As Amazon.com (AMZN) looks to own Black Friday yet again this year, its fulfillment efforts will be key.
"It's the peak season for the company," said Morningstar analyst RJ Hottovy of Black Friday, adding that the bulk of Amazon's revenue still comes from its e-commerce marketplace even as it branches into other businesses.
Over the past couple years, Amazon has enjoyed huge success during the Black Friday season thanks to its competitive prices and fast shipping speeds. Last year, Amazon accounted for about 39% of all e-commerce spending last year from Nov. 1 through Dec. 6, according to Slice Intelligence, which gathers data from millions of shoppers. Amazon also reported that it added three million new Prime members in the one week before Christmas alone.
Jeff Bezos' empire is evolving from an e-commerce retailer to a third-party marketplace through its Fulfillment by Amazon (FBA) program and the transformation will be visible during the upcoming season, Hottovy said, adding that operating a marketplace is more profitable.
Amazon has been building out its fulfillment capacities to allow more third-party vendors to store and ship goods through Amazon. In the third quarter, for instance, the company opened 18 fulfillment facilities to maximize capacity ahead of the holiday season.
About 50% of units sold on Amazon are now coming from third-party businesses, Hottovy noted.