CrossDock | October 26, 2023

Amazon Prime Day Results, Strong Holiday Spending Predictions, Latest Shopify Updates

October 2023

Welcome back to CrossDock,

In our previous issue, we brought you the exciting reveal of Amazon's second Prime Day event for 2023 — the Prime Big Deal Days. Now, in this issue of CrossDock, we'll delve into the stellar performance of the Prime event. Intending to keep up this performance year-long, Amazon has rolled out newer innovations to fasten delivery: we are referring to the Prime Air drone delivery system, now expanding to international locations. Read on to dive into the latest in e-commerce, warehousing, and fulfillment.

In this newsletter:

  1. Amazon Prime Big Deal Days Save Over $1 Billion in Holiday Kickoff
  2. Consumers Prefer In-person Box-free Returns
  3. Amazon Launches Ultra-fast Drone Deliveries
  4. Prologis Beats Q3 Expectations
  5. Deloitte Predicts Strong Holiday Spending
  6. The Port of Long Beach Experiences its Strongest September
  7. What’s New for Shopify Partners and Developers

Retail and E-commerce🛍️

Amazon Prime Big Deal Days Save Over $1 Billion in Holiday Kickoff

Amazon Prime Big Deal Days, held on October 10 and 11, saw Prime members save over $1 billion across millions of deals, marking a solid start for the holiday shopping season. Additionally, Prime members ordered more than 150 million items from independent sellers in Amazon’s store.

Biggest fall sales event 

U.S. Prime members purchased over 25 million items on the first day of Prime Big Deal Days with same-day or next-day delivery. The fastest delivery in the U.S. on the first day of the event was 54 minutes in Ohio. Some of the best-selling categories in the event were Apparel, beauty, home, and toys. 

Buy with Prime 

Interestingly, Prime members in the U.S. shopped for holiday kick-off event deals beyond Amazon using Buy with Prime for the first time. 

Extending holiday season

In recent years, major retailers like Amazon, Walmart, and Target have organized early discount events before Black Friday and Cyber Monday, extending the holiday season to meet the growing trend of online shopping.

E-commerce Logistics📦

Consumers Prefer In-person Box-free Returns

According to the "Returns Happen" study by Happy Returns, in-person box-free returns are increasingly preferred by consumers, with 67% ranking them as their top choice, a 26% increase from the previous year. Notably, 90% of consumers avoid retailers offering mail-only returns

Return policy and fee

According to the report, 53% of retailers who increased return fees saw a reduction in return rates, and 48% of these retailers reported a decline in average order value and an increase in customer complaints. Additionally, one in three retailers claimed they had lost customers as a direct result of adding return fees. 

Free return option 

Key insights from the study underline the value consumers place on choice, particularly a free return option. Notably, 59% of retailers observed an increase in shoppers opting for the free return option following the introduction of fees. The study also emphasizes the pivotal role of convenience in shaping consumer behavior, with location proximity being a significant influencing factor.

Amazon Launches Ultra-fast Drone Deliveries in the UK, Italy, and US 

Amazon is expanding its Prime Air drone delivery system to include Italy, the UK, and an additional US city, with plans for implementation by late 2024. These new additions expand upon the ongoing drone delivery operations in the US, where drones are utilized drones to deliver packages weighing up to five pounds. 

Faster and efficient delivery

Once available, eligible Amazon customers can opt-in to drone delivery for household products, everyday essentials, beauty items, office and tech supplies, and other items weighing up to five pounds. This integration of drones into Amazon's broader delivery network aims to enhance efficiency, safety, and sustainability, ultimately providing faster product deliveries.

Drone delivery in the US

Within the US, the drones will operate from Same-Day Delivery stations, which serve as smaller versions of Amazon's fulfillment centers. These stations handle orders for same-day delivery, ensuring rapid service for items ordered on the same day.

Corporate Development🏢

Prologis Beats Q3 Expectations, Reports Softened Demand

Logistics real estate operator Prologis beat Q3 expectations but noted softened demand. Prologis reported core funds from operations (FFO) of $1.30, 5 cents ahead of analysts’ expectations but 43 cents lower year over year. 

Warehouse space investment

The San Franciso-based company cited geopolitical unrest and rising interest rates as factors impacting customer decisions on warehouse space investment. Prologis reported a 97.1% portfolio occupancy for the quarter, a 60 basis point decrease compared to the previous year. 

“Demand is definitely softer — it’s closer to normal, maybe even a little bit below normal at this instant,” co-founder and CEO Hamid Moghadam told analysts on an earnings call. 

Increasing rent prices  

The company mentioned that rent prices are still increasing and are in line with or surpassing the inflation rate. Furthermore, the rent prices in the U.S. will rise by 7% for the entire year, a slight increase compared to the mid-6% rise observed year-to-date. Similarly, in a paper on global trends last month, Prologis predicted that new building deliveries would contract by 35% or more in the US and Europe in 2024.

Holiday Shopping 🛒

Deloitte Predicts Strong Holiday Spending Despite Economic Concerns

Despite concerns about the US economy, the 2023 Deloitte Holiday Survey reveals that consumers are determined to have a memorable holiday season, with an average spending plan of $1,652, exceeding pre-pandemic levels. 

Increased participation 

According to the survey, participation in holiday shopping is on the rise, with 95% of consumers intending to make purchases. However, declining savings rates and student loan repayments are causing some consumers to cut back on holiday expenses.

Secret for success 

The report says retailers may succeed by focusing on value during promotional events, with 25% planning to shop on October promotional days and 66% during the Black Friday-Cyber Monday week. 

Additionally, retailers can maximize profits during promotional periods, given consumers' strong desire for discounts. This is particularly crucial as consumers intend to shorten their shopping period to 5.8 weeks this year, down from the pre-pandemic duration of 7.4 weeks.

Number Spotlight

$704.9 billion  

The advance estimates of U.S. retail sales for September 2023. This is an increase of 0.7% from August and 3.8% year over year. 

Catching Up

Source: CNBC

Despite being the biggest retailer in the country, Walmart’s e-commerce business is still much smaller than rival Amazon. But things are turning around for Walmart. Over the years, Walmart has witnessed significant growth in online sales in the U.S. In its Q2 earnings report, the American retail giant stated that its U.S. e-commerce sales grew 24%, and international e-commerce grew 26%, a significant jump.

The Port of Long Beach Experiences its Strongest September

The Port of Long Beach achieved its busiest September on record, with a total of 829,429 twenty-foot equivalent units (TEUs) moved, marking an 11.8% increase compared to the same month last year.  

This success is attributed to consumer demand for holiday-related goods, a labor pact between dockworkers and management, and ongoing efforts to highlight the port's business advantages. 

Holiday demand and new labor agreement

The Port of Long Beach is a major gateway for imports into the United States, and the fact that cargo volume is still growing in September suggests that consumer demand for holiday-related goods remains strong. 

Similarly, the July labor agreement between The Port of Long Beach and the International Longshore and Warehouse Union (ILWU) improved efficiency and reduced congestion at the port. 

Imports increased, exports decreased 

Imports surged by 19.3%, reaching 408,926 TEUs, while exports decreased by 10.3% to 101,248 TEUs. Notably, this is the port's first monthly year-over-year cargo increase in 14 months. The port has moved 5,822,666 TEUs in the first nine months of 2023, down 20.7% from last year but on par with pre-pandemic levels.

“Consumer confidence is on the rise, and shippers can rely on the Port of Choice now that we have a ratified contract with our waterfront workforce,” said Port of Long Beach CEO Mario Cordero. “We look forward to a moderate rebound in cargo volume through the end of the year.”

Shopify Updates 📈

What’s New for Shopify Partners and Developers 

Check out our round-up of major Shopify product updates: 

One-page checkout

Shopify launched their new one-page checkout to all Shopify merchants upgraded to checkout extensibility. It’s a redesigned experience that’s shorter, faster, and more intuitive for buyers, according to Shopify.

Audiences expansion

The latest version of Shopify Audiences introduces new collaborations with Snap, Criteo, and TikTok, expanding its roster of channel partners, which already includes Meta, Google, and Pinterest. This new update gives representation across the major ad platforms for merchants. 

Enhanced localization 

Shopify Functions now supports the localization of function titles and descriptions. This enables functions displayed in the Shopify Admin, such as new discount types, to be easily translated into the merchant’s native language.

Thank you for reading, we’ll see you in the next edition!

We also publish each edition on our website. You can find them here.