Amazon Prime Day and 3PLs: How to Manage the Impact on Your Business - Part 1

Date: December 15, 2019


First held in July 2015 to celebrate the company’s 20th anniversary, Amazon Prime Day was originally intended to serve as a test of the company’s own systems prior to the traditional Holiday Season.

In just four short years, sales have ballooned nearly tenfold - from $415 million in 2015 to $4.2 billion as of 2018.1 In fact, in 2017, the event’s totals were more than 33% higher than Cyber Monday of that year.1

Amazon Prime DaySource: https://www.amazon.com/Prime-Day

While Prime Day has certainly provided 3PL warehouses with a great opportunity to increase their fulfillment profits, the still growing 30+ hour event has had an enormous impact on their operations, partners, and customers.

Here are some of the biggest impacts Prime Day and peak seasons have had for 3PL operations and their customers.

We will be sharing additional impacts in the coming weeks, so be sure to follow our blog to receive the next installment.

The Impact on 3PLs’ Ability to Fulfill High Volume

In 2018, Amazon reported that Prime Day was their biggest sales day ever, with more than 100 million products sold 2. Fulfilling such a high volume of orders within the one- to two-day delivery window promised to Prime members challenges a 3PL’s ability to perform efficiently and accurately. But it is made worse because Prime Day always occurs in July.

While this does help 3PLs increase their profits during what is usually a slow month, it is also a time when your most experienced staffers like to take their vacations. In addition, because Amazon never announces Prime Day’s actual dates very far ahead, it can be difficult for these employees to plan ahead.

The problem is exacerbated because Prime Day affects a large number of warehouses. This makes it even more difficult to secure temporary labor to handle the labor-intensive ecommerce fulfillment process. It brings home the fact that 3PLs today simply must find more ways to automate their procedures, like utilizing a Warehouse Management System (WMS) such as 3PL Warehouse Manager to help handle the type of demand surges caused by events like Prime Day.

address high volume with automation

The Impact on the Global Supply Chain

Amazon normally sells about 1.6 million products every day. And the company has reported that Prime Day 2018 sales were up 400% over a typical day. That comes out to 640 million total deliveries – all of which must be processed by the fulfillment centers within a tiny window of only 2 to 3 days 3.

Needless to say, 3PLs charged with fulfilling high volume orders must be prepared far in advance. According to Dan Clark, Founder and President of Kuebix, “The popularity of the event coupled with the capacity crisis and driver shortage are causing roadblocks for some retailers who haven’t already optimized their supply chains.”

To keep up with the heightened order volume, warehouses must streamline internal processes, ship products more efficiently and maintain a heightened level of visibility to order line items.4

To respond to this need for transparency, Warehouse Management Systems like 3PL Warehouse Manager provide complete visibility into a warehouse’s orders, processes, billing, reports and employee productivity all in one cloud-based interface. This ensures that Operations Managers and the back office are always updated about what’s happening on the warehouse floor at all times.

This capability also extends to a 3PL’s customers who can manage orders, view their items, billing and reports exclusively and in real-time with a permission-based customer portal, which saves time from the 3PL answering customer queries.

visibility translates to productivity

The Impact on 3PLs’ Customer Service & Delivery Partner Integration

Amazon Prime members expect to receive their packages within one to two days. The fact that Amazon is shipping 400 times more than normal isn’t their problem. That burden falls on fulfillment centers or 3PLs and their transportation providers.

Your ecommerce customers selling to Amazon Prime customers must come through within their promised one- to two-day delivery windows. Prime Shoppers expect to be able to track every package online. Your 3PL must enable this ability.

To meet this need, many 3PL’s are turning to tools like 3PL Central’s Unified Small Parcel Shipping Suite to deliver a paperless, best practice workflow that reduces manual labor while increasing accuracy in high volume fulfillment.

By implementing an integrated WMS into their operations that directly integrates with Amazon and other online shopping carts to receive orders, warehouse staff can receive and pick orders in real-time using SmartScan. Once the order is picked, it will be accurately scanned, packed, and verified with SmartPack.

Given the stress placed on the global fulfillment chain by the sheer volume of packages flowing through it, 3PLs will be most successful when they equipped their team leaders and customer service personnel with tightly integrated tools that provide 100% transparency to monitor the flow of goods.

SmartParcel™ directly integrates with shipping carriers to manage all carrier accounts, selects the best rates and print shipping labels, all from one WMS platform. All of these actions are completed in an integrated, paperless workflow accurately and efficiently.

integrations expand your toolkit

The Right Partners

To ensure your business is making the best of Amazon Prime for your customers, it is important that you are partnering with the right logistics technology companies. These partners can help determine best practices for your warehouse, recommend optimized workflows to reduce errors and manual entry, and suggest new technology and integrations to keep your warehouse primed for new business.

partner with the right logistics technology company

In part two of our guide to managing the impacts of Amazon Prime Day, we will share the impacts on the costs and availability of delivery partners and how to prepare for your ecommerce customers.

Sources:

  1. https://blackfriday.com/news/amazon-prime-day-history-and-statistics
  2. https://www.cnbc.com/2018/07/17/amazon-announces-2018-prime-day-results.html 
  3. https://www.quora.com/How-many-boxes-does-Amazon-ship-every-day
  4. https://www.supplychain247.com/article/amazons_prime_day_impact_on_the_supply_chain_industry

3PL Central

Written by 3PL Central

The first cloud-based WMS solutions designed for 3PLs. Powerful, flexible, scalable, and specifically designed to help 3PLs and warehouses grow to the next level.