The Halfway Point: How Is Amazon Prime Day Performing For Retail Brands So Far?
We’re halfway through Amazon’s annual sale event, and while performance data won’t settle for a couple more days, there are some early indications that this year’s event will be highly successful for Amazon and the brands that sell there.
I first hung my shingle out in the Amazon ecosystem in 2015, the same year that Amazon Prime Day was born. Every year since then, Amazon has reported higher sales volumes during the event. eMarketer predicts this year’s Prime Day sales volume to grow by 19% over last year. Various iterations that Amazon introduced over the years have included adding self-serve deals for merchants, lengthening the event, and experimenting with new merchandising programs.
Here’s how 2021’s event is shaping up so far – what’s different about this year and how retail brands that sell on the platform are experiencing the event.
And my desk research over the past 24 hours finds there are decent deals in terms of the discounts offered. Large companies and small businesses are offering deep discounts: some of LEGO’s most popular sets are 30% off, some OSMO play sets are 50% off, Across my agency’s 80 clients, most are offering Prime Exclusive Discounts, coupons, or flash sales in the 10- 40% range.
Melissa Burdick, co-founder of ad tech company Pacvue, noted in an interview with Bloomberg that some of companies who’ve historically offered great deals on Prime Day are now seeing much greater competition. “If you look at 23andMe, [Prime Day deals] are one of the biggest deals that they have, there’s a lot of copycats and there are others that are paying their way to the top to get into those top spots to win,” she says.
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Shopping appetite is strong
Amazon sellers are already seeing strong take-up of deals. Mark Samuel, Founder and CEO of IWON Organics, says that his company had already hit their sales record for Amazon by 7AM on Monday. “I am becoming more bullish on Amazon. We are now close to 3X my comparative sales numbers by 2:30PM.” This year, IWON offered deals for 35% off its organic protein snack products.
Shoppers appear to be aware of inflation on consumer items, and are using Prime Day as an opportunity to stock up on items that are likely to increase in price.
A June survey of 1000 consumers by retail analytics firm Profitero found that 61% of consumers plan to shop on Amazon on Prime Day. The survey also found that most consumers prefer Prime Day to be held in early summer (June) compared with a mid-summer (July) date or Fall date.
Part of the reason for the preference for a June event is that this makes Prime Day very well-timed for back to school shopping. According to a RetailMeNot survey, 92% of U.S. consumers are likely to use this year’s Amazon Prime Day on June 21st and 22nd to shop for back-to-school items.
Supply chain issues
The moving date of Prime Day also makes it challenging to prepare for. 2020’s Prime Day was held in Q4 for the first time, due to extensive delays in the supply chain last year. The event was still successful, causing some pundits to wonder at the time if a Q4 Prime Day could be a permanent fixture. But leaks of a June or July Prime Day appeared in April, and Amazon finally confirmed Prime Day’s actual dates on June 2nd, leaving brands with just 20 days to shore up their inventory position. With global supply chains under pressure, this is not nearly enough time for many brands to stock up appropriately, especially if their products are imported. And those that do secure inventory from overseas are often paying double the regular price for shipping container space and air freight.
If a brand is fortunate enough to have inventory already onshore, they may still have issues making the items available for customers to buy. As I wrote in a recent post for Forbes, many merchants face challenges with carrying appropriate inventory for this year’s event. Amazon reduced the Fulfilled By Amazon (FBA) inventory limits for many merchants in the weeks leading up to the event. Not having adequate FBA inventory means that a brand’s products won’t be Prime-eligible (which impacts sales volume and eligibility for deals) or worse, not available to purchase at all.
For brands that are already having difficulty staying in stock while their items are full-price, there is little incentive for them to offer big discounts. This may result in a larger spread between the ‘haves and have-nots’ this year.
Live video and content takes a back seat
Last year when I wrote about Prime Day, all my attention was on Amazon’s latest content opportunity: live video. (Further reading: Amazon Live Video Shows Us The Future Of Ecommerce.) A lot of Amazon screen real-estate was taken up by livestream videos, and content creators and brands alike were pitched by Amazon on the benefits of livestreaming in the weeks prior. Influencers were encouraged to showcase Prime Day deals in their videos, and I watched a lot of videos of varying production quality that took this angle.
But 2021’s Prime Day I could barely find any promotion of live video on Amazon’s main deal pages. While the www.amazon.com/live page displays many livestream videos, there is not the same promotion of this content that I witnessed last year. Perhaps Amazon’s experiment with this content format last year did not meet the high expectations that Amazon has for its valuable homepage real estate.
Advertising costs ramp up
At my agency Bobsled Marketing we have seen a trend of higher Amazon advertising costs in recent weeks. Ostensibly this is due to shoppers doing pre-Prime Day research – poking around the site and clicking on ads without actually buying.
At the same time, the shift from traditional to digital advertising continues – with more brands jumping on the bandwagon. More advertising dollars flowing into the ecosystem has pumped up the cost-per-click of advertising on Amazon.
But advertising on Amazon is still an exceptionally strong driver of sales and momentum for merchants. Recent research from Jungle Scout found that sellers are investing more in advertising in 2021. 34% of Amazon sellers plan to spend more on strategic advertising than in past years. To offset the increased costs of advertising on Amazon, more sellers are shifting ad spend from simple sponsored product ads to sponsored display ads which have a better return on investment.
Consumer intent surveys and eMarketer’s predictions point to yet another bumper year for Amazon sales. But conclusive data for the Prime Day event will be available a couple of days following the event, as organic and advertising-generated sales are tallied up.