Net vendors feel UPS strike pinch

The strike by the Teamsters against UPS is having serious repercussions in the world of Internet shopping, particularly for smaller retailers.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
2 min read
The strike by the Teamsters against United Parcel Service is having serious repercussions in the world of Internet shopping, particularly for smaller retailers.

"The strike has put a complete halt to our business," said Ross Markbreiter, president of the World Wide Web Store. The online computer products catalog, which normally ships between 10 and 50 orders per day through UPS, is feeling the crunch as online consumers shy away from the prospect of unreliable delivery.

Larger online retailers like Dell Computer and Gateway 2000 are downplaying the strike's impact on their business. The companies have implemented contingency plans that rely on other carriers such as FedEx and Airborne Express.

But industry analysts say even the larger retailers may feel the pinch depending on how long the strike continues and how well UPS competitors pick up the slack.

"It's really going to be up to the capacity of alternate carriers," said Kevin McCarthy, equity analyst with Donaldson Lufkin & Jenrette.

If online retail customers face delays in delivery, they may put off their purchases, added McCarthy. "To the extent that the strike goes much more than a week, we could start to run into some issues that could affect the quarter."

One alternate carrier that has felt strike shock waves is FedEx. The express delivery carrier, which reports an increase of approximately 30 percent in daily shipments, is not accepting new accounts, is restricting orders on existing accounts, and has rescinded its money-back guarantee.

The company also reports that activity on its Web site has nearly doubled from about 150,000 visits per day to 281,000 yesterday.

FedEx customers can use the Web site to track a package, find the nearest drop-off site, generate a shipping label, and determine rates. The shipper has responded to the increased traffic by migrating two of its servers onto a speedy T3 line.

But some online vendors that rely on FedEx are suffering because of the UPS strike. "It's a bitch," said a spokesperson at Thefoodstores.com, who asked not to be identified. Because FedEx will not guarantee its next-day shipments, the food store has had to turn down almost all orders for perishable items. This constitutes half of the company's business.

The gourmet food retailer, which has 70 percent of its customers on the East Coast and 80 percent of its goods coming from the West Coast, is accepting some orders, including a shipment of edible flowers to the United Nations.

"We packed them in ice," added the spokesperson. "And we're keeping our fingers crossed."