Amazon reviews shippers after holiday hold-ups

Richard Waters

Amazon is looking at the performance of delivery companies handling its orders after packages were left stranded in distribution centers instead of being placed under Christmas trees.

The online retailer pointed the finger at others for the failure, saying it had processed orders in time and was "reviewing the performance of the delivery carriers".

It added that it had limited the number of new customers for Prime, its service that provides free shipping and other benefits in return for a $79 annual membership fee. The move came before reports spread of a rash of delays to ecommerce deliveries in the U.S. in the run-up to Christmas.

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Ken James | Bloomberg | Getty Images

UPS, which is estimated to handle around 45 per cent of package deliveries in the U.S., blamed severe weather in parts of the country and a surge in ecommerce for a backlog that overwhelmed its air delivery network, leaving an unspecified number of packages stuck in its logistics centers this week.

Amazon said it had held back the growth of its Prime service "during peak periods to ensure service to current members was not impacted by the surge in new membership".

Despite that, it said that it had signed up more than 1 million new customers during the third week of December, leaving it with "tens of millions" of customers for the service.

The comment, pointing to a Prime membership of more than 20 million, was the closest Amazon has come to revealing how many people use the service, which provides free two-day delivery as well as access to Amazon's streaming video and ebook lending services.

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Holiday shipping issues trigger consumer complaints
Holiday shipping issues trigger consumer complaints

Amazon said it had given $20 gift cards to its own customers who had failed to get gifts they ordered.

UPS said that an unexpected flood of packages had left it struggling to keep up in the final days before Christmas. "The volume we received was more than forecast," a spokeswoman said on Thursday.

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The holiday shopping season was compressed by Thanksgiving falling later in November than usual, the delivery company said, while ice storms in the western U.S. had caused backlogs at Dallas/Fort Worth airport that reverberated through its system.

The shift towards online shopping this year was also bigger than some forecasts had projected, with IBM reporting that online sales jumped by 21 per cent on Cyber Monday, traditionally the busiest day in the U.S. ecommerce calendar. UPS said it expected to clear its Christmas backlog by the end of Friday.

(Read more: Amazon offers Sunday deliveries with US Postal Service)

By Richard Waters of the Financial Times