Founder and CEO of Amazon, Jeff Bezos, continues to shock the e-commerce market, and this time it was with Prime Day. Amazon’s 3rd annual Prime Day was a huge success for the company that was able to rake in more sales in a single day than ever before, surpassing Black Friday and Cyber Monday. If you don’t know what Amazon’s Prime Day is, allow me to elaborate.
Amazon’s annual day of deals has been marked Amazon Prime Day. This all-day, online deal event debuted on July 15th, 2015 to celebrate Amazon’s 20th birthday. The aim of Prime Day is to drive increased sales volumes by offering discounts on a massive variety of products. Prime Day also serves as an effective marketing tool, inserting Amazon into the forefront of the public conscious. The markets seemed to respond very favorably as Jeff Bezos briefly became the world’s richest man. If you want to be a part of the day of deals you’ll need to be an Amazon Prime member, which starts at $99 a year or $10.99 per month. So just how big is Prime Day? Although Amazon doesn’t disclose precise numbers, some analysts have said that Prime Day generated approximately $525 million in sales in 2016 with an estimated 60% increase in 2017.
So what did Amazon’s massive deal day mean for shipping and LTL? Prime Day has proven to be a hectic day for Amazon in the past two years, shipping up to 20 times more than its average daily sales. With the rapid increase in demand for consumer products, third-party logistics providers had to move quickly in order to ship goods to Amazon’s fulfillment centers in time for the big sale. The time crunch required extensive planning and precise resource allocation. This meant that Amazon had a huge demand for LTL and 3PL logistic companies in order to keep their fulfillment centers stocked and ready, which caused a spike in rates and shipment delays for other e-commerce companies and online retailers. As e-commerce continues to become a larger part of retail sales, freight shippers are under more pressure than ever to cut down on their transit times. This so-called “Prime Day effect” is a result of increased customer demand and retailer expectations. This demand for faster shipping is problematic for some FTL carriers, especially with the new ELD mandate being rolled out soon. Some carriers may be unable to handle the stresses of e-commerce shipping, which could cause a capacity shift from FTL to LTL.
While Prime day could have caused some gray hairs to sprout for other e-commerce based businesses, CEO Karl Siebrecht of Seattle-based warehouse start-up Flexe, said that Prime Day offered a chance for companies to test their fulfillment needs. “Any e-commerce company that has a spike in Q4 — which is most — there’s a lot of prep that goes into the first three quarters of the year for that peak,” Siebrecht said. “It’s a long gap between cycles. This is a great opportunity if you work in the fulfillment business. It’s a fantastic opportunity for Amazon to hone their skills and manage that peak (before Q4).”
It’s clear that e-commerce is an up-trending platform that isn’t going anywhere. If you missed our previous spotlight on e-commerce feel free to check it out here. The National Retail Federation (NRF) declared that it expects online retail sales to increase 8-12% in 2017 and shows little sign of becoming stagnant. This steady growth is changing the way companies utilize 3PL and LTL offerings and is good news for Amazon who has continued to re-invest in their e-commerce platform and has even taken the initiative invest in things like its own air cargo fleet.
LTX is an Atlanta based 3pl with the expertise and technology to grow and thrive in the rapidly changing freight and logistics industry. Here at LTX, we have over 100 years of combined industry experience. If you have any more questions regarding e-commerce growth or any other topic in logistics we would be more than happy to help you. If you are ready to take the next step and partner with us to revolutionize your supply chain then contact us below today.