FedEx is so overwhelmed with online orders from major retailers that it's capping shipments from some two dozen stores until at least May 19. The companies whose orders FedEx has limited include Abercrombie & Fitch, Bed Bath & Beyond, Belk, DSW, Eddie Bauer, Hobby Lobby, Kohl's, Neiman Marcus and Nordstrom, The Wall Street Journal reports.
FedEx told Ground workers in a memo leaked to the Journal that those stores "have seen significant volume growth since the spread of COVID-19. In a time of already high volume growth, capping the number of packages to be picked up at these locations will limit any negative impacts to the FedEx Ground network." A spokesperson for FedEx told Business Insider that the limitations are similar to what the company mandates around the holidays as a measure to ensure reliable service during a time of unusually high volume.
The spokesperson also said that some stores are directly passing their goods to their closest FedEx Ground facility to bypass hub sortation. Additionally, the shipping company has reportedly increased Sunday delivery and hiring in certain locations.
As government-mandated shutdowns from the coronavirus have endured over recent weeks, people are starting to buy more of less essential goods that retailers like Hobby Lobby or Kohls might sell. In fact, market-research firm Rakuten Intelligence found for the first half of April, compared to the first half of March, Americans bought nearly nine times as many books, nearly three times as many toys and games, and more than twice as many sports and outdoor items. Purchases of beauty products uptick by 38 percent. "It went from people trying to stock up and maybe buying a little bit more than they needed to understanding that things are OK, I can move beyond the basics of food and shelter," Jamie Minney, senior vice president of marketing and public relations at Rakuten Intelligence told CNBC.
While online shopping has been increasing for years, the pandemic is accelerating the rate, with Adobe Analytics reporting that sales online popped by 49 percent in April. The FedEx shipping cap shows that the unexpected deluge of packages is disruptive to normal business activities, with UPS and Amazon seeing disruptions as well.
UPS said it delivered 19 percent more packages in the first three months of 2020 compared to last year. But the increase in residential over commercial deliveries ended up eroding the company's profit margins. Meanwhile, Amazon halted all third-party package shipments last month, and had to ban warehouse deliveries of nonessential goods in March.