United Parcel Service (UPS) expects to return a record 1.9 million packages on National Returns Day, up 26% year-over-year. This would mark UPS’s seventh consecutive year with a record National Returns Day. National Returns Day is on January 2.
What could drive UPS’s National Returns Day volume
UPS cited a robust increase in online sales during the 2019 holiday season as the main reason behind the expected surge in returns. According to data compiled by MasterCard SpendingPulse, online retail sales during this holiday season grew 18.8% year-over-year. MasterCard SpendingPulse gathered holiday shopping spending data from November 1 to December 24.
Moreover, e-commerce sales accounted for 14.6% of overall retail sales during the 2019 holiday season. Additionally, MasterCard data shows that Black Friday and Cyber Monday accounted for 15.4% and 24.5%, respectively, of total retail spending this holiday season.
Additionally, industry experts also anticipated record package handling by UPS this holiday season. Citing projections from SJ Consulting, Commercial Appeal predicted that UPS’s package volume would grow 5% year-over-year to 840 million. Last year, the logistics giant carried 800 million packages.
Changing consumer shopping behavior
More consumers are moving to online shopping due to the enhanced flexibility in return processes. According to UPS, consumers’ shopping behavior has changed, and they “make purchases with returns in mind.” The UPS Pulse of the Online Shopper study reports that “73% of online shoppers say the returns experience affects their likelihood to buy from a retailer again.”
UPS chief marketing officer Kevin Warren said in a press release that “For retailers, a seamless returns process is essential to keeping and growing business.” He further added, “We proudly offer businesses of all sizes—from global players to small and medium-sized merchants—the sophisticated returns services that today’s consumers demand.”
Continuing with its policy to better serve its customers, UPS has expanded its services for National Returns Day. The company has provided US online shoppers with several options to return their packages on January 2. These options include:
- Consumers can return smaller packages with labels at over 36,000 UPS drop boxes.
- Shoppers can drop off their packages at more than 4,800 The UPS Store locations.
- Consumers can return packages with labels to UPS delivery drivers.
- Shoppers can also drop off their return packages at over 14,000 UPS Access Point locations.
UPS hires 100K seasonal workers to handle the holiday rush
In September, UPS projected that it would deliver 31 million packages daily during the 2019 holiday season. The company’s COO, Jim Barber, said on September 9, “We expect another record Peak season this year, with daily package deliveries nearly doubling compared to our average of 20 million per day.”
UPS announced it was hiring 100,000 seasonal workers to handle the 2019 holiday shopping rush. Temporary employees began their work in November and will continue through 2020. To fill up the posts quickly, the company had announced a lucrative pay offer. The company pay scale for temporary staff now ranges from $14 to $30 per hour, a significant rise from the 2018 average pay of $10.10 per hour.
UPS stock performance
Back-to-back strong quarterly performances and impressive outlook have instilled investor confidence in UPS stock. UPS stock’s year-to-date return of 22.1% is almost in line with the Dow Jones index gain of 22.7%. Moreover, the stock has also outpaced the iShares Transportation Average ETF (IYT), which is up 19% year-to-date.
On the contrary, the share price of UPS’s archrival, FedEx, has suffered due to back-to-back dismal quarterly performances. Moreover, US-China trade war uncertainties and global macroeconomic concerns have also kept investors increasingly cautious about FedEx’s growth prospects.