Bargain hunters are expected to find Amazon.com Inc.’s two-day Prime Day sale underwhelming this year, with many sellers minimizing profit-eating discounts in an era of soaring costs.
Bargain hunters are expected to find Amazon.com Inc.’s two-day Prime Day sale underwhelming this year, with many sellers minimizing profit-eating discounts in an era of soaring costs.
The annual event, which runs Tuesday and Wednesday, is becoming just another summer clearance sale designed to make room for new items before the busy holiday shopping season. Amazon is doing its best to sustain interest by touting “millions of deals,” including some of the lowest prices ever on its own signature products, such as $17.99 for an Alexa-powered Echo Dot smart speaker and a 50-inch Amazon Fire television for $99.99.
“Amazon knows it needs to step up the discounts on its big landmark products to capture people’s attention,” said Kristin McGrath, a shopping expert at the deal-monitoring site BlackFriday.com.
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. Prime memberships have stagnated at about 172 million as of June 30, unchanged from six months earlier, according to Consumer Intelligence Research Partners, suggesting a $20 price increase announced in February is turning people off.
This marks the second straight year when merchants — who sell 60% of the products on Amazon’s site — have been stingy with discounts. Prime Day is mostly seen as an opportunity to clear out aging inventory, said Tim Seward, who runs the e-commerce consulting firm ROI Revolution in Raleigh, North Carolina. About 60% of his 160 clients are offering Prime Day deals, but the discounts are moderate, he said.
“Many brands are doing smaller discounts than they did in 2021 due to rising costs,” he said. “It’s still a great way to clean house.”
Shoppers will still show up for Prime Day. Spending on Amazon will reach $7.76 billion in the US and $12.52 billion globally over the two-day event, each up about up 17% from a year earlier, according to research firm eMarketer Inc. Consumers grappling with higher gas prices and inflation will flock to Amazon looking for deals, especially on household staples they’ll need anyway, analyst Andrew Lipsman said.
“Consumers still have money and are looking for deals, which should give Prime Day some pop,” Lipsman said.
Amazon is also grappling with amped-up competition from the likes of Walmart Inc. and Target Corp., which host competing sales. Shoppers are accustomed to bouncing from one site to another seeking the best deals on Prime Day, and Amazon’s prominence has faded. Brands once generated about three times as many sales as usual on Prime Day, said Chris Bauserman, chief marketing officer with Palo Alto-based CommerceIQ, which provides e-commerce software to more than 2,200 brands, including Colgate and Whirlpool. This year the Prime Day bump is expected to fall to about double usual sales, he said.
“It’s still a can’t-miss event,” Bauserman said. “It’s just decelerating.”
A lot of Amazon merchants are sitting out Prime Day to protect their profits, calculating that it’s too expensive to offer deep discounts and then pay even more for advertising on the cluttered site, said Chad Rubin, founder and CEO of Miami-based Profasee, which sells pricing software for online merchants.
“A lot of our customers just aren’t participating,” he said. “They want to protect profits and you can’t do that using the same old playbook of offering big discounts and paying for advertising on Prime Day.”
For all the latest Technology News Click Here
