Amazon shipping delays level the playing field for e-commerce

Bookshop.org CEO Andy Hunter said its new e-commerce platform for bookstores reached 100,000 customers in about three months during the coronavirus pandemic.

Idris Solomon

Over the course of the nine months, Andy Hunter courted investors for his online bookstore business, Bookshop.org, and was repeatedly told he was condemned to be run over by Amazon.

Three months after launching with less than a million dollars in funding, Hunter said the company had already far exceeded the levels it hoped to reach by Christmas. In early May, the bookstore sold more than 10,000 books a day to 175,000 customers before spending a dollar on advertising, according to Hunter.

The timing of the bookstore was strange. The site, which offers freelance bookstores an easy way to set up online storefronts for delivery notes, was launched in beta on January 28. orders proliferated in the United States

“My goal was to conquer 1% of the Amazon book market and we are there now; we account for more than 1% of their sales,” he said in a telephone interview in late April. “I thought it was going to take three years to get there and instead it took 11 weeks.”

Although the pandemic threatens to cripple small businesses such as bookstores and restaurants that tend to depend on pedestrian traffic, it also creates opportunities for some online businesses to grow. The early success of the bookstore shows that Amazon may not be the only e-commerce company to emerge from the pandemic stronger than before. While the retail giant has been forced to ease its quick delivery times in the face of unprecedented demand and inventory shortages, small e-commerce services have also boomed as consumers struggle to find goods online.

Strong demand for grocery deliveries

The demand for grocery delivery has spread to several smaller departments that are now working to quickly increase capacity. Many consumers are looking to avoid their brick and mortar grocery stores, which are among the last remaining gathering places in many regions.

With open slots for Amazon Fresh and Whole Foods becoming so rare that a coder has created a program to alert people to their availability, consumers are now finding alternative services that they have not used before. Two local delivery services in New York, Go Organic NYC and Farm to People, saw a surge of new customers and were forced to quickly expand their facilities to meet demand.

Before the pandemic, Go Organic mainly stocked head offices of products. But with many of their customers now working from home, the business has become a fully residential delivery service. This change has allowed him to accept hundreds of new clients in the first two to three weeks of the crisis, according to Brian Lai, president and partial owner.

Lai said he anticipates that many of these customers will return to their grocery stores after the current health crisis has passed, but hopes to keep about 15% to 20% who were introduced to the freshness of local organic products.

Similarly, Farm to People saw its customer base triple in two weeks in March, forcing it to create a waiting list to meet demand. The waiting list increased to over 3,000 customers during a two-week hiatus after letting people into the service.

In mid-April, co-founder Michael Robinov said the company has the capacity to build 2,000 food boxes for customers, but is looking for additional storage space that would bring that capacity to 7,000.

Robinov said that when the company was trying to meet growing demand, its goal was to be transparent about inventory shortages and wait times. He said that widespread reports on supply chain challenges seem to make customers more forgiving than usual for delays and missing items in their orders.

“If Jeff Bezos were to put everyone on Amazon Fresh on a waiting list, if they can’t understand it, it’s really difficult for a small business like us to do it perfectly, “he said.

Amazon did not provide a comment for this story.

Robinov has yet to delve into the data to determine which customers are likely to remain with service after the pandemic. But he said “there is definitely a large customer base” visiting the service for the first time. While Farm to People relied primarily on targeted marketing on Instagram or through events, Robinov said that many customers now seemed to come from referrals.

“I ask from a marketing point of view, how many of these customers just need food and will bring it from anywhere, and how many of them are really Farm to People customers and will stay long?” he said.

Leading retail sites

In normal times, Amazon had become the perfect place to buy anything and everything. But as shipping delays and inventory shortages have weighed on supply, consumers seem to be looking more to meet their needs.

Many traditional retailers have reported large increases in online shopping. In April business update, Best Buy CEO Corrie Barry said the company has seen its domestic online sales increase by 250%. Objective declared on April 23 digital sales have increased by 275% since the beginning of the month.

Wayfair, an ecommerce furniture and home goods company, said last week in its call for results, revenue growth up 90% year-over-year after finishing the first trimester ended March 31, up 20% of net sales.

Some buyers seem to go directly to consumer sites to get everything they need, such as monitors and office equipment to help them work comfortably at home. A spokesperson for electronics maker Lenovo said in a statement that it has seen an “increase” in global e-commerce traffic with “increased demand for products that customers can get quickly with short turnaround times.”

Overstock.com, a leading retail e-commerce player, posted 120% year-over-year growth in retail sales in April, including more than 100% of office furniture sales.

Without brick and mortar furniture stores competing for business, customer acquisition costs have gone down for Overstock, according to retail president Dave Nielsen. This has allowed Overstock to spend even more on advertisements, although it shifts some of its television spending to cable news networks, gaining more traffic as people search for relevant health updates.

A United Parcel Service employee loads orders into a truck in the shipping area of ​​the Overstock.com distribution center in Salt Lake City, Utah.

Ken James | Bloomberg | Getty Images

Overstock communicated with customers about delivery delays of up to a week. Nielsen said the pandemic has provided “a short window” where customers are “more understanding” about the delays.

He does not see a day when the retail of bricks and mortar dissolves, but said that with more customers forced to try online shopping due to the lack of alternatives, they will likely find out just how much it’s easy for at least some of their needs.

“There is going to be stick,” said Nielsen.

Another victory for Amazon

Make no mistake: the switch to online shopping will always benefit Amazon. Even if consumers browse other sites, the more buyers get used to shopping online versus the stores, the more opportunities Amazon has to make money.

Amazon is always ready to come out stronger on the other side of this crisis. Despite inventory shortages that lengthened delivery times, Amazon increased net sales by 26% year-on-year in the first quarter, the company said. Amazon has also shown that shipping times are improving. He recently allowed third-party sellers to ship non-essential merchandise to Amazon warehouses and activated other features on his site, such as discounts, which normally encourage people to buy more.

As Amazon’s retail sales in the United States have increased each year, its share of total sales in the United States has also increased, according to eMarketer. The firm estimates that Amazon will reach more than $ 260 billion in retail sales this year and will hold 38.7% of the market. Walmart, the second, will only have 5.3% of the market this year, according to eMarketer.

And while Washington lawmakers and local officials still monitor the company’s competitive and working practices, many also praise the company for the same breath, recognizing the important role it has played in responding to the coronavirus.

Amazon has now committed to spending its expected profit of $ 4 billion in the second quarter on pandemic-related efforts, including building employee testing capacity and strengthening its transportation network to get products out on time . Some analysts have speculated that Amazon’s testing capacity could potentially open up a new line of business, although its chief financial officer has not yet been tempted by this idea.

For physical businesses, Amazon’s threat to their earnings has been compounded by a new danger.

“Amazon was the threat I had in mind when I created Bookshop,” said Hunter, the CEO, about the independent booksellers on its platform. “And then Covid-19 appeared as a much more urgent and immediate threat.”

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