Amazon Prime Day's "Christmas in July" to test supply chain

  (Photo: Shutterstock)

(Photo: Shutterstock)

Today is Amazon’s annual “Prime Day.” The event kicks off today at 3:00 PM eastern time and is one of the biggest e-commerce days of the year, with sales growing over 60% year-over-year since 2016. Prime Day features deep discounts for Amazon Prime members and will generate sales to rival those of the holiday season, even during one of the year’s lowest sales periods. Retailers supplying the 560M+ items available every day on Amazon in the USA are upping their game with the help of technology to meet expectations for quick deliveries and excellent service by optimizing their shipments and improving visibility. Prime Day is not just a test for Amazon’s own network, but also that of FedEx, UPS and others. This year, Prime Day will last for 36 hours.

Massachusetts-based, Kuebix, a transportation management system (TMS) that delivers a wide variety of freight analytics, plans to take a look at the impact Amazon Prime Day will have on the supply chain.

Dan Clark, founder and president of Kuebix, says, “Amazon Prime Day is like Black Friday, only in July, and demonstrates how consumers’ adoption of e-commerce shopping is growing at a pace that far exceeds expectations. E-retailers shipping into Amazon fulfillment distribution centers (FDCs) are focusing on improving efficiencies within their supply chains and streamlining operations to keep pace with the increased volume. By leveraging the power of technology, retailers are lowering transportation costs, finding needed capacity, and gaining visibility into operations to ensure customer service expectations are met.”

The strategy behind Prime Day is to focus sales at a time of year that has been traditionally slow for the supply chain industry. There aren’t any major holidays, and back-to-school hasn’t quite started. However, the event’s popularity coupled with the capacity crunch are creating serious headwinds for retailers who haven’t optimized their supply chains. To keep up with the heightened order volume, retailers must streamline internal processes, ship products more efficiently and maintain a heightened level of visibility to order line items.

Prime Day is a huge growth generator for Amazon. According to Morgan Stanley research conducted in 2016, Amazon Prime members spend 4.6 times more than non-members; 40% of Prime users spend more than $1,000 each year, compared with just 8% of standard Amazon customers. However, in the U.S. the number of Prime users has plateaued of late. RBC Capital Markets says that while an impressive 55% of U.S. online shoppers are Prime users, year over year numbers are flat.

Like everyone in the supply chain, retailers are increasingly turning to technology to improve their internal processes through order integration, rate-comparison, freight pay, and audit features. Global logistics communities are uniting carriers and shippers to find optimal routes to share assets and fill empty miles, according to Kuebix. Powerful optimization tools are consolidating loads and planning the most efficient routes to cut down on transit time as well as costs, such as Dock411 and Convoy. All these processes are being made possible by technology and are helping to combat the capacity crunch by making shipping more efficient and utilizing assets to their fullest.

“Amazon has set the bar high in terms of order visibility. Companies are now taking advantage of technology to gain visibility into their supply chains, resulting in superior customer service and more efficient operations. The adoption of technology like tracking devices, on-board computers, and cloud-based portals means that retailers can collaborate with carriers to improve performance,” says Clark. “Carriers can provide an updated status of their delivery so that retailers know where goods are at all times and when to expect their arrival. If a delay is going to happen, the customer can be alerted, which improves satisfaction.”

The industry is braced for “Christmas in July” as the countdown to Prime Day draws to a close--or perhaps it's more like Black Friday. Amazon currently leases 40 planes in an effort to take off some of the pressure from the likes of UPS and FedEx. The company also rolls out a fleet of thousands of tractor trailers to move products between its warehouses. Amazon operates the delivery service using its own branded aircraft operated by Air Transport International, ABX Air, and Atlas Air. Its primary hub is located at the Cincinnati/Northern Kentucky International Airport. The deep discounts on more than one million items, both Amazon-branded products as well as items from third-party sellers, are guaranteed to have a large impact on the supply chain this year. In order to keep up with increased order volume and inventory turns, shippers are turning to technology to improve their processes and speed up delivery.

UPDATE: So far, we've seen one logistics snafu. Within minutes of Amazon Prime going live, their website crashed. Considering the depth and breadth of their server system, this must have been some serious traffic.

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