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Industry News

Published on July 9th, 2019 | by The GC Team


Amazon Prime Day(s) could generate $6.7 billion this year

This year, Amazon has extended its “Prime Day” to two days (15-16 July.) This is expected to bring in some $6.7 billion for the global online retail giant, but its major objective is to win new Prime members, and it’s prepared to lose money on some Prime Day deals to sign up more Prime customers, who spend twice as much as non-Prime members on the site.

According to e-commerce delivery specialist ParcelHero, sales could rise by 60% across the Prime Days, but the heavy discounts on offer may put the profits of smaller Amazon marketplace traders under pressure.  

David Jinks MILT, ParcelHero’s Head of Consumer services, says: “The exact numbers are not always released by Amazon, but our research shows a definite pattern of sales growth that is likely to be boosted by the switch to two days. Our research reveals that, back in 2015, the first Prime day earned the company a Prime cut of around $0.96bn; in 2016 that rose to $1.52bn; which soared to $2.41bn in 2017, and reached around $4.19bn in 2018.

“That’s an average yearly rise of 60% in sales on the day; and if the event continues its meteoric growth, we think $6,7bn is a likely sales figure for the two-day promotion.” However, while Amazon will achieve its primary objective of gaining more Prime members (last year more new members signed up than on any day in the online trader’s history), the site’s “hard-pressed marketplace traders” might feel the pinch.

“Amazon’s goal for its Prime Day events,” says Jinks, “is not short-term profits but members, [who are] lured in by low prices and stay because of the free two-day deliveries, one day delivery options and other perks such as Prime Video. Amazon can afford to take big hits on its own products. The biggest sellers on the day are Amazon’s own Fire TV Stick, Echo Show and Echo Spot offered at literally Fire sale prices. But for small online traders such discounts are not sustainable. In 2015 marketplace sales accounted for 52% of all Amazon Prime Day sales, by 2018 that slice rose to 62%. Amazon says its marketplace traders sold $1bn of items last year – but in order to attract sales on the big day most items will have been significantly discounted; and how much of that $1bn translates to actual profits is debatable.

“Even at significant discounts, most marketplace members will probably still take part; and meanwhile eBay has its own ‘Crash Day’ sale also booked for 15 July to help its traders grab their slice of this now traditional midsummer madness – particularly if the Amazon site crashes like it did last year. And many more online retailers will also be jumping on this prime-time event.”

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