Peak season isn’t what it used to be. Brands are responding to changing seasonal demand, which is shifting to a year-round trend. Instead of the drumbeat calendar cadence, firms are realizing the criticality of practicing like they play in pre-season… Being operationally ready for anything when the real game comes.
Two Amazon Prime Days in 2023
Last year, Amazon hosted its first-ever Prime Early Access Savings event, “Prime Day 2”. It’s looking like more of the same, with the official announcement of Amazon Prime Day 2023 dates extending into two days for shoppers: July 11-12.
With the high participation in the third-party marketplace, this additional demand will pass directly on to your supply chain. While the immediate reaction might be dread, this is a blessing in disguise for prepared retailers. Additional revenue, even after discounts, fuels growth. But, the hidden value might be in your order management (OMS) or distributed order management (DOM) system’s ability to provide Operational Readiness.
With direct-to-consumer focus and integration with marketplaces, like Amazon, the primary sales channel has shifted. You aren’t primarily stocking for full-pallet truckload replenishment of retail stores. Parcel and LTL have become the default mode of getting goods to customers. How can your supply chain know it’s ready? Practice makes perfect.
Pre-season events matter
In the traditional peak season planning process, you set your plans, stock your shelves, and hope you are right. For many brands, there is a 3-4 month window of sales that will contribute 50% or more of their annual sales plan. A misstep in that sales window can be an existential issue for many smaller firms.
Even best plans can face snags:
- Are your people trained and disciplined?
- Can your process handle the temporary surge?
- Is your OMS and DOM system ready?
Additional Prime days could actually be a boon for many organizations, even Amazon. This presents the opportunity to create a predictable surge in demand that will – almost certainly – pale compared to the regular ones.
You’ll learn a lot during these bonus seasonal events, too. What broke? Which department fell down? Which system kept up? You usually have to pay consultants for these deep insights and you will get them with enough lead time to address them.
Like sports, there is a self-reflective value to pre-season or invitational games. These ‘games’ can help your team shake off cobwebs and test if your new tactics are sound. Better now than during the retail equivalent of a playoff game.
If your fulfillment systems can’t keep up, there might be something your vendor didn’t tell you.
What’s hot, what’s not: DOM systems can tell
What you put on the shelves is as important as how you process them. Traditional demand planning is done months – sometimes years – before the sale. All forecasting becomes less accurate the more time there is between making and checking the prediction.
Additional, earlier, Prime days can help you judge what is and isn’t moving in your assortment. Was the product you were banking on less important than you thought? It could be very important as Amazon has invested more heavily in spotlighting marketplace sellers in their deals. If Amazon features more of your products, the insights on consumer preference will be invaluable.
What if you got it wrong!?
You stocked your assortment based on an expectation of a specific ABC segmentation. These early prime days can highlight that a B SKU was really an A SKU or, worse, a C SKU is going to truly drive your sales. Amazon has invested in your brand; have you?
Intelligent DOM systems like Deposco integrate demand planning software to inform value-driven decisions during “practice”. So you can make positive changes before your full peak season hits!
Smooth out spikes
You are practicing. You are honing in on value., But what about the steep demand increase?
Well that might not materialize as a 1, 2, or 3x increase. Numbers have shown a fairly consistent ~10% gain in the program for the last 3 years. In addition, the trend of focusing only on Amazon brands is steadily shifting back towards merchants as well. It’s unlikely that a new Amazon Prime Day in October will be a multiplier for sales, but will result in an increase.
What is most likely is a pull forward of holiday season demand. This could benefit retailers that are laser focused on Black Friday and Cyber Monday supply chain execution strategies. Along with early detection of if your demand plan was on point, potentially shifting some of that demand earlier with DOM systems can:
- Reduce inventory in the warehouses earlier, freeing up working capital and reducing operational strain
- Move out of off-site storage quicker, reducing costly expenditures that drag on margins
- Smooth out peak season staffing and allow for more full-time vs. temp labor at a time when finding peak talent has been peak difficult
Many of our Peak Season survey respondents are dealing with a shift from peak to year-round execution. Predictable supply chains have incredible operational benefits that should be leveraged when possible.
Use Amazon Prime Day as a stress test
An Amazon Prime Day event should be no different than checking your fire drill strategy. You know when it’s going to happen, and you know what products you’ve placed on the marketplace. All that’s left is seeing how your team performs in the moment. Rather than be concerned, you should welcome the opportunity, and the above potential benefits above. DOM systems are a great way to stress test your operations pre-peak season.
While this is one example of how the dynamics of ecommerce trends are evolving, reviewing our recent Peak Season and Omnichannel reports can identify critical areas for improvement this year. While we’ve seen a return to form for brands and their supply chains after an extended period of disruption, this also means that consumer expectations for normalcy in execution are enhanced.
Prime Day is almost here. Are you ready?