Amazon Takes the Heat Off Warehouse Network Ahead of Prime Day
Amazon‘s next annual Prime Day event will arrive on July 11-12, but the network that powers the two-day shopping extravaganza may be a little different this time around.
Prime Day will kick off on July 11 at 3 a.m. ET across the U.S., the U.K., Canada and Mexico among 20 other international markets. For the first time, Amazon is introducing “invite-only” Prime Day deals requiring customers to request an invite for bargains that are expected to sell out quickly. Big-name brands on offer include Victoria’s Secret, Alo Yoga and Crocs’ popular Hey Dude shoe label.
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Prime Day comes as the tech titan recently reopened signups for its Seller Fulfilled Prime (SFP) delivery program. This initiative allows third-party sellers to ship Prime-eligible products out of their own warehouses.
In a note to sellers earlier this month, Amazon said new seller enrollment for SFP will begin later this year. The move could benefit Amazon as it forges ahead with cost cuts and pares back its warehouse expansion, in that it could offer more product from individual sellers without needing more warehouse space to do so.
“If Amazon assesses that you’re good enough to deliver within two days, they will put the Prime logo on your product, even if your products are not sitting in an Amazon warehouse at the time,” said Mike Scheschuk, president, small and medium business at Amazon seller software Jungle Scout. “Basically, it’s distributors being able to use their own fulfillment centers, and still get the Prime logo.”
Amazon introduced the program in 2015 before scrapping it in 2019 because less than 16 percent of SFP’s U.S. orders met the two-day shipping promise.
But new incentives seem to have the e-commerce giant singing a different tune.
“Logistically, you could see that Amazon’s clearly trying to get other people to warehouse products for them,” Scheschuk said.
While Amazon has touted the doubling of its fulfillment center footprint, the upcoming event could signal how it’s leaning on third-party sellers to enable its “fastest Prime delivery speeds ever in 2023,” according to CEO Andy Jassy in an April earnings call.
The company already shifted its national fulfillment network to one focused on eight interconnected regional hubs as it aims to get products closer to the consumer.
Amazon has not commented on how Prime Day may be impacted by the fulfillment shifts, or whether it’s looking to third parties to help meet delivery promises.
Beyond Prime Day, there are lingering concerns that a potential Aug. 1 UPS worker strike could hamper Amazon’s delivery operations.
“Consumers will see their typical online shopping orders taking much longer than expected (think removal of one-day Amazon Prime shipping as an option, an extra week for an order to be delivered). There simply isn’t enough capacity in the market with other carriers to replace UPS, especially on such short notice,” said Chris Creyts, senior director in Alvarez & Marsal’s consumer and retail group. “In the short term, options for shippers are limited and shipping delays will spill over to all carriers as USPS, FedEx, DHL and small regional couriers struggle to absorb the additional volume.”
Cretys expects a strike would impact supply chains, especially in smaller, regional businesses lacking the resources to monitor suppliers and build extra inventory on critical goods in advance of the disruption. This means a strike could effect third-party businesses rejoining the Seller Fulfilled Prime (SFP) ecosystem.
Amazon didn’t specify if it is bringing back the same two-Prime Day strategy it offered last year, but Scheschuk, an Amazon seller himself, noted that sellers have been notified of an Aug. 11 deadline to submit deals for a fourth-quarter shopping event.
Scheschuk has long been bullish on Prime Day’s benefits, correctly predicting in 2021 that Amazon would host a second iteration of the once-a-year event as pandemic-driven online spending took off. At the time, he said Prime Day could become a quarterly occurrence.
“Given that they’re not growing as fast as they were previously, I think that we’re going to see more instances where they’re trying to do special events to get merchants to bring out their absolute best offers,” Scheschuk said.
While Amazon’s growth may have slowed, Prime Day could be a sight for sore eyes for budget-conscious consumers. But according to Yoni Mazor, co-founder and chief growth officer of Amazon seller auditing software Getida, the state of the economy dictates that Prime Day is still a hit or miss.
“If the deals provide deep savings for consumers, it will help battle the causes of inflation,” Mazor said. But he didn’t rule out that consumers may hold out on Prime Day spending more so than usual in an economic slowdown, saying “the event may prove itself to be dry due to the macroeconomic environment.”
