Karen Weise reports in the New York Times:
Amazon’s share of e-commerce sales tends to drop around Thanksgiving, and usually peaks about one week before Christmas — just enough time for packages to be delivered before the holiday. Amazon’s quick delivery times may contribute to its popularity at Christmastime. In the days leading up to Christmas, Amazon’s share of online sales will increase by 50%, to half of all digital sales while most rivals fade. “Amazon has just built up its reputation around rapid fulfillment incredibly well. Customers really trust Amazon’s fulfillment offerings.”
Olivia Zimmermann started her holiday shopping early this year, buying a Bluetooth speaker from Best Buy for her sister. It was supposed to arrive by Dec. 10, two weeks before Christmas.The speaker never showed up — and the post office said it had delivered the package to a different town. Best Buy apologized and offered to reship it. But Ms. Zimmermann, who works in marketing in Chicago, was over it.“I just want a refund,” she told the retailer, and then added: “At this point, I have already ordered from Amazon because I know for a fact it will be here when they say it will.”Amazon is far and away the leader in e-commerce, outpacing competitors like Walmart, Target and eBay. But its dominance is never more pronounced than in the nail-biter last-minute sprint before Christmas.The Last-Minute OptionThe company, based in Seattle, has had a two-decade-long obsession with shrinking the time from click to doorstep. It has built warehouses in more than 30 states and a sophisticated web of delivery methods, giving it a logistical advantage.Amazon has used that edge to lead people to expect near instant gratification that, for a while, only it could deliver. The company built trust in its delivery speed with its Prime membership, which costs $119 a year and includes two-day shipping. This year, in the days leading up to Christmas, Amazon’s share of online sales will increase by almost 50 percent — to about half of all digital sales — while most rivals fade, according to the market research firm Rakuten Intelligence.“Amazon’s ability to fulfill more quickly and effectively than competitors has been a key differentiator back to the earliest days,” said Kenneth Cassar, an analyst with Rakuten Intelligence, which is an independent subsidiary of the Japanese e-retailer Rakuten.Traditional retailers still enjoy strong sales when the holiday season begins around Thanksgiving. They advertise widely, luring shoppers with doorbuster deals. The promotions also drive sales to their websites instead of Amazon. Around Thanksgiving, Amazon’s share of online sales can dip to as low as 20 percent in the United States, according to Rakuten.
Share of all e-commerce salesDec. 16Dec. 16Dec. 1620162017201850%40Amazon30CHRISTMASCHRISTMASCYBERMONDAYCYBERMONDAYCYBERMONDAY20THANKSGIVINGTHANKSGIVINGTHANKSGIVING10Best BuyTargetWalmart0CostcoNOV.DEC.NOV.DEC.NOV.DEC.Average delivery time from click to doorWEEK OF DEC. 2, 2018Amazon3.4daysCostco3.6Best Buy4.6Target4.6Walmart5.5
“Amazon has just built up its reputation around rapid fulfillment incredibly well,” Mr. Carlborg said. “Customers really trust Amazon’s fulfillment offerings.”
Those shoppers include Carissa Vinovskis, 26, who puts in 12-hour days researching diabetes at Children’s Hospital Colorado. She used to shop for Christmas gifts in stores, but as she got busy with graduate school and later her job, she had less time and patience.
Panic set in fast in the middle of this month when Ms. Vinovskis realized she had just six days to get presents before visiting her parents. She found a few cute things on Etsy — “beautiful, handcrafted gifts,” she said — and then realized they would take about four weeks to arrive.
“I was like, welp, Amazon Prime it is!” she said.
An Amazon spokeswoman pointed to a statement in which the vice president who runs Prime, Cem Sibay, said, “We keep working to add faster and even more convenient delivery options.”
Amazon’s speedy delivery has been a key focus. In 2000, it invested $60 million in Kozmo, a New York start-up that delivered snacks, movies and other goods in less than an hour. About a year later, Kozmo shut down. But it remained an inspiration to Jeff Bezos, Amazon’s founder and chief executive, according to a former Amazon employee who heard him discuss the matter.
Mr. Bezos saw that quick delivery could change how people buy things. Price and selection have always been important in retailing, but delivery would surpass store location as another critical factor.
In 2005, Amazon began offering free two-day shipping for Prime members, which Consumer Intelligence Research Partners estimates covers more than two-thirds of households in the United States. Almost a decade later, it started Prime Now, which delivers goods in as little as an hour in 30 cities.
Amazon now has over 110 fulfillment centers in North America, more than 250,000 warehouse employees and dozens of its own planes. It is setting up warehouses that hold tens of millions of items closer to major cities, letting it offer free same-day and one-day shipping on more products.
Walmart and others have also made strides in catching the wave of shoppers moving online by making simil
similar delivery promises without the cost of a Prime membership. (In the third quarter, Walmart’s online sales rose 43 percent over the previous year.) A Google search for the retailer on Wednesday returned “Walmart Last Minute Gifts | Get ’em by Christmas | Free 2-Day Shipping” for the name of the company’s home page.
These traditional retailers are leveraging their physical stores — a key advantage they have over Amazon — and providing ways for people to order online and pick up in person. That is particularly powerful in the final days before Christmas, when shoppers return to stores.
“The biggest area that we’re playing offense right now is with our stores,” Marc Lore, who runs Walmart’s United States e-commerce business, told investors in October.
For some Walmart purchases, customers don’t need to leave their car to get their order — an employee will drop it into their trunk. Best Buy said more than 40 percent of its online revenue is from orders that are now picked up in stores. And on Christmas Eve, people can order products online from store inventory as late as 5 p.m. and pick them up just an hour later.
Marshal Cohen, who advises retailers for the NPD Group, a market research firm, said three years ago, retailers rushed to match Amazon, offering free two-day shipping until just before Christmas — but didn’t have their delivery partners sufficiently prepared for the rush.
“They just clogged the system so badly and really disappointed a lot of consumers,” Mr. Cohen said. “That memory was pretty strong in a lot of consumers’ minds when it comes to thinking about shopping online.”
Building the technology and infrastructure to quickly and consistently fill orders is not cheap, and after years of breakneck expansion, Amazon has squeezed more productivity out of its investments. It picks, packs and mails items out of its warehouses in a day or less, and packages arrive at a customer’s doorstep about two days later, according Rakuten data. The data was based on electronic receipts and shipping notifications retailers sent to more than five million users who use Rakuten’s consumer apps.
Amazon is faster than every major competitor, though other retailers are speeding up. In 2016, Old Navy, which is owned by Gap, took about 10 days to deliver a package ordered during the week after Thanksgiving, Rakuten data shows. This year its packages showed up about three days faster. Walmart cut its delivery time from more than a week to six days over the same period. And Best Buy said 80 percent of its small packages now arrive in two days or under.
(Rakuten’s data excludes eBay and Etsy because the formats of their electronic receipts are harder to track.)
Yet most retailers still have to work to win people’s trust. Jessica Palazzo, who runs after-school programs near Hartford, Conn., bought her mother pajamas from Old Navy two years ago that were guaranteed to arrive before Christmas, but which didn’t appear until January. Old Navy offered her 10 percent off her next order.
This year on Black Friday, she put a pair of Gap pajamas into her online shopping cart — but then had a change of heart.
“That’s embarrassing if you come on Christmas and have nothing for somebody,” Ms. Palazzo said. She ended up buying running socks and a running ear warmer for her mother from Amazon.
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