It's 9:20 a.m. on Monday and Jeff Wilke has just ordered a 5-mega pixel camera and headphones on Amazon.com. Wilke, the company's vice president...
FERNLEY, Nev. — It’s 9:20 a.m. on Monday and Jeff Wilke has just ordered a 5-mega pixel camera and headphones on Amazon.com.
Wilke, the company’s vice president of worldwide operations, isn’t just shopping for holiday gifts. He’s inside the company’s largest West Coast distribution center, testing its new membership program, Amazon Prime.
The shipping promotion, introduced earlier this year, allows members to receive unlimited two-day shipping for $79 a year. In its 11th holiday season, Amazon hopes programs such as this will compel customers to buy more items, more often and remain loyal — particularly during the most critical three shopping months of the year.
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“It’s a pretty significant flywheel we’ve got spinning,” Wilke said of the complex distribution systems necessary to offer promotions such as this. “The challenge for us as leaders is to not get complacent.”
The Seattle-based company has spurred sales in the past by using a combination of deep discounts on items such as books and electronics and free shipping on orders of $25 or more.
But consumers have grown more accustomed to buying online, and Amazon’s competitors have grown up around it. If the company today offers everything from apparel to diamonds, it now has solid competitors in each of those categories, vying for the same customers.
Growth in online holiday retail sales is expected to outpace traditional brick-and-mortar retailers. New York-based JupiterResearch forecast online holiday sales to rise 18 percent vs. the year before to $26 billion.
Online merchants have increased incentives in the final stretch to seal what they expect will be a strong season. This week, Bluefly.com, which sells discounted designer clothing, is offering an extra 20 percent off each day on different apparel, from sweaters to outerwear. Harryanddavid.com, the gourmet food retailer, is offering a deal in which shoppers can buy one item and get the second at half price.
Amazon aims to use its scale and experience to offer customers services that other, smaller competitors cannot.
After finding success in its first shipping promotion, the company in February introduced Amazon Prime as a way to test one of the last barriers to buying online.
While the test has been expensive (the company’s third-quarter shipping loss widened to $47 million), Amazon said it believes this will be one of the most important things it does long-term.
Amazon forecast full-year sales of between $8.37 billion and $8.67 billion, or growth of between 21 and 25 percent vs. the year before.
The company has not disclosed the exact number of Prime members, although earlier this year it said it was in the “tens of thousands.” Wilke said the program so far has led members to buy more frequently and more broadly, beyond its flagship category of books, music, videos and DVDs.
“The idea is if you pay your membership fee and you’re in it, there should be no barriers to discovering what you want to buy,” Wilke said. “We think that it is going to lead to more sales in non-media (categories).”
Inside the company’s Fernley distribution center is where Amazon aims to keep its promise to customers.
The center shipped its first order in March 1999. Today, the facility spans more than 800,000 square feet, or the size of 13 football fields, with the ability to ship hundreds of thousands of items a day.
On the company’s busiest day last holiday season, customers worldwide ordered a record 2.8 million items. The company shipped 99 percent of its orders in time to meet holiday deadlines worldwide.
Wilke said the company is large enough today that it can fill up entire trucks with orders and drive them to major shipping facilities, instead of having items be picked up. Today, its volume of shipments impact how many planes a shipping carrier puts in the air on a given day.
The company, meanwhile, added more than 3 million square feet of fulfillment and storage area this year to keep up with demand. It has new facilities in Arizona, Kentucky, Pennsylvania, Texas, Scotland and Japan.
Since Nov. 1, Amazon customers have ordered 88.88 million items, according to the company’s Web site.
Somewhere, an Amazon.com customer eagerly awaits a Neil Diamond CD and two books on knitting — another, a Barbie Primp and Polish styling head.
Wilke walks through rows of bins looking for his order. By 11:05 a.m., he holds up his camera and headphones. The order is waiting to be packed.
“This is such an emotional time for customers,” Wilke said. “It’s an opportunity to gain their trust. We can’t let our guard down ever.”
Monica Soto Ouchi: 515-5632 or firstname.lastname@example.org
Material from The Associated Press is included in this report.