Most people are familiar with Black Friday and Cyber Monday, which mark the unofficial start to the holiday season. But in 2015, Amazon shook things up and created a “Christmas in July” with its biggest sale of the year: Amazon Prime Day. In just a few years, it’s become a “can’t miss” online event. In 2018 Amazon reported revenues of $4.2bn on Prime Day – an increase of 33% year over year. In fact, it was so successful that in 2019 it is spanning two full days.
In my household it feels like every day is Prime Day — packages appear on the doorstep regularly, as if by magic. Amazon has surely mastered the art of e-commerce simplicity and instant gratification, but that doesn’t come without major challenges, especially during a 36-hour global flash sale.
A massive surge in demand combined with Amazon’s quick delivery promise adds up to the ultimate test for logistics providers. Warehouses, distribution centers, and partnering stores will need to be stocked and replenished based on customer sentiment and real-time demand spikes. Trucks, trains, and planes need to have engines running ready to meet the free one-day shipping commitment that Amazon has confirmed will be available to members with no minimum purchase amount.
Here are a few hurdles I predict that supply chain professionals will have to overcome this July 15th – 18th:
Synchronizing (available) supply with (unpredictable) demand
Prime day will offer over 1 million deals worldwide, with new deals popping up as frequently as every five seconds. While I know that stock has been built up for the expected surge in demand, predicting exactly how many people will “click on the deal” and which of the of deals will be the “blockbuster” is a planning and fulfillment nightmare.
Ensuring a great customer experience
If orders were up 33% last year, we can only expect a similar surge this year, especially with 12 additional hours added to the sale. This year, they’re expecting more orders placed via Alexa than ever before, increasing omnichannel consumer options will surely drive up demand.
Delivering on the (Amazon Prime) promise of one-day delivery
When I click to order on Prime Day, I’m like Pavlov’s dog — I’ve been conditioned to expect the same outcome as I’ve had in the past. No more than 24 hours later, and preferably less, I (along with every other Prime member) expect the goods will be delivered to my doorstep. While products will have already been strategically distributed across the Amazon distribution network based on anticipated demand and inventory optimization algorithms, delivering on the last mile promise is the next big hurdle.
High expectations for the logistics network
To keep its fulfillment centers and “ship from store” locations stocked so one-day shipments are possible, Amazon will need additional support from third-party logistics network of carriers, freight forwarders and other third-party logistics providers, causing strain on the entire industry. When carriers are scarce, rates increase and other companies will have to delay their shipments. Further, for these third-party logistics providers, delivering Prime Day purchases, the stakes are high. They must plan their logistics efficiently (loads, routes, shipments) to deliver on Amazon customer expectations, while also trying to avoid the waste that comes with less-than-truckload (LTL) shipments. Summer holidays may have started in the US, but the school buses will be replaced by UPS, FedEx and Amazon vehicles everywhere.
Now Alexa: “Book everyone in the supply chain and logistics industries a vacation after Prime Day ends on July 18th” — some may need one!