This year’s two-day Amazon.com Inc. Prime Day sale is anticipated to be underwhelming, as many sellers are minimizing profit-eroding discounts due to rising costs.
The annual event, which takes place on Tuesday and Wednesday, has devolved into a summer clearance sale to make room for new merchandise before the holiday shopping season. Amazon is attempting to maintain consumer interest by promoting “millions of deals,” including some of the lowest prices ever on its own signature products, such as an Alexa-powered Echo Dot smart speaker for $17.99 and a 50-inch Amazon Fire television for $99.
Kristin McGrath, a shopping expert at the deal-tracking website BlackFriday.com, stated, “Amazon knows it must increase the discounts on its flagship products in order to attract consumers’ attention.”
Amazon launched Prime Day in 2015 in an effort to attract new subscribers willing to pay $139 per year for shipping discounts, video streaming, and other benefits. Amazon is able to strengthen its relationship with existing customers by offering them discounts on Amazon devices during the event. Prime memberships remained at approximately 172 million as of June 30, unchanged from six months prior, according to Consumer Intelligence Research Partners, indicating that a $20 price increase announced in February is discouraging customers.
This is the second consecutive year that merchants — who sell 60 percent of Amazon’s products — have been stingy with discounts. Tim Seward, owner of the Raleigh, North Carolina-based e-commerce consulting firm ROI Revolution, stated that Prime Day is primarily viewed as an opportunity to liquidate old stock. Approximately sixty percent of his 160 clients are offering Prime Day discounts, but the discounts are modest, he reported.
Due to rising costs, “many brands are offering smaller discounts than they did in 2021,” he said. It is still a great method for cleaning the house.
Prime Day will still attract consumers. According to research firm eMarketer Inc., spending on Amazon will reach $7.76 billion in the U.S. and $12.52 billion globally during the two-day event, a 17 percent increase from the previous year. Andrew Lipsman, an analyst, predicts that consumers struggling with higher gas prices and inflation will flock to Amazon in search of deals, especially on essential household items.
“Consumers still have money and are seeking deals, which should give Prime Day a boost,” said Lipsman.
Amazon also faces intensified competition from retailers like Walmart Inc. and Target Corp., which host competing sales. On Prime Day, consumers are accustomed to hopping from site to site in search of the best deals, and Amazon’s prominence has diminished. Chris Bauserman, chief marketing officer of Palo Alto, California-based CommerceIQ, which provides e-commerce software to more than 2,200 brands, including Colgate and Whirlpool, stated that brands once generated roughly three times as many sales on Prime Day as they do on a typical day. This year, the Prime Day sales increase is anticipated to be roughly double the average, he said.
“It remains a must-attend event,” Bauserman said. It is simply decelerating.
Chad Rubin, founder and CEO of Miami-based Profasee, a company that sells pricing software to online merchants, said that many Amazon merchants are skipping Prime Day to protect their profits. They reason that it’s too costly to offer deep discounts and then pay even more for advertising on the crowded site.
“Many of our customers simply do not participate,” he stated. “They want to protect profits, but you can’t do so by offering large discounts and paying for advertising on Prime Day,”
