Before you head to Amazon and click “Add to cart” on the 50 items on your holiday shopping list this year, you might want to reconsider. Americans are planning to spend more than they ever have on family and friends, with an overall expected price tag of more than $630 billion. About half of that shopping will be done online, according to the National Retail Federation. And even though consumers seem confident about spending more money on gifts this year, they might be spending more than they had anticipated — all because of shipping costs.
For the most part, paying shipping fees can feel like a small price to pay for avoiding long register lines and sardine-like department stores. But those prices are going up.
Last year, United Parcel Service hired a small army of people to make up for a 2013 holiday season rife with late deliveries. But the pendulum swung too far in the other direction, and a loss of productivity from an employee surplus dragged down UPS’s 2014 earnings. The company’s stock suffered in early 2015, but the boys in brown said they had a solution: They would add a surcharge to home deliveries that would help them recoup some of their losses.
The changes took effect earlier this year, but unless you regularly get lots of boxes delivered to your home, you probably haven’t noticed — and won’t until you start your online shopping in time for gift-giving season. Depending on the type of package being shipped to your home, you could pay anywhere from $0.15 to an extra $5 per box. Keep in mind, you’ll also have to pay those charges if you’re turning around and shipping those wrapped gifts to your aunt in Florida and your sister in California.
According to UPS, it costs three times as much to deliver the sweater you ordered online than it does to deliver 10 boxes of office supplies to the store down the street. And because online retailers, UPS, and FedEx haven’t been able to figure out the secret formula to shipping demand — especially over the holidays — consumers will pay the price.
If you haven’t noticed the extra surcharges, you might have noticed other signs of this change. For example, Consumerist suggests that fewer online retailers will offer free shipping deals because of the cost increases. At the very least, you might have to buy more to earn the free shipping perk. You can put up a fuss all you like, but online sites won’t want to offer it unless they can make up those costs elsewhere.
“Companies need to continue to explore all viable options from a carrier standpoint and should be evaluating them now,” John Haber, CEO of Spend Management Experts, told Reuters. “It’s clear that cost increases are on the horizon in 2015.”
So how can you avoid these fees? UPS itself is ramping up its use of Access Points, which are centrally located drop-off locations, often at small businesses located in your city or town. Another Reuters report says UPS has now increased the program to 8,000 locations in 100 test market cities.
By using access points, UPS can save time and money by having drivers drop off numerous packages at one location, instead of one or two boxes at every home on your block. You’ll avoid the residential delivery surcharge, and UPS will hopefully have a more effective delivery season.
UPS has a lot at stake in getting this year’s delivery system right. If the company slips up for a third year, “Heads would roll,” Greg Donaldson, founder of Donaldson Capital Management, told Reuters.
If you’re determined to buy your gifts online but are skeptical of the access points, there are a few other options you can try. You can have your boxes delivered directly to UPS stores, where you’ll pick it up and avoid extra fees for your trouble. (A hint, however: Most of them operate now as access points, so you won’t be the only one trying to pick up a box after work.) You can also have boxes delivered to your work — although you’d better clear it with your boss and be able to trust your coworkers.
Chances are, it’s only a matter of time before access points and joint drop-offs are commonplace — especially if the system works smoothly this year. But if you’d like to avoid that and extra shipping altogether, your best bet might be the mall.
Follow Nikelle on Twitter @Nikelle_CS