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Amazon Prime Day 2020 ‘is the official start of holiday’ season shopping: Salesforce VP of Industry Strategy

Amazon’s 2020 Prime Day kicked off on Tuesday with new sales for consumers. Rob Garf, Salesforce VP of Industry Strategy, joins The Final Round to discuss why Amazon’s Prime Day is kicking off the holiday season shopping and Salesforce’s holiday forecast for major retailers.

Video Transcript

JENNIFER ROGERS: And this year, October, brings us Prime Day. Usually it's in the summer. But it is today. It's going on. I'm sure everybody knows that, because if you're the giant retailer, you just get to pick what day. You want to bake a shopping holiday. And somehow, everybody goes and shops. Let's bring in Rob Garf. He is Salesforce VP of Industry Strategy and Insights.

And Rob, you guys have a lot of intelligence and data on how Amazon and the whole retail online ecosystem is going. What is having Prime Day right now in October, which is ahead of the holiday season but during a pandemic? What do we think it's going to do to the shopping trends? Is this pulling forward any purchases from that we would expect later in Q4? Is this stuff that people didn't buy in July? What is your expectation?

ROB GARF: Yeah, well, you know what. It's the official start of holiday. Let's be really clear, right. This holiday was typically in the middle of the summer with the dog days of summer but still polled a lot of demand earlier. But with the pandemic and with Prime Day, we are officially seeing the start of the holiday season.

In fact, we saw my team at Salesforce that as of 11:00 o'clock this morning Eastern time, there was a 60% year-over-year increase for the same time during Prime Day last year. So this is a big deal for retailers who, let's face it, have been trying to pull demand earlier and earlier into the fall for, gosh, as long as I can remember. But there's never been a compelling event. But now we have both the pandemic and Prime Day smack dab right in front of us.

JENNIFER ROGERS: And you guys track, not just what's happening with Amazon, but also with other retailers, as well, and small businesses out there. So can you give us a sense in terms of what you're seeing here for the whole area, I guess, because, look, Target has deal days going on right now. I was on Walmart earlier today. You know, they've got some deals as well. Last year's research showed that there was also smaller businesses coming online in July. So are you seeing that as well?

ROB GARF: Absolutely. So that figure I mentioned is actually for the greater industry. We actually are predicting that 10% of cyber week traffic and sales are being pulled in to October. So Prime Amazon has manufactured this holiday, which has created a halo effect, if you will, where other retailers are finally taking advantage of the buzz, of the demand, of the visibility and really taking advantage of it.

And if you put into perspective, last year, the market grew 37% overall during the two days of Prime. More than 50% of retailers had some sort of deal in and around Prime Day, and it's only higher this year. I'm sure you've all gotten an email that have either mentioned holiday, Prime or deal over the last 24 hours.

So this is really buoying up in industry that could really, really use it as, you know, the traffic for brick and mortar has really leveled off or decreased. And you've seen, really, a boon, a real surge, if you will, in digital.

DAN ROBERTS: Rob, Dan Roberts here. Let's stick with the idea of the pull forward in demand because of Prime Day. I mean, you mentioned that this will kind of buoy the whole industry. And certainly we've talked to death the e-commerce surge. You're right. I mean, we've talked about Walmart, Target, Best Buy have seen huge surges in e-commerce.

But as a result, I feel like there is already a little bit of an expectation that the holiday shopping season, specifically, Black Friday and then Cyber Monday might feel a little muted this year. I guess you could argue both sides. You could say it'll be bigger than ever. Or you could say that because we've been home for six or seven months, it might not really feel the way it usually does because, in many cases, if you've decided you need an item in the last few months, you've just gone ahead and ordered it. And I just wonder if you think that especially with Amazon Prime Day being this early in the fall, if now that might actually contribute to Black Friday and Cyber Monday being sort of less of an affair than it has been in past years.

ROB GARF: Yeah, you're on to something there. Well, first of all, we're anticipating that digital will comprise 30% of all sales this holiday. Put that in perspective. It took us 20 years as an industry to get to 15%. Now, we're surging up to 30%. But, you know, Black Friday, Cyber Monday doesn't go away. But it certainly levels off in terms of relevancy. And it's because of that pulling forward of demand.

And, by the way, retailers want that. They don't want the same volume of traffic and people lining up in and around stores on Black Friday to get those door busters. They'd rather see a leveling off or a smoothing off of that demand. Not only do we have Prime Day, but we have a pandemic, which is causing three things to lead to this compelling event.

First of all, there's product scarcity. I don't know about you, but you're not getting-- or I know I'm not getting a patio heater anytime soon. Second is health and safety. Consumers aren't going to be going into the stores at the same level as they have in the past. And third, and I think this is going to be the headline this holiday is shipping issues.

We're predicting that the traditional carriers are going to be 5% over capacity. That means 700 million packages worldwide are at risk not getting to the doorstep in time for the holiday. So consumers realize that. They saw that in the spring. And they're going to be compelled to buy earlier to make sure they get that gift when they want.

SEANA SMITH: Hey Rob, I just wanted to follow up on that just the fact that a lot of these retailers may not be able to meet demand. It's interesting just because we heard that Amazon has increased its footprint there, 50%, in order to try and meet the-- more of the demand, the jump in demand that we've been seeing over the last couple of months. Do you foresee that being a problem for Amazon? Or are they one of these retailers that actually have this potential problem under control?

ROB GARF: Yeah, well, they can certainly flex a lot better than a lot of the traditional retailers. But I think they're going to hit some volume issues as well. There's only so many vehicles and drivers that are out there. You know, what I really like is what the non-Amazon retailers are doing, and they're getting really scrappy.

They're thinking about how to incent consumers to go to the store and buy via curbside or drive-through. Or they're partnering and doing forward buys with some of these crowdsourcing providers, like the Ubers and Lyfts or DoorDashs and Instacart really being able to tap into the unlimited or nearly unlimited capacity to get the product from the source of supply.

In many cases, that's a store. It might be a dark store to the doorstep and not rely on the traditional carriers who are putting on caps and putting on surcharges that are going to, not only create constraints, but also cut into the margins of the retailers.

SEANA SMITH: Always good to see you. Rob Garf, Salesforce VP of Industry Strategy, talking to us about Prime Day and so much more. Thanks a lot.

ROB GARF: Thanks. Happy Prime Day on holidays.

JENNIFER ROGERS: [LAUGHS]