14 July 2022
Americans spent nearly $12 billion on Amazon's biggest Prime Day yet
Amazon and third-party sellers reported big numbers. Here's what worked.
Amazon and third-party sellers reported big numbers. Here's what worked.
Amazon Prime Day delivered the two largest days for US ecommerce in 2022.
According to the Adobe Digital Economy Index, US online spending on July 12 and 13 totaled $11.9 billion. This represents 8.5% growth when compared to last year’s total US Prime Day revenue.
Amazon launched Prime Day in 2015, and the ecommerce platform is the primary destination for deals over the two-day event. Adobe's measure of overall US revenue reflects how the day has become so massive that it lifts all in ecommerce, as other retailers hold their own deal events while others double down on marketing at a time when shoppers are interested in buying. Compared to an average June Day, Prime Day brought a lift in online spending of 141%, according to Adobe.
Here’s a breakdown of the two days, according to the Adobe Digital Economy Index:
When it comes to categories that offered the most deals, Adobe said that toys and apparel had the highest volume.
“With ‘back to school’ around the corner and promotional discounts being quite favorable for consumers, we saw accelerated growth momentum for days that have historically produced significant spending,” said Pat Brown, vice president with Adobe.
For its part, Amazon said it had its biggest Prime Day yet on at least two measures: Prime members purchased more than 300 million items worldwide, and saved over $1.7 billion, the company said. The company did not share exact sales figures.
Amazon said the top-selling categories in the US were consumer electronics, household essentials and home. The company listed more top-selling worldwide products as follows:
Some of the best-selling items worldwide this Prime Day were from premium beauty brands, including LANEIGE and NuFACE; Apple Watch Series 7; diapers and wipes from Pampers and The Honest Company; kitchen essentials from Rachael Ray, Le Creuset, and Hamilton Beach; VTech and LeapFrog toys; Vital Proteins Collagen Whey; Levi's apparel and accessories; Chemical Guys car wash products; and pet products from NUTRO, TEMPTATIONS, and GREENIES.
Amazon said sales growth among the small and medium-sized businesses that make up the platform’s third-party seller community outpaced the uptick for its own retail business.
When compared with 2021, Prime Day results exceeded expectations with sellers, even among those who did not arrange any official Prime Day deals, said Jon Elder, who consults with Amazon sellers as founder and CEO of Black Label Advisor.
“Sellers experienced incredible sales numbers during Prime Day,” said Elder. “This was driven by the fact that so many are overstocked and had extra attractive deals. While sellers might not have made their desired profit margin for Prime Day, they moved an incredible amount of inventory.”
There was widespread Prime Day Deal creation in sellers’ catalogs, as they put forward steep discounts to move stale inventory that was mismatched to trends due to supply chain delays. Along with more deals, Elder said he saw sellers increase PPC budgets by 2-3x on average for maximum visibility to attract as much traffic as possible. Even sellers who did not have any Prime Day deals or increased PPC budgets saw sales reach 3x an average day on Amazon. To stand out in organic search results, sellers also turned to coupons to offer 5-15% off or $1-5 off, depending on the product’s price.
When it came to promotional strategies on the wider web, Adobe said email, paid search and social networks saw the biggest increase in revenue contribution lift during Prime Day.
Amazon itself unfurled a bevy of strategies to attract shoppers, as well. It put a big push behind its livestreaming platform Amazon Live, which attracted 100 million views during the two days. The effort also included looking beyond its own ecosystem. While some commented before the event that Amazon marketing wasn’t as visible as in past years, it might be the case that it was more targeted than usual. Elder said it was clear that the company turned to influencers on social media platforms such as Instagram to promote Prime Day.
“What’s even more interesting is that depending on the social media influencer, they promoted the best Deals in a category that fit the demographic for their following,” Elder said. “I truly believe this was something that moved the needle in a big way this year. Expect even more promotion through influencers in 2023.”
The trove of discounts offered through Prime Day was likely a welcome relief to shoppers who have been seeing rising prices on goods for months. As Prime Day was entering its second half on Wednesday, the US Bureau of Labor Statistics reported that the US inflation rate increased to 9.1% in June, marking the latest in a series of 40-year highs this year.
“Americans were out for a deal with historic inflation and sellers delivered,” Elder said. “In many ways, it was an impeccable timing by Amazon.”
The continued success of Prime Day despite pressure on consumer wallets offers a reminder that shoppers won't necessarily stop spending. Rather, they will change their priorities in how they evaluate what to buy.
“It’s apparent that consumers are incredibly price conscious, and it will be important for retailers to leverage price effectively, in order to unlock new growth potential online,” Adobe’s Brown said.
Accurate inventory is now essential for Amazon FBA sellers, writes Emplicit's Evan Sherman.
Amazon used to be a lot more laissez faire about how Fulfilled By Amazon (FBA) sellers used their fulfillment centers. Sellers could send in inventory, and, while the space wasn’t unlimited, if their sales were not as forecasted they would simply pay long-term storage fees. Sure, if a seller’s inventory management was poor enough they would have their inventory storage limits reduced and pay higher storage fees, but this was just an incentive not to let things slide too much.
However, in 2022 Amazon reduced storage limits overall to the point where some FBA sellers had sales and catalog size impacted, and in March 2023 Amazon revised their inventory system. There is now an incentive for FBA sellers to be highly accurate with inventory management because Amazon will reward them with increased storage limits. Precision is a carrot now, rather than a stick.
In this article, we provide five strategic methods that sellers can utilize to optimize inventory management on Amazon.
Achieving successful inventory management on Amazon requires a profound understanding of past demand patterns and the capacity to accurately forecast future demand. Seasonality, market trends, historical sales figures, competitor activity and planned promotions all play a crucial role in determining the trajectory of sales.
At Emplicit, we advocate for the analysis of multiple historical data points, encompassing previous 7, 30, 60, and 90-day sales figures. Our logistics experts factor in internal factors such as stock availability, marketing spend, promotions, and sales and margin targets, and external factors such as seasonality, Amazon trends, new category restrictions and market entrants. A comprehensive review of shipments in working, shipped, or receiving status is also beneficial. Striking a balance between what has been sold, what is available, and what's en route to an Amazon fulfillment center is key to precise forecasting.
Inventory management isn’t a static task; it requires constant vigilance and flexibility. FBA sellers should regularly review and modify their demand forecasts, adjust their replenishment suggestions based on demand shifts, and update their minimum reorder points as required.
Sellers should review sales daily, plan replenishment frequencies to suit their needs, and maintain appropriate inventory levels at Amazon. Weekly replenishments can help keep a seller’s inbound pipeline full, minimize out-of-stock instances, and account for unforeseen supply chain disruptions.
Amazon’s organic and paid algorithms prioritize products with high sell-through rates. This means best selling products end up selling better. Focusing on high-performing items allows FBA sellers to reduce monthly storage costs, avoid aged inventory and the associated fees that Amazon imposes, and curtail the need for costly removal orders. And sales velocity is the quickest way to get Amazon to increase your storage limits. Concentrate on the 20% of items that generate 80% of sales.
At the same time, sellers should prune their catalogs by removing slow-selling items. These items negatively affect Amazon’s Inventory Performance Index (IPI) score, which directly influences the space Amazon allocates to a seller’s inventory in their fulfillment centers.
If sellers are tight on inventory space, as well as the best-selling products, they should prioritize products with higher margins until Amazon provides additional storage, and they should reduce marketing spend accordingly – something which necessitates a close relationship between inventory and marketing.
Ranking products by sales and margins, and calculating the storage space each product takes up will go a long way towards understanding and anticipating demand on Amazon.
Amazon’s capacity management system is a new system for allocating inventory limits to FBA sellers and allowing sellers to gauge their inventory capacity at Amazon’s fulfillment centers. It also enables sellers to bid on increases to their inventory limits.
Previously, Amazon had restock limits which were updated weekly based on the seller’s previous 90-day sales. Restock limits were determined by Inventory Performance Index (IPI) metrics such as sell-through, excess inventory, and stranded inventory. However, because the restock limits were updated weekly, it was challenging to plan accordingly, especially heading into a peak season or if a seller was about to run a promotion.
With Amazon’s Capacity Monitor program, sellers are given a monthly capacity outlook based on the cubic feet of space occupied by their products in Amazon’s fulfillment centers and their IPI metrics. Amazon not only provides a current month outlook on available space; they provide an estimate for the next three months which can aid in the inventory planning process.
To take advantage of the new system, it’s imperative FBA sellers understand their product's physical footprint in relation to the allotted space Amazon provides (Amazon does still provide unit estimates). Knowing a product’s cubic feet and the product tier designation allows for effective planning of inventory replenishment. Exceeding space limits means overage fees from Amazon, however, if a seller knows they have a peak in sales coming up they can bid for additional capacity (in cubic feet). However, selling-through this additional inventory means Amazon waives those fees, so it’s a win-win.
At Emplicit, we have seen the capacity monitor program benefit our clients, with many clients seeing an increase in the amount of inventory they can ship in – likely due to healthy sell-through velocity and other IPI metrics. The program has fundamentally changed the way we approach managing our inventory on Amazon, so everything sellers do regarding inventory planning should be within the context of Amazon’s capacity monitor program.
Smart sellers should already be considering the impact of their product packaging on their FBA fulfillment fees. If the actual product size allows, sellers can generate significant savings by reducing the size of their packaging. Amazon’s Small Standard rates are 15-20% cheaper than Large Standard rates depending on weight, and Amazon’s Small & Light rates are 15-27% cheaper still than Small Standard rates. However, fulfillment cost savings are not the only reason to reduce packaging size, smaller packaging can significantly increase Amazon inventory cost-efficiencies.
With Amazon’s capacity management system providing inventory space based on cubic feet rather than number of units, the space each product takes up is now more important than ever. While larger packaging sizes can sometimes improve sales in brick and mortar retail, sellers should consider developing smaller Amazon-only packaging. This will not only reduce fulfillment costs, but allow more units to be stored in the same inventory space. The combined savings can more than offset the cost of a redesign and second packaging print run.
Additionally, smaller packaging may qualify sellers for Amazon’s Compact By Design badge. This helps brands stand out, and increases click-throughs and conversions. (We suspect there are algorithm tweaks for brands with certain badges too, but it’s difficult to prove.) Amazon-specific packaging can help with Transparency (anti-counterfeiters) and help combat unauthorized resellers.
While it might seem like a significant investment and not something the inventory team typically gets involved with, reducing packaging size is a long-term way for FBA sellers to optimize inventory management.
Amazon Global Logistics (AGL) offers a streamlined solution for sellers whose products are manufactured in China. AGL eliminates the need to use freight forwarders who would usually receive a shipment from China, then split up that shipment and forward on to multiple Amazon fulfillment centers per the standard FBA process. Instead, sellers can book shipments directly with Amazon, complete the necessary export/import documentation, and ship directly to US, UK or European fulfillment centers – sending the entire shipment to a single fulfillment center.
If leveraged properly, AGL can save sellers thousands of dollars in warehouse and 3PL fees and reduce the need for inventory to be processed multiple times before it arrives at Amazon’s fulfillment center, meaning inventory gets where it needs to be quicker.
AGL offers two shipping options – Standard Ocean Freight and Fast Ocean Freight – with the standard option giving sellers the opportunity to either ship via a full container load (FCL) or less than container load (LCL). Shipping partial container loads with Amazon doesn’t slow shipments down versus other carriers because of Amazon’s scale. Amazon’s economies of scale mean that AGL can offer shipping prices from mainland China and Hong Kong that most sellers are unable to match. And Amazon’s expert customs brokers get products cleared through customs quickly because Amazon has a vested interest in shortening the time to market.
This one-step international shipping direct to Amazon was actually something we pioneered before the advent of this service from AGL – working with our client Shapermint and their manufacturers in China and logistics team to ensure packaging and shipments were FBA compliant. However, now AGL offers this service, it’s an even easier solution to a common challenge. We suspect AGL will roll out in other international manufacturing markets, but Amazon is tight-lipped for now.
Amazon inventory management is complex and needs constant attention. Sellers can hire a fractional inventory specialist because this is not something that should be trusted to an Amazon generalist. If sellers get inventory right, it will keep pace with sales. But if they get it wrong, their inventory can become the main thing holding them back.
Evan Sherman is the director of logistics at Emplicit.