Overall eCommerce sales may have seen an otherwise unimaginable spike in 2020. But the real proof of success in eCommerce is—you guessed it—Amazon sales.
Amazon is rapidly becoming the top search engine for customers beginning their product journey. That's not necessarily a sign that Google will lose its status anytime soon. It's a sign that online interactions are becoming more and more product-oriented.
And as the pandemic forced consumers to adapt to new shopping habits, product orientation is the first thing on the minds for most brands.
To provide a thorough year in review for Amazon during 2020 isn't a small task. It's next to impossible. So what were some of the highlights that affected both brands and consumers?
2020: The Year in Review for Amazon
To say that 2020 has been an interesting time isn't just an understatement. For some of us, it's been both a blessing and a curse.
It's sad to say. But for consumers both in the US and around the world, it's certainly been the latter by and large. And for many of us, 2020 was a year we may have preferred to forget. Yet it's also fair to say that there's nowhere to go but up in 2021.
Despite a challenging environment, we're all looking forward to achieving some sense of normalcy in our lives during the coming months. But for digital commerce, 2020 was a blessing in disguise.
In fact, the industry has seen an unprecedented ten year growth in just three months during 2020. It's a growth that has inspired both new markets and new sellers to enter into the field. Analysts have estimated US sales will have increased by over 40 percent to $839 Billion by the end of the year, 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 volume 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.
Amazon's Role in Job Creation
Some 100,000 new permanent jobs were reportedly added by Amazon 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.
Yet despite Amazon's claim that they've created more jobs than any other US company, the reality paints a much less rosy picture. Reports of harassment, undue disciplinary action and other forms of retaliation against Amazon warehouse workers took precedence in 2020, with mass walkouts, strikes and legal complaints threatening to tarnish the retailer's image in the public eye.
There's an unpleasant reality to those threats, and it's one that's not particularly flattering to Amazon. But it's also one that's not exclusive to them, either. There's hardly a single major US employer that hasn't faced allegations of unfair labor practices over the past ten years. And if Amazon was simply one of the more prominent examples in 2020, it's largely because their visibility took center stage last year.
And much of that visibility may have been the result of Prime Day.
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 just 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.
There's a reason why consumers specifically watch for Prime Day deals. And it's not simply for the savings.
Customers know that brands are just as apt to unveil new product lines to coincide with Prime Day as they are to provide increasingly competitive discounts. And that competitive edge has resulted in third-party sales constituting nearly 60 percent of Amazon's gross merchandise sales.
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 it was one that the vast majority of sellers not only anticipated, but gladly cooperated with.
Unfortunately, many customers weren't so charitable.
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.
Balancing customer satisfaction with consumer demand is difficult enough—even in the most accommodating of times. But when consumer demand threatens to break an already fragile supply chain, a crisis can emerge that no one could have predicted.
Order Fulfillment and Supply Chain Fragility
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 of fulfillment delays extends far beyond Amazon.
As do its ramifications.
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 both domestic and global supply chains for months on end.
Much of the blame of the current global supply chain's fragility isn't the result of increased consumer purchasing but the failure of inventory management strategies to address unexpected demand.
By and large, eCommerce has historically operated on "Just in Time" strategies, where processes of production and manufacturing are initiated by both currents and predicted sales volume. But when sales volume exceeds predictions as a result of a global crisis, neither manufacturers, transportation providers nor logistics services have adequate resources to address those gaps.
And until all three actively explore channels that can address higher-than-normal demands, catastrophe will be inevitable.
As a result, eCommerce 2020 saw all manner of glitches, from price gouging to unfulfilled (and frequently unfillable!) orders.
2020 may have been the year of eCommerce. And by default, 2020 was the year of 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 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 that consumers can and will turn to.
Yet Amazon is backed by a certain gold standard in customer experience. It's not just backed by name and convenience alone.
Amazon's reputation is one 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 the wake of those changes.
Will your business succeed on Amazon in 2021? Find out more at Color More Lines.