"This goes back to a game of chicken," said David Bassuk, head of AlixPartners global retail practice. "Shoppers are willing to wait until the last minute for deals. We will see a big pop right before Christmas that will be driven by promotions."