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Illustration: Aïda Amer/Axios

The 2020 holiday buying season is expected to be like no other: An avalanche of ecommerce deliveries, merchants running promotions earlier than ever, and tight crowd controls on Black Friday.

Why it matters: Retailers desperately need the revenue from this critical time of year — and they fear that overwhelmed package-delivery services will leave their customers high and dry (and angry).

What's new: The pandemic is changing the dynamics of the annual gift-buying ritual.

  • More people than ever say they'll be buying most of their stuff online.
  • With Halloween expected to be a bit of a bust this year, more stores will put renewed emphasis on Christmas and other year-end holiday sales.
  • Target, Walmart and others have vowed to stay closed on Thanksgiving.

The intrigue: "All the traditional last-mile delivery carriers [like FedEx, UPS and DHL] will run out of capacity at some point in the season," predicts Caila Schwartz, a senior industry strategist at Salesforce Commerce Cloud. "So we anticipate that 700 million packages are actually at risk of being delayed this year."

  • Some retailers will offer 15% discounts to people who fulfill in the stores, she says.
  • 2020 is expected to be the biggest year yet for a trend called "click and collect" or "BOPUS" (buy online, pick up in store).
  • Returned gifts and packages are expected to reach record levels as well.

Both UPS and FedEx — already strained by the COVID-induced ecommerce boom — are proactively slapping fees on huge mailers like Amazon and Target, sometimes as much as $3 to $4 per package.

  • Schwartz predicts COVID-related mailing surcharges will amount to $4.5 billion.
  • This price tag could strain the margins of retailers, who may be reluctant to raise prices too much and turn customers off.
  • UPS says it has already been seeing holiday levels of demand, and hired 39,000 employees in Q2 to deal with it.
  • FedEx, meanwhile, "has limited the number of items that Kohl’s Corp. and about two dozen other retailers can ship from certain locations, as the delivery company tries to prevent its network from being overwhelmed during the coronavirus pandemic," per the WSJ.

What to watch: With so many Americans worried about their finances and fearful of entering physical stores, retailers may have to lower their expectations.

  • "Elections are not good for the retail economy," Karl Haller, an IBM retail expert, tells Axios. "The uncertainty about what the future holds tends to depress the desire to go out and spend on discretionary items."
  • According to IBM's annual retail survey, Americans will likely be buying more groceries, alcohol and building materials/home improvement supplies, and fewer personal electronics and clothes (except for athleisure).
  • As Haller put it: "We’ve got a polarizing election that’s going to boost liquor sales."

The bottom line: Experts advise getting your shopping done as early as you can.

Go deeper

Dion Rabouin, author of Markets
Dec 3, 2020 - Economy & Business

The silver lining in 2020's weak Black Friday sales

Data: Placer.ai; Chart: Axios Visuals

Black Friday was disappointing for retailers this year, as spending numbers underwhelmed and foot traffic declined dramatically, according to data from analytics firm Placer.ai.

By the numbers: Customer visits were down, on average, more than 26% compared to Black Friday 2019 at the six retailers Placer tracked.

48 mins ago - World

Netanyahu campaigns against Biden's plan to save Iran deal

Netanyahu campaigns at a gym last month. Photo: Pool/AFP via Getty

Israeli Prime Minister Benjamin Netanyahu indirectly criticized the Biden administration for its intention to return to the Iran nuclear deal and told his supporters he was prepared to "stand against the entire world" to stop it.

Why it matters: This is a major change of tune for Netanyahu, who had been careful in his statements on the Iran deal and avoided publicly criticizing President Biden. The statement was part of Netanyahu's attempt to rally his base ahead of Israel's election on March 23.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Tech: "Fludemic" model accurately maps COVID hotspotsVirtual doctor's visits and digital health tools take off.
  2. Politics: Schumer says Senate will stay through weekend to vote on COVID relief — Republican governor of West Virginia says there's no plan to lift mask mandate.
  3. World: Canada vaccine panel recommends 4 months between doses.
  4. Business: Firms develop new ways to inoculate the public.
  5. Local: Ultra-rich Florida community got vaccinations in January.