Amazon’s Planning For Prime Day

Will:
All right, everybody. We are back. It is July 12th and we have another episode of Safety Stock. I am Will Davis. This is Dan Magida. And Dan, we’ve got something fun that everybody likes participating in starting today, going through tomorrow. Yeah. Can you guess what it is?

Dan:
The one of the best online events caught an event peak event. I think that’s what they actually call it. Not a disruption, a, not a sale, but a peak event peak event. And it’s, I’m gonna make it plural here. Cause it’s two days I think for like the first time ever, right? Yeah. Amazon prime days.

Will:
Days. Yeah. Yeah. Amazon prime days get excited.

Dan:
So you buy anything?

Will:
I’m sure I’ll get something. I and sure. I, I will get something the boys’ birthdays are coming up on the 18th and the 23rd pretty well prepared, but

Dan:
Great way to snack some cheap gifts.

Will:
Yeah. Why not? And Dan, you know, I think as much as I’m excited, what are you going to get for prime day?

Dan:
Yeah, I’ve been looking, there’s always, always in interested in like the electronic space. Like, can I upgrade like headphones, get those

Will:
Wifi booster?

Dan:
Nah, we know other people who could a hundred percent use a wifi booster.

Will:
You’re not yeah, absolutely. What you can use. Wifi booster.

Dan:
Yeah. Noise cancellation. Cancell headphones, you know, for planes. Cause the AirPods can only do so much after a while.

Will:
Yeah, no I’m I hear you. This is a good time. It’s a good time to get your things going. And Dan, when I think about how Amazon is able to consistently pull this off and when I say pull this off, they put in a lot of planning to making sure that this day and now days goes really well. You know, there’s a couple of things that they do that really all businesses can emulate to get their supply chain in a pretty good place. And when I think of number one, I think they do a lot of advanced planning. That’s the simple thing. What do you see from your side that other things they’re doing? Yeah.

Dan:
I mean, one thing as well, strategically is this is a summer event. So we have one big event here, obviously in the us black Friday where there’s, and that’s more of a sale event. Like get ready for the holidays. Everything just goes up. People line up the stores, that’s a physical, an online thing as well. Amazon’s doing an event in the summer where you may not be thinking as much about the holidays. So it’s a way not only to boost sales, but also way to clear out any excess inventory that could be in the warehouses that Amazon’s currently holding.

Will:
Yeah. I, I think you’re right there. And so, you know, if you’re a business and you have, you know, people talk about excess inventory or inventory and obsoleting inventory, you know, this is the reason why you see sales. This is the reason why you see markdowns. Ultimately the goal is to get rid of that inventory. Most businesses employ this tactic in order to do so. And also makes room for new inventory as you’re bringing things in, based on buying patterns from consumers, et cetera. So having a good idea of what your inventory from both a planning perspective and being able to communicate that through your business unit is extremely important and understanding how those things are communicated and how early you can get them communicated, obviously puts you in a better position in order to execute similar to what Amazon’s going to do for its prime days. They are not just willy-nilly choosing these things because they had a premonition, it will do well. There’s a lot of data that they have to suggest this is going to move.

Dan:
Yeah. So like we talked about like, you know, like times the year where you line up for like sales. So for instance, Halloween, if it’s late September or mid to mid-October, people are probably looking for costumes. So it’s like a specific event, but what Amazon’s doing is leveraging natural language processing. So which is just an algorithm on the data science side to actually look at what people are searching for and trigger that. And that helps Amazon build their models to understand how much inventory do we need to hold here where sales could be. So they have built a whole data science model around consumer demand, but also planning against that. And that’s one of the great powers of data science and machine learning that are coming out is predictive analysis into into forecasting. And that’s something that we at at Amal have done as well incorporated into what our platform is today.

Will:
Yeah. And so really simply put Amazon is using keywords that people are searching in their platform to suggest to their team and put into their software and to their algorithm, their predictive models and saying, okay, we should order this based on what people are looking for as Dan mentioned. Yeah. and from an Avil perspective, obviously our company does something similar in terms of order delays in that we will predict what your order delay is based on keywords that are being entered by you and your suppliers,

Dan:
Dan. Exactly.

Will:
Oh yeah, exactly. And so Dan, there’s also the third part of this that people can employ when you are taking a look at different deals that are going to be offered and you’ve aligned on what your deals or what items you’re gonna sell, which you’re gonna mark down. And it’s coordinated from your company’s perspective. You also need to have the labor and you have to have all the teams in place in order to execute that plan. It talks about in the article, Amazon works in all of these different business use, as it comes to incoming pick pack and shipping. What other things can companies do along those lines to make sure that they have smooth operations as well?

Dan:
Well, well actually interesting enough, a few months ago in New York city, I forget which food service either I believe was GrubHub was doing this promo where you could pretty much get either like a free launch or some severely discounted meal, which I try to take advantage of place an order, but I never, I didn’t get my order for hours. And the, when I went to go pick it up, my, my order wast on the system, cause they were just in a day with orders and they actually ended up shutting down everything. And the restaurant shout out to Sophie’s Cuban cuisine, if you ever want a nice, delicious cuban with the green sauce which was completely overwhelmed. And it take took days because a, they weren’t alerted of this by, I believe was gr hub, but also, or they didn’t realize the influx of demand was gonna be and they just weren’t prepared staff wise. And also foodwise for the search was one, I think it was one of those things like back to like, there’s like a spring promotion, like back to the office type thing. I believe it was like in April or may. But really overwhelm the system. It’s it’s out there if you guys ever wanna read up on it on blogs.

Will:
Yeah. And, and I think, you know, Beth and body works did a really good job when they would plan for their candle sales promotions and that they knew, you know, as you know, back to school and as things were coming and they had the different candle promotions that they had this huge influx of demand and typically they would go and they would be planning for it, you know, three to four months ahead of time with their long lead raw material orders. And they would be placing them in. And they had, you know, a lot of times like 20% they would say would be surge capacity. And then it would be another 20% past that would be if things went haywire. So really they were for, you know, they were looking for like a 40% surge if things went crazy. Yeah. And so that type of planning is needed in order to support those big peak events as Amazon would call it

Dan:
Yeah. And what we’re doing on the Amal side, where we touched on it earlier with the natural language processing and I was on a webinar earlier this year and we actually have a a white paper on our website that actually goes through the top five supply chain delays of 2021. We also have a 2020. So like a look back and what we’re doing is we’re processing over 6,000 messages that we’re done through the Amel platform or also via via email and looked at 3,500 order delays. So what’s actually causing your delays in order to ship. And we came out with these five top delay themes. I don’t wanna reveal all of them, but there’s a blend of everything from the transportation side to even materials or even artwork, artwork, brand delays as well. And we really analyze that. So you can truly understand what your manufacturing lead times are to gauge for future reorders. Obviously COVID has, which could be one of the delays has caused some shifts as well, but there’s also other things outside of that, that demand fluxes the supply flues as well, that are related to other global events as well or labor that do influence it. So highly recommended apple. We’ll share this out in our notes where on the Spotify and apple, if wherever you listen to the, to the podcast

Will:
That’s right. And if you have any like interesting delay that you’ve, you know, gotten recently, we’d love to hear it. You can reach out to us at hello@anvyl.com. That’s A N V Y L.com and let us know what you’re ordering for prime for Prime Day.

Dan:
Yeah. And if you’re in Vegas today or tomorrow, go see Edson Greenwood, and you can learn more about delays as he’s speaking about it at Cosmoprof.

Will:
There you go. All right. Well, everybody, it’s fun talking to you and we will be back on Friday.