8 minute read

Unless you’ve been living under a (B&M?) rock, you’ve heard Amazon’s hosting Prime Day July 12-13th.

 

I analyzed nine different guides and scoured social posts to help you prepare for, and set, the right expectations around this year’s Prime Day sales event.

Why is Amazon Prime Day Important

Everyone “knows” Prime Day is a big sales event, but I’ve never seen a financial breakdown of what it actually means for Amazon’s gross merchandise value.

 

Based on Amazon’s commentary and assumptions relating to 1P and 3P growth and past event outcomes, I estimate Prime Day ’22 will translate to ~$15 billion in sales. That compares to $3.6 billion in GMV done over an “average” two-day span.

 

The differing time periods when Prime Day occurs can impact these figures but think about the Prime Day opportunity as ~3.5-5x the amount of typical business done on the site.

 

This is of course across ALL of Amazon. Your results could be significantly different depending on the tactics you employ the rest of the year. For instance, you could see outsized results if you offer a particularly effective promotion or if you simply don’t promote products that often.

Best Practices 

Given the event has been around since 2015, there is a consensus that emerges when evaluating different guides and articles about best-in-class Prime Day strategies.

 

Explicit Goals: Like retail media spend, the first question for an organization has to ask “What does success look like for us on Prime Day (thanks Code 3!), and how or why does that differ from our normal goal on the site?” If you don’t know where you’re going, it’s tough to formulate a strategy and even more difficult to assess the results. Make the goal explicit so that internal expectations can be set and managed appropriately.

 

Established Products: While there’s a natural inclination to want to help launch new products on the site and/or clear out slower moving inventory, Prime Day is best suited for established products that are highly rated (4-5 stars).

 

Stay In-Stock: In-stock, in-stock, in-stock comes through in each guide. It’s obvious in theory, but as the last few years have shown, staying in stock can be challenging. Companies still facing supply chain disruptions simply can’t participate in a meaningful way on Prime Day. So, it’s important to have a good sense of your inventory situation and whether you can match operational considerations with your promotional goals. Did I say it’s important to stay in-stock?

 

Ad Spend Expectations: While it will vary by category (home, fashion, beauty, and electronics do particularly well on Prime Day), ad spend needs to ramp at least in line with the sales boost (again 3.5-5x) to maintain share of voice. This means that even if you don’t plan to participate in Prime Day, you will need to ramp spend to stay even, which is an important internal message. (Note, there are nuances to this as site traffic and search volumes do not necessarily equal sales boost. Analyze historical results for your products/category to dial in on what specific amount ad spend needs to increase to maintain share of voice.)

 

Carpe Diem: One of my favorite recommendations was to use the sales boost potential on Prime Day to drive improvements to your product detail page content. (Thanks to Todd Hassenfelt for highlighting this idea!)

 

Manage Internal Reactions: Monitoring when, and even if, deals run is important, if for no other reason, to manage internal reactions to the event, as it is common for brands to see certain deals not run.

 

Use This Table to Guide Expectations for Prime Day 2022:

Resources for Best Practices:

What's New for This Year

Amazon’s Focus: Amazon’s press release on the event featured mostly standard highlights like its owned electronic products will be a focus. New this year though is that it highlighted its BNPL partnership with Affirm, which may help add an additional boost to sales, especially in higher ASP categories. In addition, it highlighted 20% off certain items at Amazon Fresh stores. This is a notable shift from prior years when Prime Day Deals at Whole Foods were featured.

 

Tactical Changes: Kiri Master’s highlighted that FBA sellers have more control over inventory levels this year, which should help improve in-stocks and make 3P sellers more competitive, all else equal. Amazon also implemented a deadline for coupons, which is new compared to prior years when deadlines were only for Lightning Deals and Prime Day promotions.

 

Measurement Changes: Amazon Advertising rolled out New to Brand analytics in November of last year, making this the first Prime Day in which brands can see how the sales event grows their incremental consumer base. Every Amazon practioners should be looking at this to inform future big sales days events (including the rumored Fall Prime Day event occurring in October of this year).

 

Prime Membership Price: Amazon raised the price of Prime Membership to $14.99/month from $12.99/month earlier this year. The price change doesn’t matter much for the actual event as Amazon offers free trials. However, it may see a lower conversation rate compared to the last two years because of the price increase, making the longer-term benefit of winning these consumers less valuable.

 

Macro, Macro, Macro: Amazon introduced Prime Day in 2015, and in each subsequent year the economy was on a tear. Not so much at this moment in 2022. Gen Z and Millennials are facing the highest rate of inflation in their lives, median gas prices are $5+, interest rates are rising, home prices are starting to soften, and labor markets are loosening under the pressure. Not to mention a glut of general merchandise inventory from shoppers shifting spend from consumer goods to experiences. And to compound all of this, brands that are behind the curve on passing price increases over the last 12 months will be in no shape to offer steep discounts. In a word, this Prime Day will be…interesting? The number of caveats in Amazon’s post-event press release that touts some version of “this was our largest Prime Day ever” will be inversely correlated to how well the event performed.

Nascent Areas to Watch

Livestreaming: Amazon is planning to have celebrity hosts livestream deals for Prime Day beginning tomorrow, June 21. Everyone points to China as the potential for livestreaming, with influencers like Austin Li selling $1.8 billion in goods over 12.5 hours and the $312 billion in total goods sold through the format. Livestreaming has not taken off in the U.S. to-date, although Walmart, start-ups, and certainly Amazon are testing. The key here is that if you’re a big firm in a category that does well on live shopping channels like QVC, then livestreaming should be part of a test budget. It’s just not core to winning on Amazon at this point.

 

Alexa Notifications: While not specific to Prime Day, Amazon has enabled deal notifications for Alexa users. The functionality includes alerting shoppers of deals available on their wish list, in their cart, or saved for later. Voice shopping has not become a big part of shopper behavior to-date, but it will be interesting to see if Amazon provides any performance statistics around it for this year’s event.

Leverage Summer Prime Day Intel for Fall Prime Day

Business Insider reported Amazon is planning to host a second Prime Day in October of this year.

 

The consensus reaction to this second Prime Day event is that it is a function of poor consumer demand and an over-inventoried position.

 

While this is partly true, the “holiday period” has lengthened to include October. Over the last 30 years in the U.S., average retail sales in October increased 0.5% on a month-over-month basis. However, in 2021, October increased 2% month-over-month, 4x the normal increase. This was the second largest month-over-month increase in October since 1992.

 

The stronger demand in October is more pull-forward than it is incremental according to the data. Over the last 30 years, December typically increases 0.2% month-over-month. In contrast, it was down 2.1% in 2021.

 

Thus, Amazon’s Fall Prime Day event is a natural reaction to this trend of starting the holiday period earlier.

 

Given the macro environment today will likely be similar in four months, smart brands can evaluate what works (for them and their competitors!) during the Summer Prime Day event and then apply that intel to their Fall and Holiday strategies.