Amazon (AMZN) Prime Day is set to take place on July 11 and July 12 – and the results of the e-commerce giant's most famous sale will likely have ramifications far beyond Amazon.
"Prime Day is always a major shopping event, but this year it will be a bellwether for early holiday shopping amidst high inflation and rising interest rates that have consumers more cautious of their spending," said Michael Greene, SVP of global vertical strategy at Criteo.
Still, don't be too worried about Amazon and retailers just yet. Amazon's Prime Day has created an ecosystem in which there are major savings opportunities for consumers, ones that they're likely to take advantage of at Amazon — and elsewhere.
"It’s not just Amazon that benefits from the summer shopping excitement," said Greene. "Other retailers have launched competing events — like Walmart+ Week and Target Circle Week — that led to a boost in traffic and sales. That, in a nutshell, is the Prime Day 'halo' effect."
This means that Prime Day hasn't just created an ecosystem in which Amazon is making money – it's created one where shopping is happening across e-commerce retailers.
"I expect Prime Day will drive adjacent sales for other retailers this year more than any other," said Kevin Dunn, VP of industry sales, retail, and consumer packaged goods at LiveRamp. "Retailers seem to believe that consumer spending will stay on the rise and reach record highs by the fall holiday season. Inflation is not slowing down consumer spending, but it does have shoppers looking for the best price. Savvy retailers will capitalize on this trend to drive consumers to their own sales events online and in-store. Some of these retailers have already lined up some of the most aggressive sales I’ve seen in a while."
Delivery times and supply chain changes
For Amazon, this year could also mark their fastest Prime Day delivery times ever, according to a June 29 JPMorgan note. However, that doesn't mean it will be easy. Amazon's supply chain has been in the midst of a major shift since the pandemic, as has been the case for many retailers. What customers can — and can't — get away with when it comes to returns is also in transition.
"Since the pandemic, companies have had to make strategic changes to their policies and operations to maintain and increase profitability," said Darcy MacClaren, SAP digital supply chain chief revenue officer. "From an e-commerce and delivery perspective, this means that returns now have more restrictions and may not be free to the customer, return periods are shorter, and surge charges apply to specific delivery dates. Companies have gotten more sophisticated on charging delivery costs by day. Certain retailers charge more if a customer wants their order delivered at the end of the week, versus early or if they order seven days out. If customers want a delivery sooner, they will pay a premium."
Still, Amazon is incentivized to make its delivery times as fast as possible.
"Delivery times are important, especially with certain products, and the way to do that is by getting the inventory as close to the customer as possible," said ShipBob chief supply chain officer Melissa Nick, formerly Amazon's VP of North America fulfillment. "How do you make sure there aren't swimsuits in Minnesota all year but there in summer when you want them?... It's a benefit to both customers and the companies when delivery is fast, driving down costs."