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Amazon stock climbs as Prime Day underway

Greg Portell, Kearney's Head of Global Consumer Industries & Retail Practices, joins Yahoo Finance's Zack Guzman to discuss how Prime Day will impact Amazon's 2020 outlook.

Video Transcript

ZACK GUZMAN: Kick off the show here with Prime Day, because of course, Amazon's big shopping event is now in full swing. And interesting to see the traffic there in terms of sales on the site-- had already been trending up ahead of Prime Day versus last year, as well as sales at Walmart, when they always have their own competing sales event, also seeing a boost to sales.

But here to break down the action we are expecting out of Prime Day is our first guest. Greg Portell is head of global consumer industries and retail practice at Kearney, and he joins us now. And Greg I mean, this is a big event all the time, whatever year it is. But no doubt in 2020, one of those big things for Amazon considering the shift to e-commerce we've already seen. So what do you make of what we're seeing so far early on, and what kind of deals out there are tempting shoppers?

GREG PORTELL: Well, there's lots of deals. It's amazing, though, how basic some of the products are. We've talked about this potentially being the new start to the holiday shopping season. And if that's really the case, I think a lot of people are going to have vacuums and towels under their holiday trees this year.

ZACK GUZMAN: That would be a very sad, sad Christmas if that's what's under the tree.

[INTERPOSING VOICES]

GREG PORTELL: If you look at the deals, they are pushing a lot of the basics this time around. I mean, we have the requisite televisions and things like that. But it is a lot of home appliance and home goods that are being pushed on the site right now.

ZACK GUZMAN: I mean, that's always kind of half the battle is, digging through to see what kind of deals are good ones out there. But when you think about the shift to e-commerce, as that Edison Trends data pointed to-- I mean, we've been talking for months now about how the e-commerce mix has been growing up because of the pandemic.

I assume that would make it even more, I guess, a better time now to be investing into those e-commerce efforts. Walmart also doing so. How much of Prime Day has boosted just this overall trend to shop and find and seek out sales around this time of year, not just on Amazon, but for competitors as well?

GREG PORTELL: Well, Amazon and their retail network really has proven the ability to create a consumer holiday, whether it's in July or October. Just this year, attention given to deal-making and the traffic that it drives produces that boost in the e-commerce channel.

Now what's really interesting will be what happens next week, as all of these orders start becoming fulfilled. Because if we think about e-commerce in the summer, when the pandemic was just taking hold, there was a lot of question about stability of the supply chain, how much you could push through at any given time, and would it break under too much pressure?

Now, with October, we're leading into the holiday season. We're getting a chance to let those retailers really test the resilience of their supply chain. So if you're trying to get a sense for how healthy e-commerce is going forward, the ability of the supply chain to handle this type of bump will be a pretty telling story.

ZACK GUZMAN: It's not as if they're not struggling with their own problems on that front, too. We've noted a few times the cases that Amazon has reported in terms of this pandemic and warehouse workers having to struggle with a lot of the same issues that retail workers have to struggle with as well.

But there was interesting polling data out of [? "People Say" ?] tracking Americans and how they plan to shop around this. They said 37% of Americans plan to reduce their shopping budget this Black Friday, about 28% said they'll shop the same as last year, and also, 49% of Americans plan to do most of their Black Friday shopping online this year.

So when you think about Amazon and e-commerce hurting traditional brick-and-mortal retailers here, there's also just a shift in the pandemic just to shop online regardless, whether it's Prime Day or any other incentive out there. What does that mean for a lot of these stores that were hoping for a stronger holiday shopping season and how that might not play out?

GREG PORTELL: Well, we would still expect a strong shopping season. But as you pointed out, where that demand is coming from is really shifting away from the physical retail. The physical stores will need to figure out a way to use that footprint as a way to compete with the online-only retailers.

ZACK GUZMAN: And when we talk about those online-only retailers, I mean, obviously Amazon's been leading the way for a while. But a lot of these others are playing catch-up. Walmart seems to be the one making the largest strides here in 2020, even announcing their Prime competitor and coming out with more details around that. But for these other stores that have already been struggling for so long, is it too late for some of these other big-box retailers to try and play catch-up to an Amazon, or increasingly even a Walmart?

GREG PORTELL: Well, I think what we've seen play out in the retail sector over the past couple of years is the importance of being able to compete across multiple dimensions. The advantage that Amazon has created is they can compete against multiple different categories, on customer service, on product assortment, on entertainment. And if you're going to be a single-category retailer, it's going to be really hard to compete on any given dimension.

So if you're thinking about the Walmart and Target, competition to Amazon, that's going to stay for a while. If a new entrant is trying to come into that space, it's going to be very difficult for them to differentiate themselves against those multi-channel, multidimensional competition.

ZACK GUZMAN: Again, coming into the holiday season, it's all very intense in the competitive set. And obviously a big day for Amazon. We'll see how it tracks. Always sets big numbers, almost constantly records. But I appreciate the insights there. Greg Portell, head of global consumer industries and retail practice at Kearney. Appreciate it. Thanks again.