December 6, 2017 / 10:41 PM / in 9 days

Surging online orders slow Wal-Mart delivery network

SEATTLE/CHICAGO (Reuters) - Wal-Mart Stores Inc said on Wednesday that soaring online purchases have caused delays in its distribution network, reflecting the challenge retailers and delivery services face in handling strong peak-season ecommerce demand.

“The week of Thanksgiving is an incredibly busy time for all of retail,” “With massive volume going through our system, there were some orders that took extra time, much like other major e-commerce sites,” Wal-Mart spokeswoman Danit Marquardt said of the week of Thanksgiving.

“A vast majority of orders are shipping on time now,” she added.

The backlog reflects the degree to which Wal-Mart, United Parcel Service and other companies struggled to handle peak ecommerce volumes despite months of preparation and major investments to expand and upgrade distribution facilities.

“This shows they’ve got more volume and they are not hitting some delivery windows, but it is not going to affect anyone’s Christmas,” said Satish Jindel, President of ShipMatrix, Inc, which analyzes shipping data.

Wal-Mart declined to comment on the number of customer orders impacted.

One senior FedEx employee said Wal-Mart’s national distribution network had fallen behind in processing some four million customer orders, though he declined to elaborate on how this impacted FedEx deliveries.

A FedEx spokesman declined to comment.

“The FedEx networks are performing as designed,” the spokesman, Glen Brandow, said.

UPS, which declined to comment on Wal-Mart’s backlog, has also unveiled a number of surcharges in recent years, seen as a way to manage the higher costs associated with e-commerce.

Adobe Analytics forecasts a record $107.4 billion holiday season for online orders, the first ever to cross the $100 billion mark, it said on Wednesday.

FedEx said it expected to deliver 380-400 million packages globally during the peak shipping season.

FedEx rival UPS has shifted more employees to certain markets to work through temporary delays caused by high volume and expected to clear the backlog this week, the world’s largest package delivery company said on Tuesday.

UPS and FedEx have invested billions to upgrade and expand facilities in part to handle the boom in ecommerce business over the last decade, leaving investors chaffing over the expense.

Wal-Mart, the world’s largest retailer, offers free two-day shipping on millions of items when the order size is over $35. The retailer said online sales surged 50 percent in the last quarter.

Reporting by Eric M. Johnson in Seattle and Nandita Bose in Chicago; Editing by Andrew Hay

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