Insights

Your Guide to Prime Day 2020

Prime_Day

After months of delay, Amazon Prime Day will be held next week, October 13-14. Prime Day comes with a lot of consumer hype, and this year, the event is forecasted to generate $9.91 billion in worldwide sales.

Prime Day is best known as a discounting holiday — an event where shoppers can get great deals on a variety of products. For brands, it can be tempting to join in and offer discounts, but it’s important to consider other strategies as well.

 

A brief background on Prime Day

Amazon introduced Prime Day on July 15, 2015 to celebrate its 20th anniversary. The company’s vision behind Prime Day was to “offer a volume of deals greater than Black Friday, exclusively for Prime members.“ Prime Day has since grown in popularity and joined the ranks of other retail holidays such as Black Friday and Cyber Monday.

 

Prime Day sales have gone up every year

In its first year, Prime Day generated an estimated $900 million in global sales on Amazon. That number has gone up every year, and in 2019, Prime Day sales revenue reached $7.16 billion. To put that in perspective, online 2019 US Black Friday sales were around $7.4 billion across all retailers, and 2019 Cyber Monday sales were around $9.2 billion.

 

Why 2020 Prime Day is different from past years

This year’s Prime Day is expected to shake things up. Unlike previous years, 2020 Prime Day will kick off holiday shopping instead of preceding it. According to data from Criteo, 73% of US Prime members plan to spend some of the money on Prime Day that they usually reserve for Black Friday. Sixty-three percent of Criteo’s respondents said that they are going to wait until Prime Day to buy gifts. Prime Day spending could soak up consumer deal dollars before Black Friday and Cyber Monday come around.

 

Should brands discount during this year’s Prime Day event?

It depends on who you are and what your brand’s overall strategy is. The short answer for premium brands is: no. That may seem crazy, but hear us out. In most cases, premium brands are discount adverse, meaning that discounting can hurt more than it can help.

“From a premium brand’s perspective, maintaining pricing integrity is really important,” said Netrush Director of Advertising and Optimization Jackson Hathaway. “It’s better to avoid discounting when you can. Otherwise, you run the risk of training consumers to wait to buy for events like Prime Day.”

Aside from consumers, discounting on Amazon can also send the wrong message to a brand’s other retailers.

“Discounting can actually damage a brand’s other retail relationships,” said Hathaway. “If shoppers know they can get a product cheaper on Amazon Prime Day than at local brick-and-mortar retailers, then many of them are going to wait for the deal and go to Amazon, which can ultimately damage those other retail relationships.”

Instead of discounting, there are other ways premium brands can make the most out of Prime Day.

Double down on advertising – Even if a brand isn’t discounting, they can still take advantage of Prime Day’s increased traffic. Doubling down on advertising budgets is a great way to reach Amazon shoppers on one of the busiest days of the year. More impressions, more volume, more sales: that’s the goal.

Stretch your ad dollars further – Amazon charges a pretty penny for specific types of Prime Day advertisements. Programs like Lightning Deals that appear on the homepage are significantly more expensive than they are on non-holidays. Focus your efforts — and your advertising dollars — on sponsored product and sponsored brand campaigns instead.

Retarget, retarget, retarget – Brands might not catch every shopper on Prime Day, but increased traffic can leave brands with a healthy retargeting pool for the rest of the holiday season.
If you must discount, do it strategically – Discounting for the sake of discounting is not a great strategy, but there are certain circumstances where it makes sense. For instance, brands could consider discounting if they’re launching a product in a competitive category. Or, if a brand is trying to clear inventory or sunset a product, discounting could be a good option.

If you must discount, do it strategically – Discounting for the sake of discounting is not a great strategy, but there are certain circumstances where it makes sense. For instance, brands could consider discounting if they’re launching a product in a competitive category. Or, if a brand is trying to clear inventory or sunset a product, discounting could be a good option.