Salesforce com : Prime Day Delivers – How Amazon’s Holiday Tracks the Impact of Ecommerce on Retail

What can Amazon's Prime Day 2021 tell us about the holiday season to come? [IVAN GENER/STOCKSY]

Jun 23, 20215 min read

The complete Prime Day data set will be released with theQ2 Shopping Index on Friday, July 2, 2021.

When Amazon scrubbed its July Prime Day event in 2020, it left consumers and retailers on the edge of our seats waiting for the rescheduled date. Without a back-to-school shopping rush last year, Amazon clearly felt no need to schedule Prime Day in either August or September. Instead, it settled on October, which positioned the manufactured shopping holiday as a precursor to Cyber Week. As summer 2021 approached, the question on everyone's minds was 'Would Prime Day move back to July, or stay in October?' Well, Amazon surprised everyone again and announced that Prime Day would be held June 21 and 22, 2021. This time, it was positioned as the kickoff to summer and the start of post-COVID 'normalcy' here in the United States.

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Last year both Prime Day 2020 and Cyber Week brought in record-breaking online sales not just for Amazon, but for the digital commerce industry as a whole. Retailers and brands have successfully capitalized on the Prime Day buzz and tapped into eager shoppers ready to take part in the festivities, on and off the Amazon platform. Known as the 'Amazon Prime halo effect,' we've been observing it for years.

Now that Prime Day 2021 has shipped, let's unpack the consumer shopping patterns and behaviors from the event using our proprietary Shopping Index data, a collection of retail insights from over one billion shoppers worldwide.

Prime Day sales were soft, but the halo effect still holds strong

Global online sales growth for non-Amazon retailers was essentially flat when comparing 2021 to the Prime Days of 2020 (October 13 and 14). Total spend decreased by 1%. But APAC (excluding ANZ and Japan) and Italy were the biggest winners this Prime Day, with 41% and 47% growth in online sales, respectively.

In the U.S., online sales were also relatively flat over Prime Day 2020 (-1% growth).

APAC (excluding ANZ and Japan) and Italy were the biggest winners this Prime Day, with 41% and 47% growth in online sales, respectively.

So was there a halo effect? Yes, if we can compare how last year's Prime Days positively influenced the trajectory for June this year. Our Shopping Index data shows that online sales in the second quarter of 2021 started off soft. This was likely due to the huge increase in online spending we observed in 2020 when pandemic buying was at full charge. While June has seen a slight rebound from the early days of Q2, it has not performed much differently than April and May, exhibiting just 8% growth in year-over-year (YoY) sales so far. But, Prime Day outperformed the month's average and pushed online sales growth to 12% over the same two days in 2020 - a halo effect of four percentage points.

Why didn't we see huge growth over 2020's Prime Day?

Prime Day 2020 was enormous for Amazon and non-Amazon retailers alike. Non-Amazon websites realized an impressive 66% growth in online sales over Prime Day 2019. But perspective is important here. The 2020 growth we witnessed was on the heels of unprecedented changes in consumer behavior. Consumer spending faced four main challenges in October 2020:

1. Shipping delays due to unprecedented demand on the logistics system.
2. COVID-era digital adoption due to channel migration (brick-and-mortar to digital and economic stimulus fueling extra spending).
3. An impending holiday season that was starting in less than two months.
4. Pent-up demand from a delayed Prime Day.

As the world distributes more vaccines and consumers begin to feel more confident, they're likely focused on other activities. Travel, socialization, and end-of-school-year celebrations are again available as alternative spending options for consumers, unlike in 2020.

In fact, our data shows that consumers this June are spending their weekends enjoying other activities. Fridays and Saturdays are the only days in June seeing negative YOY growth in online sales. While Prime Day inflated a softer month, it didn't outperform 2020 as consumers transitioned to other priorities.

Supply and demand constraints counteract discount rates

Inflation, inventory issues, and logistics challenges have dominated the headlines as of late. Manufacturing delays and raw materials scarcity have made it difficult for retailers to stock their shelves. Couple that with unprecedented demand and labor shortages, and we are living in the middle of an Economics 101 course.

The fastest growing product segment for Prime Day shoppers was handbags and luggage, with spend growing 74% over Prime Day 2020. Undoubtedly, consumers were buying in anticipation of long-awaited travel plans.

For consumers, this has meant higher prices and lower discounting to stave off demand and release margin pressure. Average discount rates were down by 13% over 2020 Prime Day (from an average discount rate of 18% to 15%). The average order value also increased by 7% while the number of orders decreased by 8% over 2020. Meanwhile, the number of units purchased per order remained flat, suggesting that despite softer discounting, retailers are raising prices to compensate for the current market environment. Is this a sign of what's to come for the remainder of 2021? Early indicators point to reduced buying power for consumers as retailers raise prices and temper discounting.

What were shoppers buying?

The fastest growing product segment for Prime Day shoppers was handbags and luggage, with spend growing 74% over Prime Day 2020. Undoubtedly, consumers were buying in anticipation of long-awaited travel plans.

But what product segment captured the largest share of wallet? Furniture sites saw a 67% increase in total share of wallet this Prime Day as consumers continue to redecorate in the midst of skyrocketing furniture prices. This increase made furniture spending capture the largest share of spend across the 18 consumer product segments that we track.

Will we see another Prime Day in October? At this point, we can't yet rule it out.

Despite consumers heading out of the house, our data also shows that general and active apparel saw large decreases (-16%) over last year's Prime Day. While consumers weren't buying clothes, they were concerned about what's on their feet. Active footwear climbed at 11% over 2020, despite active apparel seeing a big drop in spend. With luxury and mid-priced handbag and luggage segments also up, it seems that consumers are shopping online for 'things' and accessories, rather than apparel.

What's next for Prime Day?

Despite another successful summertime Prime Day, I don't think we've heard the last from Amazon in 2021. Will we see another Prime Day in October? At this point, we can't yet rule it out. Consumers may be eager to get their holiday shopping out of the way early. Amidst inventory and logistics challenges carrying forward into 2021, early holiday shopping could be an attractive option again this year.

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