“Prime Day is Amazon’s biggest global shopping event,” says Echo, Amazon’s smart speaker and bestseller. But to Amazon’s logistics system, the 30-hour shopping spree means “nothing out of the ordinary for a summer sale,” as an Amazon (AMZN) spokesman told Yahoo Finance in an email on Monday.
Amazon’s self-made shopping holiday on Tuesday offers a peek into the e-commerce giant’s expanding delivery system. The annual event attracts people to pay $99 a year for the Prime Membership to gain access to exclusive discounts and two-day free delivery.
Last year, Prime Day marked its largest single day sales ever. Amazon can handle a high volume of packages with a promise of two-day delivery with its existing logistics system, with help from its partner carriers including UPS, the US Postal Service and FedEx.
Both UPS and USPS confirmed to Yahoo Finance that they don’t need to hire temporary workers to support the event, while FedEx says it plans “for volume needs year-round.”
“Amazon doesn’t need to add additional capacity for Prime Day because Amazon has excess capacity on non-Prime Day events,” said Brittain Ladd, a supply chain consultant who worked for Amazon until this March.
A ‘test’ of Amazon’s expanding delivery system
Amazon’s shipping costs have surged recently, even as the company put more resources into building its own delivery system.
Amazon is focusing much of that expansion on air delivery. The company boasted this week that it used Prime Air Cargo planes to support Prime Day for the first time. However, 40 jets with blue logos have been flying with lightweight loads to meet growing delivery demand since last year, reported by Reuters.
“Prime Day will be a test for their own capacity apart from FedEx and UPS. I don’t think they know for sure,” said Dale Rogers, professor of logistics at Arizona State University. “It’s a nice test to do before Christmas.”
During the Christmas holiday in 2013, bad weather and the overwhelming surge in orders resulted in large-than-expect package delays, which Amazon settled by offering $20 gift cards and refunds on shipping costs. Last holiday season, Amazon added more than 120,000 temporary workers to work in its fulfillment centers and to do customer service.
While Amazon is trying to reduce its dependence on third-party shipping companies to deal with order surges on special occasions, it may never rely 100% on its own internal delivery systems. It might not make sense for Amazon to send everything to Prime members doorway’ on its own.
“I think they’re going to build internal capacity, but they will also continue to grow external capacity,” Rogers said. “Wall Street won’t like it if their return on assets become much lower. It makes sense for Amazon to outsource part of them and have a mixed delivery strategy.”
Krystal Hu covers e-commerce for Yahoo Finance. Follow her on Twitter