Prime Day 2022 is nearly here.
While we wait for Amazon’s annual ecommerce holiday to arrive on July 12-13, let's take a look at the prospects for this year’s Prime Day. For a few data-driven predictions, we turn to Prime Days past, and insights about the current state of the consumer. Here’s a look:
Past is prologue
Prime Day is now in its eighth year, so there is plenty of data from years gone by that can offer a suggestion about how this year will turn out.
For one, it’s a good bet that this one will be bigger than the last. According to Digital Commerce 360, each year’s Prime Day has brought sales growth. In 2021, gross merchandise sales were $11.19 billion, according to the media outlet. However, year-over-year growth slowed down to 7.7% in 2021, as compared with a 45% jump from 2019-2020. We’ll see whether that proves to be an anomaly or the start of a new trend.
For sellers, the effectiveness of Prime Day promotions has risen in recent years. According to an analysis of data from Prime Day 2020 and 2021 by real-time commerce operating system Tradeswell, there was a significant increase in median percentage change of gross margin between the two years. In 2020, products sold on Prime Day had an increase of 32% in gross margin than the week prior. In 2021, the same measure showed a 72% increase in gross margin. That could bode well for sellers this year, especially those with discounts in the 10% to 30% range that Tradeswell deemed a sweet spot.
(Chart via Tradeswell)
Deals vs. discretionary
This year’s Prime Day arrives at a tenuous time for consumers. Against a backdrop of inflation, they face competing impulses.
On one hand, rising prices may make people more likely to seek out the kinds of deals that Prime Day offers.
On the other hand, they may have less discretionary money to spend on the electronics, household goods and apparel that Prime Day is known for featuring.
If recent trends are any indication, neither factor may end up slowing down spending. To date, rising prices haven’t put much of a damper on consumer demand. Retail sales have continued to grow, and multiple first-quarter earnings reports (including Amazon's) featured executives saying that the health of the consumer remains good, despite rising costs.
Data indicates that is poised to hold true this summer, and for Prime Day in particular. According to a survey of 1,115 consumers by Adobe Commerce, 61% of consumers are looking forward to summer sales like Prime Day, while 76% of those planning to participate in these shopping holidays said they will spend the same amount as last year, or more. But some impact of inflation is expected, however, as about 24% signaled that they don’t plan to shop on Prime Day because they have fewer discretionary funds available.
Summer shopping plans, by category. (Graph via Adobe)
The effects of inflation could also be evident in the activity of the sellers. Nearly two-thirds of respondents (64%) predict there will be fewer sales than last year. Along with price pressure, brands are facing higher costs throughout the supply chain – including fees like a fuel surcharge from Amazon. This leads to choices about what they can offer when it comes to discounts.
Before the rush for deals begins, it’s worth taking a step back to consider the scale of Prime Day, which gives the already-massive Amazon an even bigger presence in US retail. According to results of a pre-event survey by market research tech firm Numerator, Amazon is expected to capture more than 20% of the share of consumer packaged goods dollars on those two days. This share has been growing each year, from 16.2% in 2019 to 19.1% in 2021. It is expected to surpass 20% for the first time this year.
In each of those years, Amazon’s CPG share has increased 4-5x on Prime Day. In the process, it takes share from smaller retailers and in-store locations of major retailers. Only Target, which will offer its own deals timed with Prime Day next week, saw a slight positive increase of .8% in 2021.
It’s another reminder that when Prime Day arrives, Amazon is the center of gravity. Everything else in retail revolves around it.
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What: At this three-day conference focused solely on advertising, Amazon will announce new advertising solutions, talk innovation, present insights from industry leaders and hold educational sessions. Speakers include leaders from Amazon Ads, Publicis Media, Kantar, Wendy's and more.
When: Oct. 25-27, 2022
Where: Jacob Javits Center North, New York