Alexa, set a reminder: Amazon Prime Day is Today

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” retail event– last year bringing in an estimated $2.41 billion in sales.

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 ecommerce 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 will need to be stocked, trucks, trains and planes ready to deliver and personal in place to make it all happen with Amazon’s ease and speed.

Here are a few hurdles I predict that supply chain professionals will have to overcome this Monday:

• Synchronizing (available) supply with (unpredictable) demand: Prime day will offer hundreds of thousands of product discounts 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, forecasting exactly how many people will “click on the deal” and which of the of deals will be the “blockbuster” is a planner’s nightmare.
• Keeping up with the high volume of orders: If orders were up 60% last year, we can only expect a similar surge this year, especially with 6 additional hours added to the sale. Last year, it was reported by Internet Retailer that Amazon’s conversion rate was more than 50% higher than its average. This year, they’re expecting more orders placed via Alexa than ever before, increasing the variety of channels consumers have to drive up demand. Can Amazon’s backend processing technology keep up with this dramatic increase in online sales?
• Delivering on the (Amazon Prime) promise of 2-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 48 hours later, and preferably less, I (along with every other Prime member) expect the goods will be delivered to my doorstep. While products have already been brought to Amazon’s fulfillment centers in time to be listed on the site, delivering on the last mile promise is the next big hurdle.
• High Expectations for 3PLs: In order to keep its fulfillment centers stocked so 2-day delivery is possible, Amazon will need additional support from third-party logistics providers (3PLs), causing strain on the entire industry. When carriers are scarce, rates increase, and other companies will have to delay their shipments.

Further, for these 3PLs, 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 busses will be replaced by UPS, FedEx and Amazon vehicles everywhere.

There’s no doubt Amazon has changed the retail game, forcing legacy organizations to evolve or fall behind. As Karl Siebrecht, CEO of Seattle-based on-demand warehouse start-up Flexe, told Supply Chain Dive, this day “shines a brighter light on how to do e-commerce at scale, and an even brighter light on the pace at which Amazon is innovating.” Retailers and logistics providers, take note. It will be interesting to watch and analyze how Amazon raises the bar this Prime Day.

Now Alexa, “Book everyone in the supply chain and logistics industries a vacation after Prime Day ends on July 18th” — some may need one!