Lessons shippers can learn from Amazon Prime DayLessons shippers can learn from Amazon Prime Day

Day one of Amazon Prime Day on Monday resulted in record sales, with online sales jumping 8.7% to $5.6 billion according to early data compiled by Adobe Analytics.

With Walmart, Target and others also offering special discounts this week to combat Amazon, retailers that earn more than $1 billion in revenue annually saw a 28% jump in sales on Monday compared to a year ago. Even smaller retailers saw a 22% increase in sales on Monday, CNBC reported.

The fact that other retailers are benefiting is not a surprise to Krish Iyer, head of industry relationships and partnerships at ShipStation, which provides software for e-commerce fulfillment.

“The main trend we need to start tracking is the ‘rising tide that lifts all boats’ phenomenon,” Iyer said. “Other retailers and marketplaces are also going to offer special buying incentives at the same time as Prime Day. We’ll need to monitor the spillover effect.”

Iyer said price sensitivity will be a factor as well. Adobe reported that toys on Amazon.com saw the biggest price drops on Monday, averaging about 12%. Electronics saw only a 3% discount.

“Prime Day means discounted specials to entice a consumer to buy but with the urgency of limited inventory and time,” Iyer said. “At what price point will the item for sale have a demand that allows for a higher premium on another channel, and what is this price difference/delta? For example, let’s say sheets that normally sell for $75 are on sale for $24.99 on Prime Day. This item will obviously sell out quickly. At what price threshold of discounting will another channel have a spillover effect of purchasing the item, and what is the price where this urgency converts to a sale?”

Delivery delays

Delivery of the item could also be an issue this year. Supply chain disruptions have led to longer lead times for items this year, and that may mean some items could take multiple days or even weeks to arrive on customers’ doorsteps.

“If demand exceeds supply — and it will, for certain items — what is the longest lead time of shipping/fulfillment that this consumer will reasonably allow to satisfy their demand?” Iyer asked.

It also could mean that shippers, especially smaller shippers, may have issues replenishing stock or, if they have stock, finding capacity on parcel carriers to deliver it. Glenn Koepke, senior vice president of customer success at FourKites, said these factors will add pressure to supply chains.

“With a strong economy and discretionary spending still increasing, this will put pressure on the logistics chain globally,” he said.

Looking at past data patterns, FourKites believes shipment volumes will increase around Prime Day, and that could be problematic for carriers. The company has found that on-time shipments for retailers dropped 13% during the week of June 13. That was 2% higher than overall shipments. Dwell time for the retail industry also was up 18% in the two-week period beginning June 6, hitting 60 minutes, versus an overall dwell time for shipments of 45 minutes.

“Parcel carriers reaching capacity thresholds and ability to scale up for peak season will be key to managing the overall demand surge in the market,” Koepke said. “Current ocean conditions will mean that product has to be at U.S. ports or warehouses ahead of planned time, otherwise risks of shortages to meet customer demand will be a problem.”

Prime Day means opportunity

With sales across the board rising around Prime Day, the event represents an opportunity for brands to engage with potential new customers.

“Prime Day pulls give smaller brands a unique opportunity to gain new customers and levels the playing fields versus the traditional CPG conglomerates, even if it’s for just a few days,” explained Kim Perell, CEO of 100.co, an artificial intelligence brand platform. “This type of digital exposure is critical in particular for new brands just entering the market. Although brick-and-mortar retail will not go away completely, the world of consumer products has changed in fundamental ways, and every product now needs to be marketed socially and digitally with influencers and a retail experience that is seamlessly available both online and offline.” 

Perell said brands need to leverage AI and data to understand customer wants and needs so promotion can be tailored properly. It also “de-risks the entire process of product development for a brand, small or large,” she said.

Ryan Urban, CEO of marketing firm Wunderkind, said Prime Day, as well as any online interaction, offers brands the chance to engage one-to-one with consumers.  

Read: On Prime Day, sellers rejoice – and worry

Read: An early Prime Day hurts competitors more than it helps Amazon

“The companies that are the most prepared are set up with one-to-one messages that can engage their audience at scale with little to no manual lift,” he said. “Consumers were incredibly forgiving last year, especially as retailers faced long shipping windows and back orders during the height of the pandemic, but this time around they’ll expect retailers to meet and even exceed their expectations digitally.”

Urban said text message marketing is a “very impactful” tool and can help a brand’s message get through during busy times such as Prime Day or the holiday shopping season.

“A promotion must feel personal so customers can be certain they are a brand’s top priority,” Urban said. “Consumers are savvier than ever when they shop online and when a promotion is generic, it can make a brand appear cheap and hurt company sales. We must change our perspective to realize consumers are not ‘too demanding’ but rather the industry has lifted the bar for everyone in the new digital world.”

Visible answers

Another key piece of the process for Prime Day, or any other day, is visibility into the shipment. That starts with having the right technology in place.

“It is essential for brands to have an effective mobile business strategy in place across their entire supply chain in order to keep up with the increased consumer demand during this global event,” Shash Anand, vice president of product strategy at technology company SOTI, said. “Mobile devices and apps give visibility across the supply chain and help businesses keep up with peak demand. They achieve this by providing access to real-time asset visibility on everything from drivers, to vehicles and their cargo.”

According to recent SOTI research, 46% of transportation and logistics companies with a mobile-first strategy said it has enabled them to gain visibility into critical aspects of their supply chain. Visibility is also for the end consumer though.

“Improved visibility from pickup to delivery is crucial for effective supply chain management and essential for reacting quickly to changing situations as brands prepare for [events like] Prime Day,” Anand noted.

Click for more Modern Shipper articles by Brian Straight.

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