Amazon is a key selling channel for many online retailers, whether your company is Fulfilled by Amazon (FBA) or Seller Fulfilled Prime (SFP.) In fact, 55% of online retailers expect to generate their biggest percentage of sales on Amazon this holiday season, according to a survey from ChannelAdvisor and Morar Consulting featured in Internet Retailer. With so many sales flowing through Amazon, the company is working hard to keep up with demand.
Here's what you need to know about Amazon this holiday season.
Amazon is redefining Black Friday
Surprise! Amazon decided to start Black Friday sales at the beginning of November, bucking tradition. This provides an immediate challenge to competitors. Amazon says that deals will be unveiled as frequently as every five minutes through December 22. While this move could indicate the decreased importance of Black Friday for online retailers, RetailNext reports that it is still the third busiest day of the year for brick and mortar stores. CBS News suggests that Amazon "might be trying to spread out its holiday shipments into early November to avoid a repeat of the bottlenecks it experienced a few years ago, which resulted in customers not getting their holiday gifts on time."
Amazon is adding workers
You may have seen the ads on TV...Amazon is hiring 20% more seasonal workers in 2016. This means 120,000 new workers compared with 100,000 last year. Compare this to other retailers like Target who are adding only 7,500 workers for online distribution and fulfillment. This is still an increase, but nothing compared to the scale of Amazon's operation, or the amount of workers Target is adding for retail locations.
In fact, Amazon is hiring twice the number of seasonal workers they used just four years ago. Workers will be set up in new warehouses that the company is rapidly opening around the country. Common roles include picking goods off shelves, and packaging them for delivery. This directly impacts Pacejet customers, as we see more and more retailers looking to Amazon as a key sales channel.
Amazon is losing money on shipping
A problem encountered by many online retailers is how to balance the costs of free shipping with the low prices offered on items throughout the holiday season. Amazon is known for their shipping offers, especially for Prime members, which pay $99 a year for unlimited two-day shipping. But the company says that the faster deliveries are costing it a lot of money—and "as online orders surge during the holidays, its shipping costs could top the $3.9 billion it spent in the third quarter."
They are trying to drive down costs with their own logistics network and a direct partnership with the United States Postal Service (USPS.) As we shared in a recent post on holiday volume skyrocketing, USPS is doing their own work to gear up for the season, adding 35,000-40,000 seasonal workers. We'll all be watching to see how Amazon and USPS handle the holiday season and whether they manage to keep up with unprecedented demand.
Are you selling through Amazon this holiday season?
We'd love to talk to you about the difference between Amazon Fulfilled by Amazon (FBA) and Amazon Seller Fulfilled Prime (SFP.) Contact us for a free consultation about our integration with Amazon SFP and how it can help you grow your business.