E-commerce
Amazon Prime Day bests expectations despite increasing competition
By all accounts, its own and industry watchers, Amazon Prime Day 2023 was a resounding success for Amazon, its third-party sellers and consumers seeking a bargain.
July 21, 2023 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com
By all accounts, its own and industry watchers, Amazon Prime Day 2023 was a resounding success for Amazon, its third-party sellers and consumers seeking a bargain.
And it happened despite an increasing wave of competitors launching their own 'spectacular' sales events before, during and after Amazon's annual event. The list includes power hitters — Walmart Plus Week, Target Circle Week and even a Nordstrom Anniversary Sale.
The first day of this year's two-day event was the single largest sales day ever, according to Amazon, which made for the biggest Prime Day event ever.
It was also the biggest Prime Day event for independent sellers. In fact their sales growth outpaced Amazon's retail business, according to a press release. Prime members bought more than 375 million items worldwide.
"The first day of Prime Day was the largest sales day in Amazon's history, and Prime members saved more this year than any other Prime Day event," Doug Herrington, CEO of Amazon Stores, said in the release. "Prime is an incredible value, and we're proud to offer additional value for members through exclusive deals events like Prime Day. Thank you to our Prime members for continuing to shop in our store, and to our employees and independent sellers around the world who delivered for customers this Prime Day."
Success drivers
A big reason for that success, according to Brendan Witcher, principal analyst and VP at research firm Forrester, was Amazon's marketing push.
"Every significant retail sales event has a two-pronged incrementality challenge when it comes to measuring success: How much of the event's sales are consumers that delayed buying full price to buy at a discount, and how much represents consumers 'pulling-forward' their purchases causing dips in sales later? In 2023, as Amazon promotes Prime to a greater degree than in year's past through early invitation-only offers and online messaging alerting customers that products will be on sale if the consumer will wait 24 hours, this becomes an even greater challenge," Witcher told RetailCustomerExperience in an email interview.
This year's Prime Day featured a new enticement. The Buy with Prime is a member perk for U.S. members shopping directly from participating brands' websites. To drive awareness of these deals Amazon invited a range of merchants, big and small, to participate in promotional activities in connection with Prime Day deals on their own sites. The deals were also promoted across Amazon channels.
According to Amazon the merchants who participated experienced a 10x jump in daily Buy with Prime orders and an 8x increase in daily revenue during the event.
Another driving factor in increased third-party sales is the fact that consumers are more comfortable than ever buying from third-party sellers on Amazon's marketplace, according to Witcher.
"This is critically important for the success of the sale since more marketplace sellers participate in the event year after year. Consumers are also becoming more aware that Prime Day has become more of a retail event than an Amazon event, so consumers are buying from more retailers during this period than they have historically. We see this in the numbers both at individual retailer level and the aggregate level — total online sales for all of retail on July 11 was the highest so far this year," he said.
Value prop still strong
This year's Prime Day results reveal that the annual event's 'shine' for consumers has not dulled, according to Witcher.
"From a trend perspective, there are a lot less questions this year about the value of Prime Day and significance of it as a "topical" event. This has people talking less about it in the media, but this certainly hasn't dulled the consumer's appetite for taking advantage of the retail sales event. All one needs to do is look at the record setting sales and it becomes clear that Prime Day will be part of every retailer's planning calendar for years to come," he said.
Amazon's Prime program has more than 200 million paid members in 25 countries. It costs $14.99 a month or $139 a year. College students can try Prime Student with a six-month trial then just pay $7.49 per month, or $69 per year. Qualifying government assistance recipients can get Prime Access for $6.99 per month.
The savings factor for consumers was also a reason for Prime Day success, according to Tasha Reasor, SVP of marketing at Loop.
"Discounts dug deep, not only for this year's Prime Day shoppers, but also for other retailers who promoted deals to hop on the two-day influx of online shopper traffic. Especially with consumers tightening their wallets, shoppers are likely to return many of their impulse purchases. It's at this pivotal point that retail brands must recognize the importance of a seamless and flexible shopper post-purchase experience," Reasor said in an email interview.
Yet mixed in with all the savings and discounts there was also increased prices, according to data from Noogata, maker of the AI eCommerce growth Assistant.
Noogata's team of data scientists analyzed the top 10,000 items sold during Prime Day 2023 and found major brands continue to leverage their popularity to increase prices going into the Amazon-created holiday.
It found that 45.4% of the top 10,000 selling items were on sale (of 3% or greater) during Prime Day 2023 (vs 39.3% in 2022) while at the same time prices were raised were raised (by 3% or more) on 13.0% of the top 10,000 selling items.
"Our analysis of Prime Day data from 2023 shows that more items were put on sale this year, reaching 45% of the 10,000 most popular items sold. On the other hand, we found that listings in which prices increased for Prime Day remained steady at 13%, which suggests that it's become standard practice for some brands to leverage Amazon's biggest sales event to increase prices and margins," Roee Bas, data scientist at Noogata, said in an email interview.
Increasing competition
The fact more top brands are creating sales events before, during and after Prime Day means consumers have more doorbuster deals to choose from outside of Amazon Prime than in years past, according to Elena Glotova, product evangelist of marketplace integration at Productsup.
"Retailers are increasingly giving Amazon a run for its money. We've all seen that brand loyalty is becoming a thing of the past. Instead of pledging allegiance to one brand indefinitely, consumers are loyal to who has what they want and need in any given moment, and who has it for the best price and can deliver it faster and conveniently. With that being said, I think this year's Prime Day went fairly well with new, similar competitor events popping up surrounding Prime Day," Glotova said in an email interview.
"However, now that retailers are ramping up their sale events, I think Amazon will seek to invest even more in providing a stellar consumer experience above and beyond what other marketplaces can offer, including potentially unveiling new AI features. For example, Amazon has already started implementing AI for faulty items detection at their warehouses and to increase speed of delivery."
About Judy Mottl
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