(Image Source: The Financial Express)
Back in July this year, Amazon declared its biggest profit in its 26-year history. COVID-19 restrictions implemented by governments all around the world encouraged many consumers to shift to online marketplaces such as Amazon.
To cope with the spike in demand whilst keeping their staff safe, Amazon limited its warehousing services to essential goods. The company had to change its operations amid the surge in e-commerce demand, resulting in slower deliveries.
With that in mind, some analysts have begun to question whether Amazon will be able to handle the holiday sales as demand continues to grow.
“Do they have the logistics and delivery capacity to handle order volumes?” Colin Sebastian of Baird Equity Research asked.
“I think you’re going to have a disastrous fourth quarter in terms of demand overwhelming them once again,” said Michal Pachter, of Wedbush Securities with reference to incidents about warehousing constraints.
Amazon faced a similar challenge back in 2013, leaving many with no gifts on Christmas Day. Since then, the company has been working hard to avoid the same incident and handling their deliveries in-house. Amazon also moved its key marketing event Prime Day from July to October this year, allowing consumers to do their holiday shopping early.
Pachter said, “They wanted us to start thinking ‘holiday’ now, before the crazy rush that begins Black Friday.”