News Article

As Prime Day approaches, Amazon stares down barrel of the delivery gun

Massive volumes and its new one-day commitment could stress its system

Amazon.com, Inc. (NASDAQ:AMZN) has experienced many defining moments in its quarter century of reshaping American commerce. Beginning in the wee hours of Monday morning, another of those moments will be upon it.

At 2:59 AM eastern time July 15, Amazon will unleash “Prime Day,” the online ordering extravaganza that in its fifth year is fast rivalling in relevance the day after Thanksgiving, known as “Black Friday,” in the hearts, minds and wallets of an e-commerce-obsessed global populace (It will be available in 18 countries this year). But this Prime Day will be different: For the first time, it will run for two full days: July 15 and July 16. It will be the first such event to showcase Amazon’s free one-day delivery service to its Prime customers; the service went national in the U.S. on June 3, replacing the prior two-day commitment window. This year, Amazon will have to manage without the services of FedEx Corp.’s (NYSE:FDX) U.S. air network; FedEx did not renew its domestic air contract with Amazon, but is still providing ground deliveries which is expected to be a key part of the Prime Day mosaic.

No one will hazard a guess on the magnitude of this year’s traffic. Amazon declined comment other than to express confidence in its ability to deliver the goods. Brittain Ladd, a former Amazon executive and now a retailing consultant, said that if things go well, the company will rake in between $4.5 billion and $5.5 billion in sales during the two days alone. Last year’s Prime Day, which ran for 36 hours, resulted in the ordering of more than 100 million products, surpassing Black Friday, the “Cyber Monday” after Thanksgiving, and prior Prime Days as the biggest sales event in Amazon’s history for a day-and-a-half period. Between the more than one million special deals with substantial price markdowns, a 48-hour ordering window, and the wall-to-wall exposure from the general, business and trade press, there is little doubt this year’s event will break all records, with a good chance of doing so by a country mile.

For Amazon, however, the two days could end up being a double-edged sword. The expected spike in volumes, combined with the launch of the one-day delivery commitment that has yet to be tested on such a massive scale, could pressure its delivery infrastructure.

This article was originally written on July 12, 2019 by Mark Solomon on FreightWaves. Read the full article here.