As the world continues through summer 2021, some semblance of normalcy has returned. Amazon Prime Day is among those things that seem to be back to normal. However, this Amazon Prime Day was unlike any in history, breaking records with more than 250 million items sold globally, reports Logistics Management. While that’s great for Amazon, it leaves many shippers wondering what the implication is for the future of their own networks? What will happen as e-commerce continues to grow through Amazon and other retailers? And what will it all mean for the state of transportation management as the world moves closer to the real peak of 2021, the holiday shopping sprees that will create yet another record-breaking parcel peak season?
What Happened During Prime Day 2021
Amazon Prime Day was a definitive success. According to CNBC, Adobe Analytics reported online retail sales during the event amounted to $5.6 billion on Day One and $5.4 billion on Day Two. That’s 11% higher than overall e-commerce transactions generated during the same event in 2020. Now, Amazon Prime Day 2020 did take place in the late fall due to COVID-19, but it still is important to recognize the statistical context.
The prior year was the busiest and most active shipping and parcel peak season in history. And if Amazon Prime Day occurred at its onset, a growth of Prime Day sales in 2021 can only allude to a record-shattering parcel peak season this fall.
The Insights Gained From the Mid-Year Event
Evidence suggests that the event spurred growth in other retailers as well. Walmart, Target and other major retailers offered special discounts to combat the media support pushing Amazon Prime Day. Generally, retailers with more than $1 billion in annual revenue experienced a 28% increase in sales during the event, but even smaller retailers below that $1 billion threshold reported a 22% increase.
This is a clear sign that the modern customer wants the convenience and ease of shopping that is synonymous with omnichannel and e-commerce-driven experiences. Unfortunately, the gains come at a cost — a cost to logistics and an effective crackdown on wasted transportation and an absolute necessity for clear, data-driven transportation procurement. After all, the biggest sales events in history will always lack value if the shippers cannot realistically scale their shipping strategies or if they are experiencing trouble tracking their actual shipping costs compared to usual buying habits.
Regardless, these are the top insights gained:
- Transportation capacity rapidly shrank during the event.
- Rates across all modes, particularly parcels, jumped.
- Shipping lead time grew longer.
- Customers were willing to pay a premium for faster delivery — receiving Prime member benefits from the get-go.
It’s all a sign of what’s to come in the future parcel peak season at the end of the year. And paired with more GRIs and peak surcharges, there’s little evidence to suggest that shipping rates will retreat anytime this year.
What’s the Strategy for Getting Ready for the Future Peak of 2021?
Shippers need a way to cut through the noise. There is plenty of Prime Day data to analyze. The largest price breaks during the event were across toys, but the next highest savings category was with appliances, says Mike O’Brien of MultiChannel Merchant. And with appliances, there is the concern that they will take up more space than shipping a small toy or even a pallet of toys. As such, transportation capacity shrinks. Without maintaining a clear view of what’s happening, it’s going to be downright challenging, if not impossible, to find capacity when these events recur in the future.
That’s why it is important to have all relevant shipping data available in one repository to view all carriers, analyze costs, service levels, and make the right decisions to stay strategic and avoid unnecessary expenses. That further adds to mitigating risks, such as lost or damaged freight, and being able to use such information to increase value across the network.
For instance, it may be necessary to use data to unlock value through:
- Expanding the parcel peak season carrier pool to rapidly scale the network.
- Knowing how your usual parcel costs change over seasons and what costs were through Prime Day 2021.
- Recognizing when other strategies, like hub injection or zone skipping, can be useful to source better rates when customers are willing to wait an extra day or two for delivery.
- Tracking your costs to recognize when errors occur, why, and what’s the next step for submitting a claim to a carrier that has overbilled a shipment.
- Strategically sourcing carriers across all modes, including parcel, to avoid unnecessary expenses and ensuring the right service level is used for every move.
Partner With Intelligent Audit to Understand Your Use of Parcel Courier Networks
The right strategy for managing increased parcel demands due to e-commerce and the coming peak season is not a one-size-fits-all approach. It must be unique and flexible to accommodate changes within the network. If Amazon has taught the industry anything, it’s that a wider network that can connect all the different points and routes will be superior. Connect with Intelligent Audit to get started and learn how to apply data to stay competitive and ready for the onslaught of freight and parcel demands that will come with peak through the remainder of 2021.