We found this article from Gretchen Gavett on the Harvard Business Review to be very insightful. It describes the way in which Amazon has learnt from a distribution disaster experienced during Christmas 1998.
It’s no surprise to hear that Amazon are currently employing 70,000 temporary staff in the US alone to process the spike in transactions experienced at Christmas. With 14 American distribution centres (and in 36 cities across the globe) the demand for seasonal employees is huge. Whilst some of us are devoted e-commerce users, others of us only use Amazon etc on a few occasions during the year. Needless to say, buying presents involves many of us taking to the internet in search of the perfect gift.
“The underlying truth is that Amazon becomes, like almost like all retailers, a different company during the holidays… Volume grows over the previous year. The already aggressive and fast-moving environment in the headquarters and fulfillment centers become manic. I describe it as two Amazons: one that operates for 10 months and the other that operates for two months out of the year.” Jeff Stone
We find the notion of becoming “a different company” fascinating, particularly when thinking about the challenges facing our clients. In fact, increased demand at Christmas time has the potential to cause start-ups to effectively become SMEs, medium-sized retailers to become high-street chains etc etc. Becoming a different company involves thinking differently about every part of the E-Commerce process.
So, what exactly happened to Amazon back in 1998?
Gavett cites Stone’s account of every E-Commerce business’ worst nightmare; a spike in orders threatening to result in huge delays and dissatisfied customers. In order to avoid this happening, staff worked through the night and were joined in the warehouses by company executives. The company ordered in coffee and burritos to help maintain energy levels, and just about managed to survive to tell the tale.
Amazon responded to the 1998 crisis by implementing a world-leading distribution process to ensure that the problem would never happen again. Whilst employing huge numbers of temporary staff is a part of this strategy, the solution stems from the realisation that at key points in the calendar the company completely changes. This means that everything else needs to change in order to cope with demand and continue to deliver first-rate customer service.
We wish all of our E-Commerce clients the very best of luck over the Christmas period and hope that your sales smash previous results. And, if it all seems like too much in the coming weeks, draw comfort from Amazon’s story and know that it’s perfectly normal for your business to face one or two distribution challenges at this time of year…