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Amazon Shoppers Ignore Meager Discounts to Swarm Prime Day Sale

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(Bloomberg) -- Amazon.com Inc.’s Prime Day sale is luring bargain hunters looking to stock up on pantry items and cheap electronics despite a dearth of deals.

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Typical household spending was $88.28 as of noon New York time, up 20% from the early hours of the previous sale last June, according to Numerator, which is tracking Prime Day spending from 973 households. Besides Amazon’s own branded electronics -- which are offered at steep discounts -- the best-seller in the early hours of Prime Day was a Frito-Lay variety pack of snack chips.

The annual sale, which runs Tuesday and Wednesday, provides a window into the spending habits of consumers reeling from rising prices and a slumping stock market. So far at least, shoppers are looking for utility products over indulgences and are spending more than anticipated even though many sellers are limiting the deals to protect their profits amid rapid inflation.

Branded, which generates $250 million in annual Amazon sales from a selection of about 40 products, reports that Prime Day sales have surged 30% -- far outstripping its expectation of single-digit growth. Branded offered fewer discounts, but sales remain strong, Chief Executive Officer Pierre Poignant said. Top sellers are a $30 Fullstar vegetable chopper and a Acumobility back roller for $70.

“We pushed for profits this year, and sales are surprisingly strong,” he said.

Channel Key, an e-commerce consulting firm with 70 clients that generate more than $100 million in combined annual revenue, said sales rose about 12% in the first six hours of Prime Day compared with a year ago. Health and beauty products and supplements were among the top performers, indicating shoppers are looking for deals on items they use regularly, according to CEO Dan Brownsher.

“Early signs are really positive,” he said. “Usually there’s a big morning spike for Prime Day and then another big spike after dinner time.”

Amazon launched Prime Day in 2015 to attract new subscribers who pay $139 a year for shipping discounts, video streaming and other perks. The event helps Amazon lock in shoppers before the holidays and deepen its relationship with existing customers by offering them deals on Amazon gadgets. Spending on Amazon will reach $7.76 billion in the US and $12.5 billion globally over the two-day event, each up about 17% from a year earlier, according to research firm EMarketer Inc.

Instead of dangling discounts, brands are spending heavily on Amazon ads to lure consumers. It’s a good deal for sellers because advertising on the site can cost half what it does on Google, Facebook and Instagram, says Alasdair McLean-Foreman, who runs Boston-based Teikametrics, which sells pricing and advertising software.

“The big takeaway is ads are paying off big-time this Prime Day,” he said. “Advertising on Amazon is like paying to be in the store aisle, which is performing better right now than a billboard campaign or Super Bowl ad.”

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