Why Amazon Has a Leg Up On the Online Competition, Thanks To Its Massive Customer Base

Amazon Says This Year’s Prime Day Surpassed Black Friday and Cyber Monday Combined

Notwithstanding warehouse workers’ protests and renewed calls for consumers to cancel their Amazon Prime memberships, Amazon once again topped previous record-setting Prime Days with what it’s calling the “largest shopping event” in Amazon’s 25-year history.

As reported by Lauren Thomas of CNBC, Amazon said it sold more than 175 million items during this year’s Prime Day shopping event, more than its sales for the past Black Friday and Cyber Monday combined (watch the video >>).

The online retailer, which didn’t disclose an actual sales figure in the press release (read below), called the two-day sale across 18 countries and ran for 2 days the “largest shopping event in Amazon history.”

It also said that on Monday and Tuesday it sold more Amazon devices - like the Echo Dot, the Fire TV Stick, and Alexa Voice Remote - over a two-day period than it ever has before.

Boost to Sales for Amazon’s Rivals

Thomas further stated that Prime Day 2019 also delivered a boost to sales for Amazon’s rivals, many of which have been touting their own deals all week to compete with Amazon Prime Day.

The 48-hour shopping extravaganza gave large retailers a boost in online sales of 68%, on average, according to Adobe Analytics, which measures the transactions of 80 of the top 100 internet retailers in the U.S. Adobe classifies large retailers as companies that have more than $1 billion in annual revenue.

Niche retailers, which Adobe classifies as those that bring in less than $5 million in annual sales, saw a 28% lift in digital sales, according to the firm. Last year, niche retailers saw a decrease in sales, Adobe said.

Walmart, Target, eBay, Macy’s and Best Buy have all been running deals this week. Target pushed discounts for its in-house home goods brands. Walmart is expected to run deals, on everything from Google Home smart speakers to Instant Pots, through Wednesday. Breaking News: Walmart Deepens Store-Digital Integration as Web Unit Struggles.

Read: Could Amazon Be Worried About The “Walmart Effect”?

Jason Woosley, vice president of Adobe’s commerce product division, stated;

“Prime Day has become an indisputable summer shopping holiday, greatly benefiting online retailers that can attract consumers to their site through compelling email campaigns or offering value-add services like buy online, pick up in-store.”

Amazon’s website also experienced a major glitch during Prime Day 2018, which only ran for 36 hours, potentially giving rivals an even bigger boost when shoppers couldn’t order through Amazon. But that wasn’t the case this year.

Catchpoint, which monitors websites’ performance rates, said Amazon “did an amazing job staying technically available and loading fast under heavy traffic during Prime Days.”

Amazon Prime Day Creates Logistics Challenges and Opportunities

Logistics Management's Group News Editor Jeff Berman wrote, while Prime Day does materially bump up demand and subsequently network volume levels, it also has a trickle-down effect, of sorts, on other major supply chain stakeholders, too, like UPS and the United States Postal Service, among others.

Since Amazon initially introduced Prime Two-Day shipping in 2005, domestic margins for UPS fell from 15.7% in 2005 to 8.9% in 2018, noted Robert W. Baird and Co. analyst Ben Hartford in a research note earlier this year.

“Amazon has been increasingly developing its own logistics capabilities since the early 2000s, leading some investors to believe that insourcing from Amazon's logistics efforts has led to margin erosion at UPS (and FDX),” he wrote.

“We think the impact has been less direct but nonetheless still very consequential: Amazon's creation of customer demand and expectations for B2C led to e-commerce's rapid development over the past 10-15 years. As a result, we recognize the risk a similar headwind being presented to parcel providers if the migration to free ‘One-Day’ becomes adopted and expected in customer preferences.”

And there is also clearly a subsequent post-Prime Day impact on the USPS, too, according to Carson Krieg, co-founder, and director of Carrier Operations at Austin, Texas-based Convey Inc., a software company focused on improving the delivery experience for retailers.

“Last year, the week after Amazon Prime Day, USPS shipping volume across Convey retail customers dropped dramatically - from a typical 20-30K/week down to 2.1K/week (or approximately 92%), said Krieg.

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“This raises important questions about whether retailers chose to purposely avoid USPS that week, if the glut of orders created too many logistical issues for the carrier, or if retailers lost that much in business after consumers spent their hearts out on Prime Day. One thing is clear: for parcels that did go through the USPS system, average transit times spiked from 3.3 days to 4.4 days (33%), and negative customer feedback increased by 10%. It’s an important warning sign for USPS and the retailers who rely on it this year: Amazon is not only expanding its own delivery footprint but also increasingly biting into sales and shipping capacity for others during this period - requiring them to find new ways to create positive customer experiences and uphold brand promises through actionable insights and collaboration.”

Convey’s Krieg added that the two-day Prime Day spike, in a sense, serves as a third major shopping holiday, with Black Friday and Christmas, with the common theme being the Prime Day impact on parcel carrier capacity.

As for Amazon Prime Day itself, he said, he said it swamps the abilities of the USPS, adding that the impact of the rest of the e-commerce retail group for those few days is also pretty significant.

“Having a multicarrier ecosystem [during Amazon Prime Days] means retailers are not relying on a single point of failure,” he said.

“If you are going to leverage the USPS by itself, what we saw last year was a spike in FedEx volume, which speaks to the need for a backup, or contingency plan, for things like origins, when an order is processed and inventory planning, and exception management,” he said.

“What we see in our data is that 70% of our exceptions can happen in the first [part] of delivery and not the final mile, which is kind of counterintuitive to what people think of the last mile being the hardest, due to things like incorrect deliveries and addresses. With Prime Days, the exception issues relate more to the carrier or customer load times, origin source problems, unreadable bar codes, and other things that can go awry when a ton of volume disrupts the status quo.”

While Amazon Prime Day is well known as an annual event, that does not mean it is not overhyped, noted Jerry Hempstead, president of parcel consultancy Hempstead Consulting.

“Today is the premier example of hype, excess, and impulse buying,” he said. “Does any prime day buyer really need their purchases tomorrow? My birthday is two months away and Christmas is five months away. Amazon is promoting next day delivery because they can do it (much of the time) but in the end what is lost if the item is delivered in two days or five? One of the big items hyped today is the Echo Dot for $22. The world will not cease turning if you don’t get it tomorrow…or the Firestick for your TV.”

Hempstead also observed that unfortunately all this excess will put a strain on UPS and the USPS the remainder of this week, noting that the possibility exists that really urgent deliveries might get delayed as Amazon (and other retailers piggybacking on the sales hype) flood the networks with items that may not truly need this level of next day delivery. FedEx and DHL also benefit from Amazon Prime Day, he said.

Whether you are keen on online shopping or not, it goes without saying that Amazon Prime Day has become more than a big deal in supply chain and logistics circles.

There are many spokes on the wheel it creates over a two-day period that goes on and on, and it will only continue to spin as e-commerce continues to take a bigger piece of the action going forward.

Amazon Press Release

July 17, 2019, at 9:21 AM EDT

Alexa, How Was Prime Day? Prime Day 2019 Surpassed Black Friday and Cyber Monday Combined

Members worldwide purchased more than 175 million items, from devices to groceries and more, throughout Prime Day
Prime Day was the biggest event ever for Amazon devices – top-selling deals worldwide were Echo Dot, Fire TV Stick with Alexa Voice Remote, and Fire TV Stick 4K with Alexa Voice Remote
Prime members in the U.S. received tens of millions of dollars in Prime Day savings by shopping from Whole Foods Market – best-selling Prime Day deals were organic strawberries, red cherries, and blueberries
Millions of people around the world streamed Prime Day events including the Prime Day Concert presented by Amazon Music and headlined by 10-time GRAMMY Award-winning artist Taylor Swift

SEATTLE - (BUSINESS WIRE) - Jul. 17, 2019 - (NASDAQ:AMZN) | This year, Prime Day was once again the largest shopping event in Amazon history with more than one million deals exclusively for Prime members. Over the two days of Prime Day, on July 15 and 16, sales surpassed the previous Black Friday and Cyber Monday combined. Prime members purchased more than 175 million items throughout the event. Prime Day was also the biggest event ever for Amazon devices when comparing two-day periods – top-selling deals worldwide were Echo Dot, Fire TV Stick with Alexa Voice Remote, and Fire TV Stick 4K with Alexa Voice Remote.

“We want to thank Prime members all around the world,” said Jeff Bezos, Amazon founder and CEO. “Members purchased millions of Alexa-enabled devices, received tens of millions of dollars in savings by shopping from Whole Foods Market and bought more than $2 billion of products from independent small and medium-sized businesses. Huge thank you to Amazonians everywhere who made this day possible for customers.”

Global Highlights from Prime Day 2019

Prime members worldwide saved more than one billion dollars throughout Prime Day.
Millions of items shipped in one day or faster using Prime Free One-Day, Prime Free Same-Day, or Prime Now worldwide – making it the fastest Prime Day ever.
Members in 18 countries shopped – double the number since the first Prime Day five years ago.
Amazon welcomed more new Prime members on July 15 than any previous day, and almost as many on July 16 – making these the two biggest days ever for member signups.
Customers made their homes smarter by purchasing millions of smart home devices. Top-selling deals included iRobot Roomba 690 Robot Vacuum, MyQ Smart Garage Door Opener Chamberlain MYQ-G0301, and Amazon Smart Plug.
Customers purchased 2x as many Ring and Blink devices this Prime Day as last year when comparing two-day periods.
Prime Day was the biggest event ever on Amazon for Alexa devices with screens, such as Echo Show and Echo Show 5.
This was the best Prime Day ever for Fire tablets, with Fire 7 tablet as the top-seller. This was also the best Prime Day ever for Kindle devices.
Customers purchased hundreds of thousands of Amazon kids’ devices this Prime Day, such as Echo Dot Kids Edition, Fire 7 Kids Edition tablet, and Fire HD 8 Kids Edition tablet.
Customers purchased 2x as many Fire TV Edition Smart TVs as last year’s record-setting Prime Day when comparing two-day periods. Since launch, customers have purchased millions of Fire TV Edition Smart TVs.
This Prime Day was the biggest sales event ever for eero on Amazon - customers purchased 6x as many devices as any previous sales event for eero.

More Entertainment this Prime Day than Ever Before

Millions of people around the world streamed Prime Day events – including the Twitch Prime Crown Cup featuring FIFA 19 and Apex Legends and the Prime Day Concert presented by Amazon Music and headlined by 10-time GRAMMY Award-winning artist Taylor Swift.

Highlights from the Prime Day Concert include Taylor Swift performing “You Need to Calm Down” live for the first time ever; SZA performing a rendition of the iconic ‘90s pop classic “Kiss Me” by Sixpence None The Richer; Dua Lipa’s rousing performance of her hit, “Blow Your Mind (Mwah);” and Becky G’s world debut of her fiery new track entitled “Dollar.” Prime members in 200 countries can still exclusively watch select songs from each performance from the Prime Day Concert on Prime Video. For more details on the show and to add it to your watchlist, head to primevideo.com/primedayconcert.

U.S. Highlights from Prime Day 2019

A record number of Prime members shopped during Prime Day in the U.S.
Prime members purchased more than 100,000 lunchboxes, 100,000 laptops, 200,000 TVs, one million headphones, 350,000 luxury beauty products, 400,000 pet products, 650,000 household cleaning supplies, and more than one million toys.
Prime members purchased more than 200,000 LifeStraw Personal Water Filters and 150,000 Crest 3D White Professional Effects Whitestrips Kits.
This year, Prime members in the U.S. received tens of millions in Prime Day savings when they shopped at Whole Foods Market. The best-selling Prime Day deals were organic strawberries, red cherries, and blueberries.

Prime Day Best Sellers by Country

Members shopped across nearly the entire catalog of products including electronics, beauty, fashion, grocery, toys, furniture, everyday essentials, school supplies, and more. Some of the top-selling deals from around the world, excluding devices, included:

United States: LifeStraw Personal Water Filter, Instant Pot DUO60, and 23andMe Health + Ancestry kits
United Kingdom: Sony PlayStation Classic Console, Oral-B SmartSeries Electric Toothbrush, and Shark Vacuum Cleaner
United Arab Emirates: Al Ain Bottled Water, Ariel Laundry Detergent, and Fine Towel Tissue Roll
Spain: yobola Wireless Bluetooth Headphones, Philips Multigroom Series 7000 All-in-One Trimmer, and DoDot Diapers
Singapore: Meiji Fresh Milk, Coca-Cola Zero Sugar Soft Drink, and Kleenex Clean Care Bath Tissue
Netherlands: Mama Bear Diapers, SanDisk 128 GB Memory Card, and Philips Hue White and Color Ambiance Light
Mexico: Nintendo Switch, HP Monitor 22w Borderless, and Nautica Travel Sport Eau de Toilette Spray
Luxembourg: JBL Charge 3 Stealth Edition Bluetooth Portable Boombox, Tefal Jamie Oliver Stainless Steel Pan, and iRobot Roomba 671
Japan: Happy Belly Water, Anker PowerCore 10,000 Mobile Battery, and Pampers Premium Protection Diapers
Italy: NESCAFÉ Dolce Gusto Barista Caffè Espresso, Dash 3-in-1 Detergent Pods, and AUKEY Powerbank Portable Charger
India: Syska 9-Watt Smart LED Bulb Compatible with Amazon Alexa, boAt Rockerz Sports Bluetooth Wireless Earphones, and Godrej Aer Pocket Bathroom Fragrance
Germany and Austria: JBL Bluetooth Speaker, Tefal Jamie Oliver Stainless Steel Pan, and OSRAM Smart+ Plug Zigbee Switchable Light Socket
France: iRobot Roomba 671, Lunii Story Telling Factory, and Oral-B SmartSeries Electric Toothbrush
China: Dove Exfoliating Scrub, L’Oreal Rejuvenating Eye Cream, and Silk’n Permanent Hair Removal Device
Canada: PlayStation 4 Slim with Spiderman and Horizon Zero Dawn, LifeStraw Personal Water Filter, and 23andMe Health + Ancestry kits
Belgium: OSRAM Smart+ Plug Zigbee Switchable Light Socket, SanDisk 128GB Memory Card, and Brita Water Filter
Australia: Mario Kart 8 Deluxe, Finish Powerball All-in-1 Max Dishwasher Tablets, and Huggies Ultra Dry Nappies

Spotlighting Small and Medium-Sized Businesses

Prime Day 2019 was another record-breaking success for independent third-party sellers - mostly small and medium-sized businesses. These innovators, artisans, and entrepreneurs are an invaluable part of the Amazon family. Products from these unique businesses increase variety and contribute to the ever-expanding selection available to Prime members worldwide.

Globally, these businesses far exceeded $2 billion in sales this Prime Day, making it the biggest Amazon shopping event ever for third-party sellers when comparing two-day periods.

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