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Prime Day Preview: Pandemic Economic Hangover Raises Stakes for Amazon’s Big Event

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Prime Day Preview: Pandemic Economic Hangover Raises Stakes for Amazon’s Big Event

Prime Day is almost here. In fact, it is two days. But who counts? Well, Amazon sure is. Programmed for June 21 and 22, the annual sales event is closely watched by many bargain-hungry Prime members.

Surpassing a lackluster debut in 2015 other an online outage in 2018Prime Day has become one of the biggest annual events for the company, effectively creating a second peak season, six months after the holiday shopping rush.

Providing an idea of ​​scale, Amazon says that customers saved $ 1.4 billion during Prime Day last year, when the event was delayed until October due to the COVID-19 pandemic. It was previously held in July. This year, the lingering impact of the pandemic complicates Prime Day and raises the stakes.

In this episode of Day 2, GeekWire’s All About Amazon podcast, we go behind the scenes of Prime Day with two ecommerce veterans:

  • Our podcast contributor, Jason boyce, former Top 200 outside vendor, founder of Avenue7Media and co-author of The Amazon jungle.
  • Andrea Leigh, vice president of strategy and knowledge of Ideoclick, a Seattle-based e-commerce technology and services company that works with Amazon’s retail vendors and third-party sellers. Leigh was the CEO of Amazon and a retail category leader for nearly 10 years.

Listen above, subscribe to any podcast app, and read on for the highlights.

Prime Day is important to Amazon’s business for a number of reasons, Leigh said.

1) Brands boost their advertising on Amazon to promote their products before, during and after the sales event. Increased competition for keywords leads to higher spend and CPC (cost per click) on advertising.

Andrea Leigh, Ideoclick’s vice president of strategy and insights and former general manager of Amazon.

“Typically, we are adjusting manufacturers’ budgets by about 50% for that time period, and that’s a lot of ad revenue for Amazon,” Leigh said.

two) Prime Day is especially important this year because e-commerce retailers are struggling to match or exceed what they sold at the height of the pandemic.

“The year-on-year growth numbers for vendors and Amazon are not good right now, because around this time last year was a huge e-commerce boom. They can use the sales event to get some of the vendor and vendor community to help fund that change in consumer behavior and accommodate some of those growth figures. “

3) Amazon appears to have a large amount of inventory in its warehouses, clogging the system for outside vendors and retailers. Cleaning up inventory may be one of the reasons Amazon moved the event forward to the second quarter, Leigh said.

“We keep track of all our customer sales data and purchase order volume data, and I think Amazon is overstocked, big time,” Leigh said. “Purchase order data generally starts to rise before Prime Day and has been declining for the past few weeks. I think your systems are over-ordered.

“You would have to have a crystal ball to know how many people were going to buy online in March of this year. So I think they over-ordered and I think they have a lot of inventory now. “

Another downside this year: ongoing supply chain challenges and manufacturing delays in the global economy, also as a result of the pandemic.

“For consumers, what that means is that the offerings will be a little more focused on what’s available than the ‘main’ offering,” Leigh said. But that does not mean they are not good business. And it does not mean that they are bad products. It may not be the best seller or it may be more focused on the product that is in stock. “

Jason Boyce, Avenue7Media

Like it or not, Boyce said, it’s critical that third-party sellers participate in Prime Day.

“It has become a necessary evil, like so many things at Amazon for third-party sellers,” he said. “Because if you don’t discount, you’re going to have a competitor who will jump in and maybe push you into your organic search results ranking or rankings. … So even if you don’t want to participate in Prime Day, you have to do it now. “

Amazon has brought back a pre-Prime Day promotion for small businesses, offering a $ 10 discount to customers who spend at least $ 10 with small businesses on Amazon between June 7-20. More than 2.5 million Prime members participated in the promotion this year in the first 24 hours, the company says.

Prime Day sales by third-party sellers were more than $ 3.5 billion last year, an increase of 60% year-over-year, Amazon said.

This year’s event comes at a time of increasing antitrust scrutiny of Amazon’s programs for third-party sellers. Amazon has brought Kristen Bell and other celebrity endorsers to promote Prime Day benefits for small businesses this year.

In many ways, Prime Day-related issues are a window into the broader state of Amazon’s first- and third-party retail business. Also referenced in the discussion:

Listen to the previous episode or subscribe to the GeekWire Day 2 podcast at Apple podcasts, Google podcasts, Spotify or any podcast app.

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