OMG: Another Amazon sale?
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When I heard rumors surrounding a potential launch of Amazon’s October sale days, labeled Prime Early Access, I couldn’t help but roll my eyes.
It seemed like Amazon was up to its usual tricks. My gut reaction was “why?” And I wondered if consumers are paying attention or simply annoyed by these ploys. As I was finishing this Perspective article, I received an email about its “epic” details, which was certainly marketing at its finest.
The sentiments about Prime Early Access among coworkers I reached out to were what I expected. These stuck out to me:
I can be hasty in my thoughts on Prime Early Access, so I took some time to think about the rationale for this action and then decided to counter it with how I saw the reality. As always, I recommend letting the dollars and spending tell the story. It’s important to remember that it can’t be just based on Prime Days 1.0 and now 2.0 but rather Holiday 2022 and full-year results. Retailers are infamous for inventing holidays and slicing the year’s sales numbers to tout their message, so sellers beware.
Like every company, Amazon looks to accentuate the positive. Amid warehouse worker issues and flat revenues, a little bit of good news could go a long way. My overall reaction is that this is a way to try to hedge a potential tough holiday sales season. And as one of my more seasoned coworkers suggested, “the new CEO is trying to boost sales and profits in Amazon’s unprofitable retail operation. Bad news for other retailers.”
My second thought was it would give Amazon a gauge on a season that may be difficult to predict. Digital Commerce 360’s survey of 70 retailers in September revealed that 64% planned to start their holiday marketing by October. Ironically, 13% had already begun those efforts during Amazon Prime Day, so they are not alone in their approach. And if it’s about the early access they tout, 39% of retailers indicated they had plans for early season sales.
Perhaps Amazon and/or some of their marketplace sellers find themselves in a tough inventory position. This would be a chance to rid themselves of excess inventory while also putting some muster behind some of the classic holiday hits in toys, consumer electronics and their own private-label products. Our research reported, however, that 49% of the retailers surveyed believed they were in a good inventory position, so I believe retailers have heeded the warnings.
Remember the slogan, membership has its privileges. There have always been privileges associated with membership, but it seems to me from the research on Amazon Prime that it’s all about the free shipping.
Our Digital Commerce 360 Amazon survey of 1,000 online shoppers in September 2022 kicked off with a question about if the shoppers had a made a purchase on Amazon. It inquired about their membership status. Findings revealed that 68% made purchases as Amazon Prime members, while 27% purchased without membership, and just 5% didn’t make a purchase on Amazon at all.
To explore their sentiments about Amazon, we asked about their agreement with 17 statements. The No. 2 answer cited was their Prime membership and its associated free shipping among 45%. Let’s face it, Amazon is an invaluable resource to many, top-of-mind to most and their reliability is hard to beat but free shipping seals the deal.
Shoppers intend to spend about the same for the holidays this year compared with last year, our survey data shows. So, perhaps Amazon believes if it gets more buyers to the table early, it can take a greater share of that wallet.
To ground my own biases, I thought it would be insightful to share a few of the findings from a Digital Commerce 360 and Bizrate Insights survey of 1,088 online shoppers in September. The reality is shoppers only have so much money to spend.
Trying to capture the greatest share of spending will be tricky this season due to shopper sentiment. When it comes to their spending, 64% said they intend to spend about the same or less on their holiday spending.
When we asked about year-over-year holiday spending specifically about Amazon, as part of our Amazon survey, the numbers are almost in sync but less positive. 73% said they will spend about the same or less.
Remember the phrase, “It’s the economy, stupid” James Carville coined in 1992. Thirty years later, in 2022, inflation is likely part of what’s fueling some of this activity.
Our question on the impact of current economic conditions reinforces some of the likely behavior going into the holiday season that forecasts headwinds when it comes to spending.
40% said they will comparison shop more as they expect prices to remain high. Inflation will cause them to purchase less overall (35%), and 30% will make fewer purchases overall given their current financial situation. Lastly, 25% expect to find more promotions than in past holiday seasons.
Retailer perception suggests that half of consumers will take advantage of early access in the season to avoid out of stocks. That may be true, but not sure they will buy more overall. But like the retailers, I’m more concerned about the 63% who believe high inflation will cause consumers to purchase less.
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