Another Prime Day is in the books, with Amazon reporting that third-party sellers rang up $3.5 billion in sales over the two days, up 60% from $2.2 billion in 2019, and once again Amazon devices were big winners along with the perennial favorite LifeStraw personal water filter.
However, the Instant Pot pressure cooker, a winner in past years, was conspicuous by its absence this Prime Day, despite promotions and deals. Indeed, there seemed to be more media partners in 2020, getting a cut of sales they promoted.
eMarketer pegged the worldwide total for Prime Day at a shade under $10 billion, according to senior forecasting analyst Cindy Liu, up 43% from $6.93 billion in 2019. Prime Day was held in 19 countries this week, while India had its own separate Prime Day in August.
On the other end of the scale, Citi analyst Jason Bazinet said Prime Day was flat compared to 2019, citing data from SimilarWeb. Bazinet also noted that Amazon’s press release this year didn’t say “biggest day ever” as it had in the past.
Once again, many other retailers large and small held their own competing events over the two days. According to deal site RetailMenot, more than 350 retailers leveraged Prime Day momentum to hold their own promotions this year, up 17% from 2019. Target claimed its Deal Days event, which doesn’t require a membership like Prime, grew two and a half times over 2019, with customers saving millions. Amazon claimed its members saved $1.4 billion during Prime Day.
Never one to rest on its laurels, Amazon is putting the pedal to the metal today by launching a new deal extravaganza called Holiday Dash, with a reported million discounted items through the holiday season.
3P Sellers and Prime Day
Amazon placed a lot of emphasis on 3P sellers, saying it is investing $18 billion in 2020 to help them succeed. The company added small businesses on the marketplace realized $900 million in sales in the two weeks leading up to Prime day, helped by Amazon’s own promotions.
While eMarketer estimates 3P sellers make up 58.9% of the sales on Amazon’s marketplace in 2020, Liu said the rate was substantially lower on Prime Day, 35%. While this is very different than eMarketer’s full-year estimate, “it’s not alarming,” Liu said.
“The logic behind this is that Prime Day skews heavily towards 1P sales as the event promotes Amazon’s own products,” she said. “That said, with 3P sales growing 60% on Prime Day 2020 per Amazon, this is higher than the total growth of 43%, meaning 3P sellers did gain some share over last year, which is what we were expecting.”
Amazon Devices and Ecosystem Win
According to Amazon, the Echo Dot was again the biggest-selling item overall on Prime Day, while Fire TV enabled smart televisions outsold last year’s event, from brands including Toshiba and Insignia. Electronics connected to the Alexa world also performed well, with millions of compatible devices sold, including Bose QuietComfort 35 wireless headphones and Fitbit Versa 2 Health and Fitness smart watches.
Top-selling categories were bedding, wireless accessories, nutrition and wellness, arts, crafts and sewing and healthcare, Amazon said.
Chris Bell, CEO of Perch, a company that acquires top-selling Amazon brands, said he had a very good Prime Day, seeing an average of 2x-3x compared to an average day in October, with certain categories doing particularly well.
“Given Prime Day was again a two-day event, I expected Tuesday would see a bigger bump and Wednesday would fall off, but it was pretty consistent across both,” Bell said. “It did vary by category. We had VR headsets that sold at 21x a normal day on Tuesday and 27x on Wednesday. Personal care and gift items also saw a big bump. Run-of-the-mill things like kitchen items had more of a normal Prime Day at 2x.”
While listing items in Prime Day exclusives or lightning deals is more of an investment and therefore a risk, Bell said those items “in general did tremendously well, exceeding expectations. Those are moderately expensive programs but they can pay off handsomely.”
A late Prime Day may cannibalize some sales from Cyber Weekend, Bell said, but he’s still expecting a large holiday season. “The major offsetting factor to that is, a lot of places across the U.S. are seeing COVID-19 on the rise, so I expect a continued shift online, with Amazon continuing to capture share,” he said.
Amazon Private Label Brands Not Pushed Hard
Juozas Kaziukenas, founder and CEO of Marketplace Pulse, said while Amazon has been building out its own private-label brands, especially apparel, they don’t get as big a push on Prime Day as its higher margin devices and electronics.
“I was watching the livestream, and it’s not about their brands,” Kaziukenas said. “The first page of the Prime Day site, they’re never upfront with exclusives. I’m sure they had increasing sales but it’s not a huge focus. Out of the thousands of deals listed, I only saw 20 to 40 for their own brands – that’s very small.”
Even though ecommerce via smart devices like the Echo is miniscule, Kaziukenas said Amazon continues to practically give them away on Prime Day to sink its hooks into the home ever deeper, preparing for the inevitable day when voice ordering becomes as common as mobile commerce. In Congressional hearings this past July, Amazon was accused of deliberately selling its Echo devices below cost to undercut competitors and monopolize the space, a charge CEO Jeff Bezos denied. More recently, a House subcommittee last week accused Amazon of wielding its market dominance like a weapon to thwart competition.
“… Large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,” Amazon responded in a blog post, even asserting that “fringe notions on antitrust would destroy small businesses and hurt consumers” in its headline.
“There’s not much (voice) buying now, but the idea is they’ll be more useful in the future, and by then there will be a device in every home,” Kaziukenas said. “I’ve seen stats that 1% of users bought something with a smart home speaker, and no one bought more than one time sing voice devices. But it’s something that could become powerful.”
An Underwhelming Spectacle
Kaziukenas added Prime Day 2020 felt like it was mailed in by Amazon, saying it lacked the pizazz of 2019 with a concert featuring Taylor Swift and a product launch by Lady Gaga. He added major retailers with their competing events could have done more to take advantage of it.
“Sure, all the retailers have record days and sales, but it felt like a lazy attempt by all of them,” he said. “They just copy/pasted from last year and called it a day. A lot of consumers already have an issue with Prime Day, that it’s hard to find deals, and these companies are not trying to solve it at all. Sure, there are 4,000 deals but how do I find what I like? There were lots of social media complaints that shoppers were overwhelmed and not a lot of really good deals.”