Amazon's Late Prime Day, Now in October, Set to Fuel Record End to Year
By Sebastian Herrera
For years, Amazon's annual Prime Day shopping extravaganza has
pulled in sales during the lull of summer shopping. This year, it
could help the company shatter its fourth-quarter earnings
Amazon.com Inc. early Monday confirmed that Prime Day will take
place on Oct. 13 and 14, marking the second straight year the
company has opted to extend the sales period to two days. While
Amazon doesn't disclose its Prime Day revenue, some analysts
estimated it was more than $7 billion in 2019. Amazon said it sold
more than 175 million items during the event last year, surpassing
its sales for the previous Black Friday and Cyber Monday
While Prime Day has become a promotional tool for Amazon, the
sales period is influential in the retail industry and funnels many
customers into Amazon's Prime membership. Walmart Inc., Target
Corp. and many other rivals typically offer their own discounts
during the event to counter Amazon's effort.
Amazon, which has more than 150 million Prime members
world-wide, has added roughly 50 million members since 2018.
Members pay $119 a year for free shipping on many items, discounts
at Whole Foods Market, video-streaming content and other services,
and receive access to all of the deals during Prime Day.
The company first rolled out Prime Day in 2015 to juice up sales
during the typically slow summer period. Amazon this year pushed
the event to later in the year after it became overwhelmed with
customer demand during the onset of the coronavirus pandemic.
In the spring, an Amazon executive expressed concern in an
internal company email that the delay to Prime Day had led to an
"overhang" in devices of five million units. Amazon would have to
sell the devices at a discount that would cost between $100 million
and $300 million, according to the memo, which was reviewed by The
Wall Street Journal.
Retail analysts expect Amazon to have a big showing in the
fourth quarter because of the combined Prime Day and holiday
shopping period, as well as a general consumer shift to e-commerce
in the pandemic. The holiday period typically provides retailers
with their highest sales of the year. Amazon consumer chief Jeff
Wilke said Prime Day will be an "opportunity for Prime members to
get their holiday shopping done early." That could potentially hurt
competitors but also undercut some of Amazon's holiday sales.
Amazon "will leverage Prime Day as a 'test run' to manage yet
another surge in demand ahead of an unprecedented holiday
situation," analysts at investment firm Cowen Inc. wrote in a
research note. Cowen said Amazon is expected to expand its
fulfillment square footage by about 50% this year to meet the
uptick in demand.
The pandemic has given Amazon record quarterly sales and
accelerated its growth. Amazon made $88.9 billion in sales in its
April through June quarter. The company is on pace to easily blow
past the $280.5 billion it made in sales last year.
The retailer has ramped up hiring at its package-fulfillment
centers in anticipation of the fourth quarter. The company this
month said it would hire 100,000 additional hourly warehouse
workers in the U.S. and Canada, adding to the hundreds of thousands
of workers it hired earlier this year. It has also implemented
tighter limits around the amount of inventory third-party merchants
can hold at its U.S. warehouses for the holidays.
Amazon has faced a growing amount of competition around Prime
Day. During last year's event, roughly 200 retailers also offered
deep discounts during the period, according to online coupon
tracker RetailMeNot. Among the typical players are Best Buy Co. and
Walmart, which this month launched its own subscription service
named Walmart+. Priced at $98 a year, membership includes free
grocery delivery, a discount on gas from Walmart parking lots and
the ability to check out via a mobile phone in stores.
Amazon has tried to add enticements to Prime Day for customers.
Last year's event included a concert from Taylor Swift and an
exclusive that began during Prime Day to sell a new beauty product
by Lady Gaga. The company said this year "celebrities and
influencers will be joining live to surprise customers with
exclusive experiences," without providing further detail.
Amazon said it would be offering discounts for many of its most
popular products, including its Echo smart speakers and Fire TV
products. One sale includes two Echo Dot devices for $39.98. The
company on Thursday unveiled several new devices it plans to
release that included a redesigned Echo lineup, car-alarm system
and drone security camera.
Write to Sebastian Herrera at Sebastian.Herrera@wsj.com
(END) Dow Jones Newswires
September 28, 2020 01:15 ET (05:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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