As online shopping skyrocketed during the COVID-19 shutdown, Amazon was overwhelmed with orders and its rivals saw an opportunity to grab market share. In the last quarter, Target’s online sales increased 141 percent, Etsy’s went up nearly 80 percent and Walmart’s rose 74 percent. Amazon, however, is regaining its footing by removing limitations of the products in its warehouses, offering promotions and, again, shipping more products in one-to-two days. It also plans to increase its Prime Air fleet to about 200 planes.
The New York Times reports that, according to Rakuten Intelligence, prior to the pandemic, “orders to Amazon accounted for about 42 percent” of U.S. e-commerce, which dipped to 34 percent by mid-April. As Amazon struggled under the unprecedented surge in orders, chief executive Jeff Bezos took control of day-to-day operations.
Now, although Amazon postponed Prime Day, it is “preparing for an earlier ‘Summer Sale’ to let brands sell excess inventory.” This, and other moves, says NYT, “signal that Amazon’s leaders feel confident that the business, and in particular its shipping network, is no longer in crisis mode in response to the pandemic.”
“They eliminated their own competitive advantage they had built over 20 years,” said Orca Pacific founder and chief executive John Ghiorso. “Now they are getting it back pretty quickly.”
Amazon’s chief e-commerce advantage has been “the efficiency of its network … and the speedy and reliable delivery it provided.” But, during the pandemic, workers stayed home, slowing down activity at its 500 or so fulfillment centers. Amazon hired 175,000 new employees and, “on May 1, it stopped allowing unlimited unpaid time off, bringing many nervous employees back to work.”
Former Amazon senior manager Eric Heller, now at Wunderman Thompson Commerce, said, “it really feels very much back to normal.”
Bloomberg states that, according to a report from DePaul University’s Chaddick Institute of Metropolitan Development, Amazon plans to expand its air fleet from 42 planes today to “about 200 … in the next seven or eight years, creating an air cargo service that could rival United Parcel Service.”
“At a time when many other airlines are downsizing due to the pandemic, Amazon’s push for faster and cheaper at-home delivery is moving ahead on an ambitious timetable,” said the report. “Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years.”
Amazon’s air cargo service, which began in 2016, “operates out of smaller regional airports close to its warehouses around the country,” to help it meet its one- and two-day delivery schedules. The key factor enabling Amazon to compete with “entrenched players” is its “new $1.5 billion facility near Cincinnati that will accommodate up to 100 planes and as many as 200 flights each day.”
“The massive investment being made in a large hub at Cincinnati/Northern Kentucky International Airport … could change everything,” noted the report, which described the hub as “the linchpin to Amazon’s efforts to develop a comprehensive array of domestic delivery services.”
Amazon Targets Fall for Prime Day as it Tries to Return to Pre-Pandemic Operations, The Wall Street Journal, 5/21/20