A Blog by Jonathan Low


Dec 1, 2020

How Amazon Won Black Friday and Plans To Dominate Holiday Shopping

Amazon used the pandemic-driven decline in real estate and cargo jet prices to build out its network, giving it a strategic advantage in managing deliveries. 

This has already proved crucial during a massive holiday shipping season which, as of December 1, is already causing merchants and other shippers to warn consumers that packages may be delayed. JL

Cat Zakrzewski reports in the Washington Post:

Online spending on Friday jumped 22% from a year ago. Meanwhile, traffic to physical stores tanked 52%. The company has used the crisis to expand its logistics operations, seizing on plummeting prices on everything from commercial real estate to cargo jets. “They are building the world’s biggest package-delivery company.” Since the beginning of July, Amazon has hired 400,000 workers, 2,800 employees a day. This effort, which has accelerated during the pandemic, will give Amazon an upper hand as other retailers struggle to deliver packages in a network jammed with holiday purchases.

Amazon and other online retailers won Black Friday. 

Online spending on Friday jumped about 22 percent from a year ago, according to data from Adobe Analytics. And Cyber Monday deals could set new online shopping records today.

Meanwhile, traffic to physical stores tanked about 52 percent, according to retail tracker Sensormatic Solutions. The slowdown reflected stores' efforts to limit crowds through shorter hours and less doorbuster deals.

The shift highlights how the pandemic is accelerating a massive evolution in shopping. 

Amazon and other big-box retailers such as Walmart and Target that have expanded their online operations in recent years are benefiting. It's another sign of how the pandemic is further empowering tech giants  and it's unclear whether traditional retailers will ever be able to make up the ground they are losing.

Amazon's swift growth during the pandemic is likely to attract greater scrutiny from Washington lawmakers and regulators, who have increasingly been scrutinizing the behemoth for anti-competitive behavior. (Amazon head Jeff Bezos owns The Washington Post.)

Amazon wasn’t ready for the surge in demand in the early days of the coronavirus pandemic, but the company has made major moves in recent months to dominate the holiday rush: 

The company's key advantage is an in-house shipping network that's starting to rival FedEx and the United Parcel Service. 

The company has used the crisis to expand its logistics operations, seizing on plummeting prices on everything from commercial real estate to cargo jets, my colleague Jay Greene reports. The e-commerce giant leased a dozen Boeing 767-300 cargo aircraft, bringing its fleet to more than 80 jets. It also added 220 package facilities since the beginning of the year, including urban delivery stations and giant warehouses.

“They are building the world’s biggest package-delivery company,” David Glick, a former Amazon logistics executive who serves as chief technology officer at Flexe, which helps retailers warehouse and deliver goods, told Jay. “If you believe the carrier network is tapped out today, and it is, there is no other option.”

This years-long effort, which has accelerated during the pandemic, will give Amazon an upper hand as other retailers struggle to deliver packages in a network that is jammed with holiday purchases. 

Amazon has hired more than 400,000 workers, as other companies have had huge layoffs. 

The company’s employee base is nearing the size of the population of Dallas. Since the beginning of July, Amazon has been adding about 2,800 employees a day, according to Karen Weise of the New York Times.

“It’s hiring like mad,” Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara, told Karen. “No American company has hired so many workers so quickly.

It far outpaces the 230,000 employees Walmart added in a single year two decades ago. The closest comparisons are the massive hiring sprees entire industries went on during the early years of World War II, she reports. 

At this pace, Amazon could have more employees than Walmart within two years and become the world's largest employer. That exploding growth is in part why the company is under increasing regulatory scrutiny in both the United States and Europe. 

Amazon is rolling out a special holiday bonus to front-line staff. 

Full-time employees at the company from Dec. 1 through Dec. 31 qualify for a bonus of $300. Meanwhile, part-time employees will receive $150, the company said in a blog post. The holiday bonuses will total more than $500 million, as the company responds to the surge in online shopping, the company predicts.The company offered a similar bonus in June as lockdowns around the country increased demands on the company. It comes as workers have raised concerns about the safety conditions at Amazon warehouses during the pandemic. The company said in October more than 19,000 employees had tested positive for the coronavirus.


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