Prime Day, once Amazon’s vital sales boost, is now much more complicated

Amazon Prime Day, which runs today and tomorrow, is a rather more complicated proposition than it has been in past years, when increased sales were almost guaranteeed for both the marketplace itself and its third-party merchants.

Why it matters

Since its inception, the global shopping event has not only fuelled increased sales, it has also been a critical moment for Amazon to discount its own tech products and grow its membership ecosystem. But that is no longer obviously the case in an inflationary environment, with pressure on consumers’ wallets and supply chain issues affecting stock. 

Further, a sales event requires discounts, which are problematic at the best of times. They erode the perception of a brand’s value and diminish the ability for that brand to raise its prices – a critical lever to pull now in order to retain profitability. 

Amazon Prime Day, along with similar events like the recent 618 festival in China, is now being watched closely as much for what it can tell observers about volatile consumer sentiment as it reveals about the platform’s business performance. 

What’s happening

Amazon Prime Day has been a growth driver for other, less robust companies, who will find 2021 is a tough act to follow, when the e-commerce boom was in full swing and plenty of cheap money fuelled a 17% year-on-year increase at Amazon, the FT reports. It is very unlikely that this year’s Prime Day event will match that, even if it might bring on board some additional Prime members.

What to do

Brands will need to figure out their shopping holiday strategy, which will depend on the category and particular situation – naturally, if you’re struggling to keep shelves stocked, running a great big sale isn’t a great idea.

For more on shopping holidays, including particular drill-downs into US shopping holidays, WARC has you covered.

Sourced from FT, WARC