To say that 2020 has been an interesting time isn’t just an understatement. For many of us, it’s been both a blessing and a curse.
For consumers both in the US and abroad, it’s certainly been the latter by and large. And it’s fair to say that there’s nowhere to go but up in 2021. We’re all looking forward to our lives achieving some sense of normalcy in the coming months. But for digital commerce, 2020 was a blessing in disguise. In fact, the industry has seen an unprecedented growth. Analysts have estimated US sales will have increased by over 40 percent to $839 Billion, representing some 21 percent of total global retail sales.
It probably won’t come to a surprise that Amazon has been at the forefront of the 2020 eCommerce surge. And you probably won’t need a crystal ball to predict they’ll continue to be synonymous with online commerce for years to come. But for Amazon, 2020 was a year of highs and lows.
Amazon’s Domestic Share in the eCommerce Market
In North America, Amazon reported over $96 Billion in sales for the end of the 2020 third quarter; representing a year over year increase of close to 40 percent. And while Amazon continued to dominate the lion’s share of the US eCommerce market at 23 percent, that number has actually dipped by over 3 percent compared to the first quarter of 2020.
But Amazon’s share in the US eCommerce market hasn’t been isolated to net sales alone. As the national unemployment rate remained stagnant with a depressing 7.9 percent by the end of September, Amazon emerged as a key force in job creation. Some 100,000 new permanent jobs were reportedly added by the retail giant as part of their North American expansion, providing sorely needed manpower to over 100 new operating facilities across the country, with 100,000 additional seasonal jobs being made available as Black Friday and Prime Day inched ever closer.
Prime Day: Would They or Wouldn’t They?
Prime Day may not be the sole jewel in Amazon’s crown. But it may be the most significant one. And the likelihood of refusing consumers a collective savings of over $1.4 billion in the middle of an increasing shift towards digital sales surely would have been considered the retail kiss of death.
If 2020 meant adaptation to an increase in customer demand for Amazon, it also meant adapting to new challenges—not least of which included operations and logistics. Few were surprised when Amazon announced a likely delay in Prime Day from its normal mid-July schedule. But many were surprised at how long of a wait it would be.
Consumers worldwide received their answer when Amazon finally announced Prime Day was scheduled to occur between October 13th and October 14th. And while they remained true to form by announcing the Prime Day 2020 was their largest promotion in their 26 year history while refusing to admit actual sales, one fact did emerge: third party sellers were the clear winners during the 48 hour event, amassing over $3.5 Billion in sales. Comparatively, that figure represented an increase of over 60 percent from Prime Day 2019.
But not every third party seller was pleased with Amazon in 2020.
Order Fulfillment in 2020: A Critical Mass?
As the US spike in reported coronavirus cases surged to record numbers in early March, Amazon announced they were suspending the sale and distribution of nonessential items from FBA sellers, “temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.”
It’s hardly an unreasonable demand. And one that the vast majority of sellers not only anticipated, but gladly cooperated with. But the temporary suspension also resulted in an increased delay in order fulfillment once it was lifted in early April, with the Washington Post estimating that 11 percent of all reviews left for sellers were excessively negative during a 30 day period between April 18th and May 18th.
To be fair, Amazon has been entirely aware of the problem with unreasonable delays. In fact, they’ve even gone so far as to remove negative ratings should sellers not be found at fault with order fulfillment. But the issue extends far beyond Amazon. As recently as December, it was announced that two major west coast ports were effectively paralyzed due to an unprecedented deluge of imports—a deluge which may have direct ramifications affecting the whole of the domestic supply chain for months on end.
2020 may have been the year of eCommerce. And by default, Amazon. But it was also the year in which operational flaws and glitches in online retail became glaringly apparent. What does 2021 hold?
A Glimpse into 2021?
Don’t necessarily expect business as usual with Amazon in 2021. As Amazon continues to refine order fulfillment and seller protocol, customers will become increasingly more demanding of both vendors and digital commerce as a whole. And if Amazon can’t fulfill those demands, there’s going to be a growing number of competitors they can turn to.
Except Amazon is backed by a certain gold standard in customer experience. It’s not just backed by name and convenience alone. It’s a reputation they’ve rightfully earned after decades of trial and error. And it’s a reputation they’re going to fight hard to protect as they continue to expand into burgeoning global markets in direct competition with well established local providers.
Will sellers be left behind in the wake of Amazon’s increasing dominance? Not necessarily. We may live in uncertain times, but maximizing your presence on any marketplace requires both an understanding of changes and an adaptation to those changes. Just make certain the quality of your service remains constant in its wake.
Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.