What’s the Deal with Amazon Prime Day Deals?

Just like most events in 2020, this year’s Prime Day looks a little different. What normally is the ecommerce holiday of the summer, Amazon Prime Day is now taking place on October 13th and 14th, right before the holiday shopping season. 

The veiled threat of a lethal virus has changed consumer purchasing behaviors drastically, leading to a surge of ecommerce use and an unwillingness to shop indoors. 

So, what does this mean for online and offline retailers? 

Despite the challenges of the pandemic, retailers like Walmart, Target, and Best Buy are hopping on board by offering their own deals in October. This decision gives them an opportunity to:

Collect more consumer data

Offering online sales, especially in conjunction with Amazon, allows retailers to collect more data on their consumers. A better read on consumers in this time of uncertainty helps retailers understand what their consumers are prioritizing. If they can get a significant read, they can stock inventory to meet demand. As online sales increase and shopping seasons are shifted (i.e., Back to School has been pushed to late fall months), merchants have been struggling to meet the needs of consumers and stock inventory accordingly. 

Serve as a competitor to ecommerce giant Amazon 

We spoke with John Sydnor, the Chief Growth Officer at The Shipyard, about his predictions for Prime Day. He shared that, “Covid accelerated an already aggressive march towards ecommerce relevance and because of this increased infrastructure investment, some firms are opting out of Amazon Prime Days in favor of directing consumers to their own sites promoted via various social channels while other, more capital-constrained brands are doubling down on promoting their items for Prime Day.”

Target’s “Target Deal Days” make an extra effort to promote its accessibility to consumers instead of offering exclusive deals to a select group of customers, such as Amazon Prime members. 

Companies like Best Buy are emphasizing refunds and price matching if consumers find a better deal beyond the sale dates. 

Sydnor continued, “I believe Covid and the continued popularity of Prime Days will be another accelerant on the transition from brick and mortar transactions to ecommerce. This transition was already in process over the last decade, yet it had definitely been picking up steam in the last 5 years. With Covid, and the continued lack of success in eradicating the virus, more and more brick and mortar retailers have been scaling back the number of consumers that can be inside of a location at any given point in time. Added to this backdrop are those leading brands that have already had a laser-focus on revamping their ecommerce strategies and Black Friday/Cyber Monday and Prime Day will reward them with even greater returns than normal on their strategic digital investments.”

All of these efforts are to encourage shoppers to look beyond Amazon. 

Help decrease the spread of the virus + put shoppers at ease

By starting sales earlier and extending them throughout November, retailers are attempting to create artificial demand. In a few holiday surveys, shoppers have articulated their concerns about shopping during the traditional holiday season - particularly Black Friday. 

An Accenture Shopping Survey noted that “76% of consumers said they want retailers to close on Thanksgiving,” “only 11% of consumers are willing to pick up purchases in-store,” 41% said they plan to spend less on holiday shopping, and more than half of consumers are less inclined to shop on Black Friday and more inclined to shop on Cyber Monday. 

Retailers are listening to this feedback by elongating sales starting in October that are equivalent to Black Friday deals, retailers are closing their stores on Thanksgiving, and companies are offering multiple avenues to purchase - online, in-store, curbside, etc. 

Retailers also benefit by spreading out the sales. Since uncertain consumer demand leads to a messy inventory - Christmas decorations sold in October, Back to School backpacks and lunchboxes sold in November - stretching deals beyond one day like Cyber Monday helps companies stock shelves and give the consumer what they want/need, when they want it. 

What are our predictions for the future? 

Seeing that big retailers have shifted to adjust to the customer’s needs this year, we predict a different approach to the holiday shopping season and deals moving forward — one that is extended and more accessible in and out of stores. 

Sydnor predicted purchase increases for certain products given that consumers have been working from home for the past 6-7 months. “ I anticipate home furnishings (home office), electronics, sporting equipment and housewares will see a significant uptick over 2019,” he shared. “In past years, July Prime Days were used to test out various strategies and to reduce inventory in certain sectors. The market didn’t really have that luxury this year so I anticipate extremely low prices on items like electronics and furnishings given that larger than normal inventories may now be on hand and the 4th quarter has already begun.”

This is potentially a great move for Amazon, drawing an estimated revenue of up to “$7.5 billion over its 48-hour course, from an estimated $5.3 billion in 2019,” according to JPMorgan. Hopefully, since retailers have taken a significant hit (especially ones who rely on in-store sales), other businesses will see a surge in sales as well due to their price matching, refunds, and extended deals.