Amazon Prime Day Kicks-Off Holiday Shopping Projected To Hit $9.9 Billion

Holiday 2020 will be an extended shopping season starting with Amazon’s
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Prime Day on October 13th and 14th. Many other retailers will be following suit to compete for the customer’s dollars over the two-day period. Last year Amazon Prime Day raked in $6.93 billion worldwide from 124 million U.S. Prime users (up almost 11% from the previous year). For 2020, the projections are sales of $9.91 billion worldwide from more than 142 million U.S. users, surpassing 50% of the US population.

Andrew Lipsman, principal analyst of eMarketer, said in an interview,” Prime Day is a coordinated industry-wide event with other retailers planning promotions to compete with Amazon for shoppers’ attention.” The value of each shopping interaction in holiday 2020 will be higher than in 2019 as customers are making fewer trips to the physical stores but spending more dollars per trip. Chris Dessi, vice president Americas and Australia of Productsup, stated, “With Amazon Prime Day occurring in October rather than July, consumers will certainly take advantage of the deals and two-day shipping to cross items off their holiday shopping list.”

Lipsman says, “Smart and savvy marketers can be very successful by making sure the brand shakes hands with the consumer early in the shopping season, engaging them in some way by bringing them to their site or using ads to later reach out to them.” Dessi points out that Prime Day is only two days long and December is still rather far out, which is likely to trigger extended shopping periods that offer new deals over a period of months. Dessi stated, “By stretching out sales and marketing special offers and products in a variety of channels—marketplaces, online stores, social media, etc.—retailers can grab the attention of new customers and drive sales leading up to the holidays.”

An early start to the holiday shopping season will benefit both customers and retailers

Customers will have the advantage of an early start to their shopping with deep promotions across many different online and physical retail stores. Retailers will have high-demand products stocked early in the season but may see their stock run out as the season progresses. Inventory management will be problematic later in the season as many retailers will be chasing stock to fill demand based on lean inventory heading into the season. Dessi said, “In a crowded and competitive marketplace, e-commerce retailers should expect that if they show shoppers irrelevant products or high-demand products that are out-of-stock, they will lose a sale and consumers will simply click-and-buy elsewhere.”

For retailers, early shopping means the ability to level out the demand over more days making fulfillment and logistics more efficient. Spikes in customer demand over fewer days put a strain on the supply chain and on replenishment processes. Desi said, “In today’s retail holiday season we can expect more and more instances of unexpected, unsteady and unprecedented changes in supply and demand.” Real-time inventory visibility becomes crucial for retailers to meet the demands of their customers. Formulating an agile response to changing demands will be key for successful holiday selling. The unpredictable consumer demand shifts since March of this year have made it difficult for retailers to plan inventories accurately, leaving most to enter the holiday season with lower inventory levels than in previous years. In the end, retailers could benefit from higher gross margins but may miss sales opportunities if there are too many out-of-stock products. An early start to the season allows retailers to respond and react to current buying trends. 

Bloomreach’s data shows that the end of year shopping spree is already underway with ‘Christmas’ appearing in the top 20 search terms for September, one month earlier than in 2019. Related terms such as stockings and ornaments are also entering the list of top searches for the same period. Bloomreach forecasts that 68% of consumers will begin their festive shopping by early November, an 11% surge compared to 2019.

Closed on Thanksgiving and Black Friday is Gray Friday 

Many companies are opting out of Black Friday to minimize large volumes of shoppers going to the physical stores and there is a growing list of retailers that will be closed on Thanksgiving Day. Dessi said, “In-person Black Friday shopping is essentially canceled, meaning retailers must find other ways to attract customers who are likely logging on to Amazon Prime Day.”

Customers used to taking advantage of Black Friday deals in stores after Thanksgiving will turn to spending more online including with mobile devices. Mobile commerce should have one of its largest days ever as people will shop from their homes on Thanksgiving, turning it into “Couch Commerce Day.” Retailers are moving promotions to earlier in the season and providing more opportunities for customers to shop over a longer period of time. Best Buy
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recently announced that their Black Friday sales will begin on Amazon Prime day.

In-stock for the holidays

The key for retailers during the lead up to the holiday is to make sure products are in stock and in the right locations for the customer—either in a distribution center ready for shipping directly to the customer or in a physical store. 

Marcel Hollerbach, CMO of Productsup, said, “Retailers should ensure their product data is updated frequently and that inventory and feed management is automated, refreshing multiple times a day.” Hollerbach believes If a customer goes to buy an item that’s out of stock, or receives an item in the mail that’s vastly different than what they thought they were purchasing, that’s a lost customer for life. 

Holiday promotions comes early for customers

Accelerating factors contributing to the growth of Prime Day this year includes the shift of Prime Day from July to October, more people working from home with wider access to online shopping, and a step change in consumer behavior to purchase more products online. Prime Day is projected to be the largest holiday sales event in 2020, sparking a flurry of promotions from other retailers.