The dawn of a new type of peak season is fast approaching, courtesy of Amazon. (Photo: Amazon)
Amazon.com, Inc.’s (NASDAQ:AMZN) decision to move its Prime Day online buying extravaganza from July to Oct. 13 and 14 may have been triggered by concerns over the coronavirus pandemic. But its effect will be felt long after a hoped-for vaccine during 2021 ends the pandemic and restores balance between online and in-store buying, according to Carson Krieg, cofounder and director of strategic partnerships for Convey, a research and consulting firm based in Austin, Texas.
Amazon’s move effectively kicks off the 2020 peak season 30-45 days earlier than normal, Krieg said in an interview on Friday. What’s more, Amazon’s ability to condition consumers to its changes, and the need for competitors to keep up with its trail, means an earlier peak will not just be a one-year event, Kreig said.
Amazon may eventually return Prime Day to its traditional slot on the calendar, and e-commerce may not be as much of a factor once consumers feel comfortable returning to stores. However, it is likely that the mid-October period will become a new jump-off point for Amazon’s massive holiday promotions that feed directly into what had been the traditional peak cycle, Krieg said.
“Amazon is creating the 75-day peak season,” he said. Amazon did not respond to a request for comment.
Amazon is poised to dominate the peak, with 61% of 1,600 respondents to a Convey online buying survey. In what is expected to be a chaotic environment for inventory availability and fulfillment, respondents believe that Amazon is the best positioned to have the products consumers want and the delivery network needed to reliably fulfill their orders, Krieg said.
The best way for rivals to respond, Krieg said, is to present consumers with a broad menu of pickup and delivery options to choose from. Delivery from the store, especially if normal inventory flow is stymied, will be especially critical this season, he added.
For a retail supply chain still struggling with massive dislocations due to the pandemic, pulling peak 30 days forward is probably not a bad thing. The sudden, tsunami-like shift to e-commerce from brick-and-mortar has led to frequent delivery delays almost across the board, as well as yearlong inventory stocking challenges. A new measure from Convey which tracks a typical order from the time a customer clicks to buy a product to the time it is delivered stood at 143 hours as of the week of Sept. 21. That was compared to 115 hours during the week of Feb. 24, before the virus took hold in the U.S.
Kreig said consumers should expect the average holiday order to take seven to 10 days to be delivered. That’s far from the one- to two-day delivery guarantees that went by the boards months ago. In the Convey survey, which was released Monday morning, 42% of the respondents–30% of whom said they plan to do all their holiday buying online–said late deliveries were their biggest shipping concern. The next highest worry was porch piracy at 17%. Nearly 90% said that on-time deliveries will be a critical contributor to a positive holiday buying experience.
The earlier buying windows should help providers spread out their delivery cycles and mitigate the crunch times that have become as much a part of the holidays as Santa Claus and Rudolph. John Richardson, vice president of supply chain consulting for Hickory, North Carolina-based Transportation Insight LLC, a consultancy that works with hundreds of shippers and retailers, has described the phenomenon as a “leveling off” of supply chain flows.
Today’s long lead times for deliveries will not be permanent. Krieg said notoriously impatient American consumers will cut retailers and carriers slack for another six to nine months before returning to their demanding pre-COVID behavior. “We saw customer sentiment begin to shift back to pre-COVID levels this summer following the initial wave this spring,” he said. “I think once the holidays are behind us, shoppers will be less likely to assume the best.”
No matter what, consumers will expect prompt communication about delays so, if needed, “they can reset [their] expectations” about delivery performance, Krieg said.
Despite Amazon’s popularity, some survey respondents appear conflicted about using it. About 31% have a negative view of Amazon’s increasing dominance over the retail landscape, up from 24% last year. Krieg said the sentiment among respondents is that Amazon threatens to monopolize retail and thus reduce their online options. Yet 46% of those who hold that negative view said they will still shop on Amazon’s site this season, the survey found.
