Retail giants, including Amazon, introduce pre-holiday sales.
In the lead-up to the holiday season, retail giants like Amazon are grappling with uncertainties and escalating expenses due to supply chain issues. These challenges include port congestion, manufacturing and shipping disruptions, rising freight costs, labour shortages, and escalating labour costs.
To combat these difficulties, Amazon has announced the creation of 125,000 new jobs in the United States, with an average starting hourly wage of over $18. Furthermore, the company has pledged to invest over $1 billion in higher pay for its front-line teams.
Last year, Amazon's sales event, similar to Prime Day, was delayed due to the pandemic. This year, the event has returned to its more typical early summer timeframe. However, the company is facing the possibility that supply chain and cost pressures may worsen before they improve, potentially impacting the latter part of the holiday season.
To ensure goods reach customers by the Dec. 25 holiday deadline, many retailers are jump-starting the holiday season. The traditional post-Thanksgiving "Black Friday" shopping day has been blurred by e-commerce, with the general timing mostly sticking.
To help customers navigate the holiday shopping season, Amazon has updated its lists feature, allowing customers to share gift ideas for each household member with relatives and friends. Additionally, customers can send gifts using email or mobile phone numbers, eliminating the need for addresses.
Despite the challenges posed by the pandemic, many consumers have been out and about since the spring. Retailers, however, are still dealing with the repercussions of the pandemic on their supply chains.
Telsey Advisory Group analysts expect tailwinds such as pent-up demand, strength of consumer spending, full-price selling, enhanced profitability from the digital channel, and a rationalized expense base to have a slight edge during the holiday season. However, they also warn that challenges may persist after the holidays, with comparisons being difficult, no U.S. government stimulus, and profit pressures likely to persist in the first half of next year.
In conclusion, while the specific impact of supply chain issues on Amazon's 2021 holiday sales is not yet fully known, it is clear that these challenges have had a significant impact on retail supply chains, including Amazon's operations. Amazon's initiatives to expand delivery networks and improve parcel delivery capabilities suggest ongoing investments to address these limitations. By launching "Black Friday-worthy deals" early this year, Amazon is aiming to attract customers and maintain its position in the competitive holiday retail landscape.
- The government could consider investing in AI and technology to help businesses, particularly in labor-intensive sectors like retail, address the ongoing labor shortages and rising labor costs caused by the pandemic.
- As supply chain issues worsen, governments may need to intervene and collaborate with the private sector to improve logistics, which could help in reducing the escalating freight costs and port congestion faced by companies like Amazon during the holiday season.
- In the face of increasing competition during the holiday season, retailers like Amazon could leverage AI capabilities to optimize their supply chain, predict consumer demand more accurately, and make timely decisions to combat potential shortages and mitigate costs.
- With the pandemic highlighting the importance of digital transformation for businesses, governments could provide incentives to promote the adoption of new technologies like automation and AI in industries like retail and manufacturing, helping improve productivity, reduce costs, and create jobs.
