The Perfect Supply Chain Storm: Prime Day, Peak Season, and a Pandemic

  2020 10 08 Amazon Prime Day BL

Amazon Prime Day 2020 has officially been announced to take place on Tuesday, October 13 and Wednesday, October 14 for Prime members in 19 countries around the world. The annual discount shopping event has increased sales each year kicking off in 2015. In 2019, they pulled in over $7 billion during the two-day event.

Every year, Amazon experiments with the event. However, this year will be a bigger (and less intentional) test than in the past. Prime Day has traditionally taken place in July, allowing the ecommerce leader to boost summer sales and test peak season logistics operations. Due to the global pandemic, Amazon postponed this year’s event to October. 

As online shopping rapidly grew due to stay at home orders, and new social distancing practices had to be quickly implemented at fulfillment centers and sorting centers, Amazon experienced a higher than expected demand with shares increasing 66% so far this year.

In a year unlike any other in modern history, supply chains are already reeling from unexpected disruption and volatility. For a seamless Prime Day and following holiday season, it will be even more important for Amazon, their sellers, and their competitors to fine tune their logistics networks. 

How Amazon and Their Sellers are Preparing 

Amazon faced unexpected demand earlier in the year due to the COVID pandemic. With a rise in orders and a limited workforce, they reevaluated needs for the rest of the year, announcing that they would hire 100,000 full- and part-time logistics and fulfillment workers in North America and open 100 fulfillment and delivery centers. 

While Amazon’s fulfillment network has remained competitive during this unprecedented year, capacity is still limited.

Many of Amazon’s sellers are facing challenges as well. With the pandemic, many have already struggled to move goods quickly enough and to forecast inventory needs. Further contributing to forecasting challenges is the traffic at Amazon’s fulfillment centers where Fulfillment by Amazon (FBA) sellers have experienced a delay when their inventory is received at Amazon. 

These sellers are left to decide if they should place their bets on Prime Day, or if they should focus their efforts and investment on their own holiday sales. 

A Ripple Effect on Holiday Shopping and Peak Season 

Amazon’s Prime Day timing impacts more than their sales and logistics network — the entire retail industry will feel the effects. An already challenging peak season will face even more shifts and the need for agility. 

According to the National Retail Federation (NRF), 74% of retailers think that consumers will spread their holiday shopping out over several months with 69% expecting customers to start holiday shopping in October or earlier. 

On top of earlier shopping, ecommerce sales are expected to surge. While ecommerce sales have been trending up over the last several years, this year presents a larger increase than past years. According to Deloitte, ecommerce holiday sales are expected to increase by 25% to 35% this year compared to 14.7% in 2019. 

As this year’s Prime Day seeps into holiday shopping, other large retailers are responding quickly by accelerating their own seasonal sales. For example, Target is holding their Deal Days event on the same two days. 

Not only will Prime Day impact how consumers are buying, but it will also put increased pressure on retail supply chains to ensure inventory is available and where it needs to be for this early holiday season. 

A recent report by project44, Is 2020 the End of the Delivery Economy?, found that regardless of the pandemic and associated economic challenges, 83% of consumers won’t sacrifice fast delivery and 89% won’t give up visibility into the delivery process. 

Adding this consistent expectation for fast and transparent delivery to the list of other challenges — including the early holiday shopping season intensified by the recently announced Prime Day, an increase in online shopping, and a number of roadblocks caused by the global pandemic — makes this year’s peak season a test of agility and resilience for retail supply chains. 

The First Step Toward Gaining Control Over the Supply Chain 

Supply chains have become the central focus for retailers this year. The increased attention and need for supply chain precision has brought inefficiencies and gaps in information to the surface. Manual processes and siloed data that were once good enough will no longer cut it. 

To build the agility needed to take on today’s disruption and uncertainty, companies are seeking complete visibility and automation across their supply chain. And while retailers with these practices in place will lead this year’s peak season, these initiatives have become essential throughout the year and across industries. 

With real-time transportation visibility and predictive insights across modes and regions in one place, supply chains can gain a unified view of their in-transit inventory. This comprehensive visibility allows them to handle issues before they occur, improve collaboration across parties, and deliver the results their customers expect.