9th October 2020
POV: Prime Day 2020 Preview
Background:
Amazon’s 6th annual Prime Day will take place on 13-14 October. Prime Day is Amazon’s biggest shopping event exclusive to its 150 million Prime members and delivers more than one million deals globally across all categories. Replicating last year’s format, the event will run over two days and has been extended to 19 markets, with Turkey and Brazil participating for the first time. It will hope to beat its 2019 sales target of $7.16bn, despite the impact of COVID-19.
Details and Implications:
Prime Day 2020 is set to benefit from significant tailwinds: according to Mindshare’s New Normal Tracker, more people are shopping online than ever before, with 49% of consumers saying new rules in physical shops such as wearing face masks have further increased their use of online shopping. These fundamental shifts in consumer behaviour have already propelled Amazon’s business to new heights, with Q2 reported revenue $88.9bn, up 40%YoY, which would make it the 65th biggest country in the world by nominal GDP.
Amazon states that Prime membership has accelerated globally since March, so we can expect more people than ever to use the shopping fest to make the most of their membership fee.
Consumer sentiment in the wake of the pandemic is likely to play out in Amazon’s favour too: as people face financial uncertainties, value conscious shoppers will look to Prime Day to make big savings, whilst families that remain financially well, will redirect budget from holiday savings and shop to keep up their spirits in what has been a difficult year.
Historically held in July, COVID-19 forced Amazon to shift Prime Day into Autumn as logistics in many markets struggled to maintain the supply chain, at times being forced to stagger delivery, prioritising essential items and also acknowledging concerns over warehouse hygiene and staff safety. With Prime Day moving to October, Amazon has caused a seismic shift to the 2020 shopping calendar. One of the big questions is what knock-on effect this will create on Black Friday and Cyber Monday, just six weeks later. Despite the broader appeal of BF/CM, brands may still see sales pulled forward, particularly in higher price point categories with attractive Prime Day deals. As such, 2020 could be the first year we see Prime Day overtake BF/CM to become the second biggest shopping event of the year, second only to Alibaba’s Single’s Day.
As traditional retailers and high street brands grapple with subdued demand and unsold inventory, many will be forced into more aggressive and savvy sales strategies to shift stock and retain relevance. US retailers Target, Best Buy and Kohl’s have already announced plans to start discounting in October, with many more brands likely to run parallel sales in a bid to have their slice of the Prime Day shopping frenzy. Competition is also likely to be fierce across Amazon’s advertising products, as brands are increasingly forced to invest to ensure visibility during the event. As supply chains stabilise, brands are likely to double down on advertising to maximise Prime Day’s potential to recruit new shoppers and advertisers should expect inflation of cost and focus on their most attractive deals to win.
Summary:
With eCommerce adoption at a historic high, Prime Day is positioned to bring Amazon its biggest Q4 ever in what is likely to be the biggest Q4 in the history of online shopping.
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