Did Brands Selling On Amazon Have A Winning Prime Day?
It was a happy Prime Day for retail giant, Amazon.
Well, mostly. The shopping bonanza’s first round of promotions on Monday, July 16th, crashed the site in the mere minutes after kicking off, as consumers scrambled to see if their desired products made the sale. If you recall, Amazon experienced similar site woes in 2016 – which, would reasonably lead us to believe that this type of malfunction was in the rearview for good. But, it happens, right? Troubles of another kind also arose that tested Jeff Bezos and Amazon from a values and employee rights perspective, with global walk-offs calling into question the realities of what goes on behind the scenes to make Prime Day happen.
Again, With The Record-Breakers
But, these were just small blips in the booming shopping event that was this year’s Amazon Prime Day, dubbed its “biggest day in history”. We won’t go too deep on the numbers here, though some are certainly worth mentioning.
- 100 million – the number of products purchased during this year’s event.
- $3.6 billion – the projected global revenue brought in by Prime Day between 3 pm on Monday and midnight Tuesday. Some reports are saying revenue could have reached $4 billion.
- 17 – the number of countries that shopped on Prime Day, making it perhaps the most global event Amazon’s had.
- 90% – the year-over-year increase in sales on Amazon’s third-party marketplace, during the first 12 hours of the event. Important to note, that while Amazon has made a tremendous push in its direct selling business – which is on par to grow to $95 billion by 2019 – its third-party marketplace sales will surpass 30% growth this year, with revenues of nearly $130 billion accounted for last year.
- More than half – the percentage of shoppers that will own an Alexa-powered device – from Dots, to Spots, to Shows, to Alexa Voice Remotes for Fire TV Sticks – after Prime Day 2018. This is key for marketers that continue to navigate the ecosystem of voice, particularly as consumers rely more and more on voice-activated devices in their everyday lives.
- $1 billion – sales made by small and medium sized businesses selling on Amazon’s marketplace.
- 80 (or close to it!) – the number of private label brands Amazon sells, and pushed during Prime Day 2018, with more than half of those across apparel. Private label brands like Lark & Ro, Mama Bear, Solimo and Wag, and Basic Care were big winners on Prime Day, creating further customer loyalty for Amazon’s brands.
Behind The Numbers
Global Shopping Events
Yes, it was an impressive couple of days for Amazon, and likely extremely successful for a multitude of businesses. It’s worth it to note, that as substantial as $3.6 billion is, it has a ways to go before coming even remotely close to behemoth, Alibaba’s, revenues on Singles Day. Amazon’s global scale has been improving, with countries like Australia, the Netherlands and Singapore added to its participant list this year; but you’d better bet that Jack Ma is watching Amazon closely, particularly at how it performed through Prime Day, and what new offers or integrations, like the Whole Foods play, resonated with consumers.
Manufactured shopping events like Prime Day and Singles Day add an electricity to the shopping experience, that’s not only about snagging the best deals, but for some consumers, about uncovering the rare, treasured item amidst all the product that’s deemed hot by others. For brands selling either direct on the platform, or through the third-party marketplace, Prime Day’s biggest draw is becoming a part of that electric shopping atmosphere, where unmatched levels of traffic, Lightning Deals, more advertising and more visibility on products overall, can make participating in Prime Day one of the more important businesses decisions a company will make throughout the year. Brands also have the opportunity to gain a mid-year spike in revenue that relieves some pressure of Q4.
That being said, the decision must weigh into components like: margins, and how deep-discounting impacts them, competition for product share, and the overall experience of customers – not all customers may be the deep discounting-driven type. Prime Day is a strategic business decision like any other that will inevitably have its pro’s and con’s, all that likely played out in varying ways for companies that participated this year.
Immense Value, But Also Challenges in Marketplaces
The consistent growth of its third-party marketplace has catapulted Amazon into incredible success, and according to the stats, Prime Day was a definite winning moment for small and medium sized businesses. The feeling around marketplaces in general, from the viewpoint of retailers and brands, can vary from intrigue to sheer terror; nevertheless, they’re now a quintessential stop on the shopping journey of today’s consumer, effectively making them impossible to ignore. Reaching consumers at scale is an undoubted upside, as is gaining access to Amazon’s trove of customer and shopping data points – some of which they’re more willing to share than others, of course.
But competing on Amazon’s marketplace isn’t without its challenges, particularly during Prime Day. Lightning deals and overall participation fees increased significantly for third-party sellers during this year’s event. And that’s just a moment in time. Beyond Prime Day, Amazon can still be an incredibly sophisticated ecosystem for both brands that sell third-party and direct on the platform. Has the rapid, incredible growth it’s seen created some unforeseen mishaps behind the scenes, as companies struggle to fit Amazon into the overall e-commerce, and omnichannel picture? And what about the notion of obsessing over customers, as Jeff Bezos so boldly put it in an investor letter of years’ past? While Amazon focuses obsessively on customer needs and wants, where does it leave brands and their customers? Did some brands lose out during Amazon’s site outage, because it caused a breaking point in the customer experience?
The Advertising Question
Amazon wasn’t shy about amping up its efforts to snag advertising dollars from brands participating in Prime Day, promising impression increases in the 100+% range. They continue to court brands and agencies for advertising dollars, as being in the game through AMS and/or AMG has become a more critical piece of the Amazon puzzle.
With the level of searches happening on Amazon from the start of the customer journey only increasing, running search ads on the platform makes a world of sense for brands hoping to capture high-intent customers. But with Prime Day being a beast of its own kind, results from leveraging Amazon’s ad products may need to be considered differently due to the rapid-fire nature of the event. It will be interesting to see how brands’ ad dollars performed on Amazon, and whether they in fact drew the increase in eyeballs that Amazon promised.
Stay tuned for our next post-Prime Day recap, that will take a look at what happened outside the Amazon ecosystem.
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