The days of manic rushing to Best Buy and Walmart before you’ve even had a chance to digest Thanksgiving dinner are over. In addition to Black Friday and Cyber Monday, we now have Amazon Prime Day. Amazon Prime Day is a two-day event typically held in July where the masses are able to converge online to score obscenely amazing deals, with free shipping to boot, if you’re an Amazon Prime member.
Amazon first held Prime Day on July 15, 2015, as a celebration of their 20th anniversary. But, due to the staggering success of the event, it turned into an annual affair. You’d think such an event would be the busiest time of year for the massive shopping site but it actually only ranks in fourth place, after Black Friday, Cyber Monday, and the lead up to Christmas. Despite its ranking, 2022’s Prime day saw record sales of over $12 billion. Due to such a high demand, it only makes sense that behind the scenes things are being kicked into high gear.
The entire enterprise is a Swiss watch of moving parts. The scope of work doesn’t sound like much when you think about the fact that Amazon already does all this on a daily basis. However, when you factor in the massive uptick in quantity of items sold, therein lies the difficulty. On average, Amazon ships out roughly 1.6 million packages per day, a mere drop in the bucket compared to the more than 300 million items sold on Prime Day 2022. And the effects of this surge across their operations are a perfect case study to understand many of the factors impacting supply chain volatility across the larger economy. Doing so makes the risks and opportunities within this volatility much more obvious to other vendors of any kind.
Demand Fluctuations
Forecasting is key to any business. But the sales on Prime Day are unique and buying patterns are often spontaneous. This makes predictions precarious because both overestimations and underestimations can lead to dissatisfied customers and lost profits. Skillfully walking this tightrope is as much art as science and explains why experienced supply chain experts are so in demand.
Logistical Capabilities
Amazon typically averages a little over $1 billion in gross sales daily. This means that the numbers from 2022 were almost 10 times what happens during a “normal” day. Companies can’t increase their footprint by 10 times for just a day or two every year, so how do they handle surges like Prime Day or Black Friday? The answer is that sometimes they can’t. Websites crash, orders get backlogged, products sell out and that can’t be helped. Twitter revels in highlighting these struggles. But the goal is to avoid it at all costs and many companies do so with careful preparation and nimble planning. When facilities and workforces are well-prepared, and plans are closely monitored issues can be addressed appropriately in real time, consequences mitigated, and customers end up pleased.
Communication is Key
Whether you’re the scale of Amazon or just starting to scale up from a company of one, no business can handle a 10x increase in daily business alone. It takes great partners to do so successfully, and it takes great communication to get great partners. Amazon takes collaborative communication so seriously that it’s driven a lot of their other business research. Now every business doesn’t have to develop their own version of Amazon Web Services, but they should all invest in tools that make communicating with partners easier and more accurate.
There is much more that impacts the supply chain, for Amazon or any other business, than what has been covered in this article. But focusing on these three areas of emphasis has shed a little light on why some companies don’t survive supply chain disruptions while others, like Amazon, are able to thrive. If you’d like to learn more about supply chain resilience and how you can make it a reality at our company, you should read our recent blog about it too. Have other questions about supply chain? Send them to our Writing Team and keep your eyes out for future blogs.
