According to estimates published by Morgan Stanley, Amazon is now delivering 2.5 billion packages in the United States per year. Amazon's logistics capabilities has doubled within the last year from accounting for around 20% of Amazon package deliveries to more than half of all Amazon package deliveries. Amazon Logistics is rapidly catching market leaders FedEx (3 billion packages/year) and the United States Postal Service (4.7 billion packages/year). Although growing its own logistics capabilities is costing Amazon a fortune, it will soon own the entire delivery chain of its products, an accomplishment that will result in dramatic cost saving and efficiency improvements.
The quest to own more of its delivery chain has definitely not come cheaply. Just this year, Amazon reported a nearly 50% increase in its fulfillment and shipping costs (a total of $9.6 billion) over a three month period (June - September). Remarkably, Amazon is managing to increase the number of packages it delivers as well as the speed it takes to deliver them. This year, for example, Amazon began testing a shift from Prime two-day shipping to one-day shipping. Traditionally, the last mile of a package delivery is not only the most expensive for retail organizations but also the hardest for them to handle themselves. Amazon has launched numerous initiatives, such as Prime Air and Amazon Flex to meet the needs of their logistics goals.
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Black Friday (Nov. 29th) and Cyber Monday (Dec. 01) set new spending records in the United States with $7.5 billion and $9.4 billion in online sales estimated by Adobe Analytics. Both daily totals represent a growth of nearly 20% over last year's records. Not only is online spending skyrocketing, but customers are also choosing to make more purchases via smartphones. On Cyber Monday, for example, smartphones accounted for more than one-third of all sales, an increase of over 40% over last year. Adobe expects that online holiday spending will reach over $140 billion, with Cyber Week (which includes Black Friday and Cyber Monday) accounting for around 20% of that total.
Although the increase in spending seen during Cyber Week echoes broad industry trends, big retailers do get a bigger boost from the holiday season than their smaller competitors. Adobe estimates that big retailers ($1B+) see a holiday revenue boost of close to 65%, which is close to double what their smaller competitors ($50M<) experience at 35%.
Advertising is a vital part of the equation for any retailer trying to capitalize during this holiday period. Adobe estimates that paid search was accounted for over 24% of sales (up from 5.2% last year), just edging out direct traffic (21.1%) and "natural" search (18.8%). Although social media isn't as successful at driving sales, accounting for only 2.6% of sales, its role as an influencer is growing as it drove 8% of visits (a growth of 17.5% from last year).
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