While retailers and their associated supply chain teams are still in the process of recovering from the 2016 holiday fulfillment period, and while the final retail sales numbers are being assessed, some takeaways have become apparent.

The first and foremost, was the continuing preference among various consumers to do their holiday shopping online. The prime beneficiary of that activity was once again the Amazon online shopping platform, but some inroads were made by other online retail platforms as well.

Amazon has already declared its best holiday season ever indicating that more than 1 billion items were shipped on a worldwide basis with both the Amazon Prime and Fulfillment by Amazon programs. More than 72 percent of Amazon online customers shopped utilizing a mobile device which is a remarkable statistic regarding changed shopping habits. fba_sized

In terms of Amazon’s operations, December 19 was declared as the peak worldwide shipping day during the 2016 holiday season which was contrary to earlier industry expectations that shoppers would opt to seek more deals during the Thanksgiving to Cyber Monday promotional weekend period in late November.

The 2016 fulfillment period was also the test of Amazon’s augmented order to last mile fulfillment capabilities which appeared to perform well despite visible labor unrest including a brief walkout by ABX Air pilots in late November. Pilots of Amazon’s leased air carriers subsequently took to a social media campaign warning of missed holiday deliveries due to overworked pilots.

A published report by Reuters cited air freight payload data among Amazon’s leased fleet of cargo aircraft indicating that most Amazon Prime flights flew with full cubic payloads but with lighter than average weight loads than traditional air freight. That would imply smaller, low density parcel type shipments. According to the Reuters analysis, Amazon leased aircraft handled between 37 percent and 52 percent of their maximum weight loads as contrasting to FedEx and UPS air cargo averages of between 53-56 percent. Reuters did indicate its data analysis did not include the November-December period when contractor ABX Air paused flights after a pilot work stoppage.

Amazon’s flight scheduling reportedly favored scheduled shipments later in each day, with direct routing to at least 10 airports closest to major population centers across the United States. Many of the online retailer’s chartered eastbound flights departed U.S. West Coast airports well after midnight local time, arriving direct to nearby Amazon logistics fulfillment centers. Thus, Amazon has elected to overcome the scheduling limitations of traditional parcel carrier hub and spoke networks through direct flight routing to major fulfillment population centers. While the online retailer continues to deny that is directly competing with either FedEx or UPS in parcel delivery, its fulfillment strategy appears to be directed at overcoming the time and logistics limitations of a hub and spoke air freight network.

As was the case in 2015, Amazon warehouse and fulfillment center employees in Germany once again initiated a series of labor stoppages as part of a long running dispute dating back to 2013 over local compensation levels. Amazon has once again claimed no disruption in holiday delivery commitments within that country.

There are some indications that the combination of Walmart.com and Jet.com might have had some impact on competing with Amazon on price, but at this point, we have not seen enough quantitative evidence to support that observation.  One report we reviewed indicated that Jet.com had a high inventory stock-out rate with nearly 29 percent of the most popular items in out-of-stock status.

Obviously, more definitive data will be forthcoming regarding the recent holiday fulfillment period but the continuing trend favoring online buying and Amazon’s platform dominance in market share seen inescapable.

Bob Ferrari

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