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.
Amazon announced on Nov. 1 that it would start offering Black Friday deals from then through Dec. 22 and would have up to 20 deals a day. By comparison, Amazon kicked off its Black Friday deals last year just a week prior the holiday and offered 10 deals a day, with Black Friday itself having 10 extra deals of the day.
Promotions will include electronics, toys, jewelry and clothing, among other items. For the first time, Prime members will be able to use their Alexa-powered devices to order Black Friday deals.
Amazon is looking for ways to get more usage of Alexa and Echo products, Hottovy added, explaining that the likelihood of Alexa becoming the company's fourth pillar after marketplace, Amazon Prime and Amazon Web Services is increasing.
"It's going to be a competitive holiday season, but it's a little unclear how the retailers are trying to combat," Hottovy said, adding that brick-and-mortar retailers will likely turn more to e-commerce as they shorten Thanksgiving shopping hours.
The fulfillment group's build-out will place Amazon in a much stronger position this year, agreed Maxim Group analyst Tom Forte.
The e-commerce giant will benefit from having more fulfillment centers and delivery networks, he said, while noting that uncertainty from the election has been understated so far.
"[We] do not know what's going to happen tomorrow and how consumers are going to react. We don't know how tomorrow's election will affect the consumer psyche," Forte said.
Meanwhile, Amazon is celebrating the two-year anniversary of voice recognition service Alexa and home automation device Echo on Monday by promoting one-day promotions for Echo products. The e-commerce company is selling the Amazon Echo for $140 instead of $180. (The promotion isn't part of its Black Friday deals.)
Seattle-based Amazon has been an early mover in the smart home market since the introduction of the Echo device family in 2014, with Alphabet (GOOG) jumping in with Google Home this month.
In September, it rolled out a new generation of Echo Dot devices for $49.99 compared to the original price of $89.99. Now the Alexa-powered device group includes the Echo, Echo Dot and Amazon Tap.
Shares of Amazon were up 3.8% Monday afternoon to $783.97. The stock is up about 16% year-to-date.