Another Prime Day! Or Is It?
Amazon, brands and sellers are gearing up for Prime Day 2022, scheduled for July 12-13. After eight years, Prime members have come to rely on the holiday for some of the best deals of the year on a wide range of products, while brands and sellers have come to invest in it for the significant traffic, which offers the potential for meaningful sales lifts on promoted products as well as a general “halo effect.” Amazon has come to rely on that same sales lift, along with the opportunity to grow overall Prime membership and engagement, to help fuel its flywheel into the future.
All of that said, recent Prime Days have been far from typical. The COVID-19 pandemic and global supply chain challenges made for unique Prime Days in 2020 and 2021, which will likely have lasting effects into this year’s eHoliday as well. Keep reading to learn what’s different this year compared to years past, and what we’ll be looking out for during the event next month.
Summary Temperature Gauge: Health of Critical Prime Day Ingredients, By Year
Consumer sentiment: Potential for softer demand this year as consumers are out and about, returning to physical stores, and facing record-level inflation
Assortment & discounts: Supply is healthier vs. 2020 and 2021 Prime Days but brands are facing significant profit pressures which may limit discounting, offset by brands that have already seen a contraction in demand and may use Prime Day as an opportunity to clear through excess inventory
Supply chain readiness: Amazon’s fulfillment centers and transportation network appears ready to handle Prime Day volume this year
Amazon Live shopping: Prime Day is one of the biggest annual opportunities for Amazon Live but has yet to take off in a big way
Live entertainment: Amazon has not announced any major live entertainment plans for Prime Day after 2021’s three-part Prime Day Show
Timing shifts
This year’s Prime Day is set for July 12-13. Historically, Prime Day has taken place in July. When the pandemic hit in early 2020, Amazon pushed the event back to October, as the company spent most of Q2 and Q3 simply managing the “essentials” and record-level demand.
The October event effectively served as an early kickstart to the holiday shopping season, particularly as consumers were aware of the challenged supply chain environment. These pressures resulted in shoppers eager to find the products they were looking for and have them delivered in time for the holidays. Discounts and product selection tended to be less impressive than usual, as many brands and sellers were dealing with a supply and demand imbalance; supply constraints meant there was less product to offer, and high demand lessened the need to promote heavily.
In 2021, Amazon held Prime Day in June, noting that July was a big vacation month for its Prime member base. Similar to 2020’s Prime Day, persistent supply chain challenges made for a more limited Prime Day in terms of selection and discounting. Nonetheless, Amazon highlighted the event’s success in surpassing sales performance from the October 2020 Prime Day and contributing 400 bps of growth in the quarter (Q2 2021), with particular success among SMB sellers.
So why back to July in 2022? While Amazon hasn’t shared the reasoning, the move back could mean Amazon saw a smaller-than-expected impact from holding the event in June last year. It could be about sales growth trends and expectations; perhaps Amazon’s financials would be better served with a Prime Day bump in Q3 this year vs. Q2.
Amazon’s Supply Chain is Ready
After two years of chasing unprecedented demand and investing heavily in its fulfillment center and transportation networks, Amazon has noted it is finally back to healthy capacity levels and ready to handle Prime Day’s high volume. While most brands are in a better supply situation compared to the last two years, lingering supply constraints are likely limiting some brands’ ability or appetite to run big Prime Day promotions yet again, in addition to margin pressures driven by the inflationary environment.
But are Shoppers Ready?
Consumers are sitting in a different position compared to the last couple Prime Days, which may have an impact on the event’s 2022 performance. In October of 2020, many consumers were spending most of their time at home and doing a lot of their shopping online. Discretionary spending was largely going toward consumer goods rather than services, travel and the like. All of this was a powerful set-up for Prime Day.
Come June of 2021, some of those dynamics were beginning to wane but still played a role in Amazon’s 2021 Prime Day compared to pre-pandemic years.
Since last year’s Prime Day, more and more consumers have gotten closer to their pre-pandemic routines—out and about, returning to physical stores, and catching up on the travel that they’ve missed over the last two years. Amazon’s slowing sales growth in recent quarters, particularly 2Q21 and 3Q21, was attributed to “return-to-normal” consumer behavior. This continued reversal of pandemic trends could mean consumers will be less inclined to shop the event this year.
The macroeconomic environment could have an additional effect as well. Record-level inflation and concerns of an upcoming recession are likely impacting consumer spending. Retailers like Walmart and Target have indicated some pullback or trade-down in consumer spending in response to inflation and/or their shifting routines, particularly among low- and middle-income shoppers. While Amazon’s most recent commentary (Q1 earnings release in late April) suggested consumer demand remains strong, the management team stated it is wary of changing consumer demand trends given inflation.
Prime Day Competitors
Target: As in prior years, last week Target also announced their Target Deal Days event will run July 11-13. Like Prime Day, electronics will have a big presence, but Target is also marketing a wide range of deals, such as in food and beverage, home, beauty, apparel, toys, and more.
Consumers can shop the deals only via Target.com and the Target app, although same-day fulfillment options give shoppers the option to use Drive Up, Order Pick Up, or Same-Day Delivery with Shipt to receive their purchases in just a few hours.
Walmart: While Walmart has typically run competing deals alongside Amazon’s Prime Day, this year the company hosted a new, separate event called Walmart+ Weekend. The online-only event was held June 2-5 and offered Walmart+ members deep discounts on thousands of items spanning electronics, apparel, home, toys, and more—similar to Target’s Deal Days. Walmart did not publicly release any commentary on the performance of Walmart+ Weekend.
Best Buy: Best Buy hasn’t announced an upcoming shopping event, although the company has historically run promotions to compete with Amazon’s Prime Day deals in the electronics category.
Prime Day Deals and Promotions Fall in Line with Years Past
Amazon’s initial Prime Day announcement last week suggests much of this year’s event will look similar to years past:
Prime Day always tends to lean heavily towards electronics—especially Amazon devices—and this year is no different. As is typical, a variety of Amazon’s other private label brands will be highlighted during the event as well.
Prime Day will put a special emphasis on supporting small businesses, similar to the last couple years. Those that purchase small business products between now and Prime Day will receive chances to win prizes. Amazon also recently introduced its Small Business Badge to help consumers easily identify small business brands and artisans when shopping on Amazon.
While Amazon Live has yet to be heavily adopted year-round by consumers or advertisers, Prime Day tends to be where we see the most activity. This year, Live will have appearances by celebrities and influencers Porsha Williams, Joe and Frank Mele, Lala Kent and Hillary Duff.
As shoppers return to stores and become increasingly omnichannel, Amazon understands the need to establish a compelling omnichannel presence. In recent years, this meant interweaving Prime Day deals into Whole Foods Market stores and its smaller B&M chains like 4-Star Stores and Amazon Go. This year, Amazon uses Prime Day to drive awareness of its new Amazon Fresh B&M grocery stores; starting June 29, Prime members can save 20% on select everyday essentials at the stores by scanning their Amazon app at the register or paying with a credit card linked to their Prime account.
Prime Day is always an opportunity for Amazon to grow its Prime membership base and build awareness of all that Prime has to offer beyond shopping. Amazon’s Prime Stampcard enables members to receive a $10 Amazon credit by completing four Prime activities between now and Prime Day, spanning Prime Video, Prime Music, Prime Reading / Kindle, and Prime shopping. As consumers may be pulling back on discretionary spending given the economic environment, it’s important for Amazon to show all the value that is included in membership, especially given the increased membership price earlier this year.
New to the event this year, Prime members can opt-in to receive personalized deal alerts related to their recent Amazon searches and recently-viewed items. This could be significant because the event is typically crowded, messy and poorly merchandized, making it difficult for shoppers to discover and shop Prime Day deals. However, Amazon will first need consumers to actually opt-in to this feature, which will require heavy marketing and educating between now and Prime Day.
Prime members can also have Alexa remind them when Prime Day starts and when relevant deals go live based on products added to their Wish List, Cart, or Save for Later.
Are You Ready?
Here at Netrush, we’re putting the finishing touches on our own Prime Day plans and are eager to see what the event brings given the uniqueness of the last two years. Contact us to make sure you’re ready as well!
WRITTEN BY CLAIRE MCBRIDEClaire McBride leads Research, Insights and Education for Netrush. Claire’s entire career has been centered in the consumer and retail space, spending the last five years helping brands grow and optimize their ecommerce businesses through written research, events, share group discussions and one-on-one consulting.
