Photo: RetailWire
Amazon follows record-setting Prime Day with Holiday Dash Deal events
Amazon.com is coming off a record-setting Prime Day performance and following it with Holiday Dash Deals, an ongoing sales promotion that the e-tailing giant says will deliver “Black Friday-worthy” savings to its customers leading up to Christmas.
Shoppers on the site can go to amazon.com/events/Holidaydash to discover current and future deals across a wide variety of product categories, including tech devices by Amazon and other brands, computers, apparel and accessories, food, health and beauty, products for the home, toys and more.
It’s not clear from Amazon’s description of the event if Dash Deals represent a significant increase in promotional activity over past holiday seasons. (RetailWire has reached out to Amazon for clarification on this issue and will report back if an update is given.)
It also remains to be seen whether this week’s two-day Prime Day event will provide a momentum booster for Amazon’s seasonal traffic and sales or if it will in a significant way cut into customer purchases that would normally come in November and December.
Either scenario could prove problematic for Amazon, with the former putting pressure on the company to safely and efficiently meet high demand, something it struggled with earlier in the year as the novel coronavirus pandemic upset life and retailing in America.
Amazon has engaged in ramped-up hiring efforts in recent months to assure it has the human resources required to meet demand. That said, warehouse workers have expressed concern about safety protocols as they rush to meet a surge in holiday orders. Bloomberg reports that employees at an Amazon warehouse in Staten Island, NY, have sued the company, alleging that managers at the facility have reinstituted productivity quotas despite a promise by the company not to do so in order to mitigate the risks of COVID-19 transmission.
Hospitals have reported an increase in cases of the virus in 44 states and Washington, D.C. over the past week, according to a Washington Post report. Confirmed cases of people infected with the virus passed 64,000 yesterday, the highest one-day number going back to July. More than 216,000 Americans have died.
Amazon is not the only retailer looking to spread out its holiday deals. Walmart, this week, announced “Black Fridays For Days,” a series of three promotions intended to drive sales and safely space out traffic in the chain’s stores and on walmart.com.
- Holiday Dash – Amazon.com
- Shop Now, Save Now—Amazon’s Holiday Dash Event Starts Today with Black Friday-Worthy Deals Dropping Daily – Amazon.com
- Amazon Prime Day 2020 Marked the Two Biggest Days Ever for Small & Medium Businesses in Amazon’s Stores Worldwide – Amazon.com
- Amazon workers say they’ve been hassled to meet Prime Day quotas, says Bloomberg – ZDNet
- U.S. surpasses 64,000 new coronavirus infections for first time since late July – The Washington Post
- Walmart Announces “Black Friday Deals’ For Days,” A Reinvented Black Friday Shopping Experience – Walmart
Discussion Questions
DISCUSSION QUESTIONS: What impact do you expect Prime Day and promotions run by retailers this week to have on their Christmas season sales? Do you expect the resurgence of COVID-19 cases to have a significant dampening effect on holiday revenues?
Poll
BrainTrust
Neil Saunders
Managing Director, GlobalData
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Prime Day and the aggressive, early holiday promotions in general, will pull holiday sales forward and spread out the activity over a longer period of time. Given the economic headwinds, I doubt that the sales pie has gotten any larger, so I don’t see the early promotional activity driving a lot of incremental sales when the final numbers are tallied at the end of the season. The impact of COVID-19 is still being felt, and a resurgence will further dampen sentiment and sales.
There is no doubt that Prime Day is used by many consumers as a source for some of their holiday purchases, just like retailers’ holiday promotional sales. To understand the impact of Prime Day on Amazon’s total Christmas season sales we should compare total sales during the whole holiday sales period (October through December) to previous years’ sales. For shoppers that are still unemployed due to COVID-19, it will reduce their holiday spending but the social distancing and potential reduction in physical gatherings for holidays should not have a significant impact on holiday buying. If anything, the holidays are a bright spot in a horrible year and so gifts may lift people’s spirits.
This year the promotional calendar has changed. The holiday is starting earlier than ever and spend is going to be more spread out across the fourth quarter. This is both a good and bad thing for retailers. This year, the good is that it will hopefully avoid crushes and crowds in stores and will allow retailers to cope with fulfilling online demand. The bad news is that it is training consumers to expect early and continuous promotions, which isn’t particularly great for margins.
I don’t believe we will see holiday sales increase this year – they will be spread out over more time. We will see a spike in October sales (which typically is a quiet retail month). November could actually maintain as retailers are offering deals throughout the month – there will just be a significant drop on Black Friday weekend. I would predict December will be softer than previous years. Hopefully the amount of last minute shoppers will shrink due to the offers being offered for months in advance.
Prime Day and other early retail promotions can only help mitigate the downside risk that retailers face this coming holiday season. The more sales a retailer can pull forward the better. And of course the resurgence of COVID-19 will have a dampening effect. Even if sales were to comp even, the shift to e-commerce will be dramatic. And I highly doubt sales will comp even given the current unemployment level and the lack of progress on providing additional stimulus. Are customers thinking far enough in advance to offset what could be a difficult shopping environment come late November and December? Probably not, so how this season ultimately plays out is still a head-scratcher at this point.
Good points Jeff. It’s also worth noting that even if online sales increase to offset some of the sales lost in-store, the profitability of online sales is significantly lower. So even a flat comp (which many retailers would take right now in a heartbeat), will look much worse on the bottom line.
Thanks Mark. And then there’s that pesky return factor in e-commerce transactions. The rush to e-commerce can be a rush to lower profitability. There’s a big opportunity in figuring out the returns issue.
Under the current and forecasted economic situation for consumers we can easily say that a dollar spent today is one less dollar spent in November or December.
On the positive size, Prime Day may have helped that dollar go farther than it might as we close in on the holidays. For Amazon, they have that dollar in the bank and it isn’t going to the competition. And operationally, it will smooth out the fulfillment challenges of the holiday season. Quick enough to have an effect on the season.
The COVID-19 reassurance will have little effect on total shopping. The issue is the economy and how much people have in their wallets.
Q4 has evolved into a non-stop shopping extravaganza.
Notably, the extended sales season conditions us to check for deals online (vs. in stores), especially as COVID-19 risks grow. Earlier promotions will relieve strain on the supply chain and help more consumers receive holiday gifts on time.
Deal-seekers and last-minute shoppers will spread out consumption all quarter, boosting holiday revenues to new heights. E-commerce sales in particular will soar as online shopping emerges as an ingrained habit in Q4 and beyond.
Amazon numbers focus on third-party sellers. This suggests Amazon’s own numbers weren’t super growth events. There is a shift and the Prime Day impact has been substantially muted. The timing and dispersion of promotions over the seasons will have limited impact. This trend has been ongoing for several years with less importance placed on Black Friday, Cyber Monday and yes, even Prime Day as a single day event. We’ll see that promotions will be distributed over longer periods. Retailers have a whole season to sell – but consumers are more cautious with their cash. Holiday revenues can actually see a bump based in specific categories. Sectors such as grocery, healthcare, toiletries and personal space become more critical for the end of this year and addressing the next wave of this abysmal pandemic.
Another explanation for Amazon’s emphasis on marketplace sellers is the antitrust scrutiny the company has been under. Playing up wins by the little guys seems like good public relations now when critics in Congress and the administration find something in common to complain about.
In all my 40-plus years in retail, one truth continues to ring true in my mind: in bad times you have to buy sales increases, and in good times you carefully enjoy sales increases. So the purchase of sales dollars in full force begins, with maintained margins always in peril, especially in this COVID-19 environment.
Amazon moved early to capture market share for the holidays. I think its a genius move, they got the publicity because they went big and they went first.
As we move into November (the more “traditional” holiday selling season) and more retailers start their promotions, it’s going to become increasingly difficult for any one retailer to stand out in the crowd. Black Friday gave shoppers a day to focus on, and all the retailers lined up their offers for comparison. Now, with great offers spread out over eight weeks, getting consumers attention for your brand I think is going to be tough. I expect to see some really innovative marketing this year.
Given the growth of e-commerce and the need to socially distance within stores, it makes sense to pull sales forward to spread out holiday demand which is what Amazon and several other retailers have chosen to do. The bad news is that pulling sales forward won’t necessarily increase total holiday demand. Although there is a lot of uncertainty and the total “size of the pie” is yet to be seen, a pull ahead approach should help retailers by giving them more time to manage their supply, demand and pricing to make adjustments as needed. This may be a key component that helps some retailers transform an uncertain season into a successful one.
With Prime Day and early holiday promotions run by retailers, we can expect to see a spike in YoY sales for October and possibly November, but a decline in December as consumers are not rushing to get the best deals at the end of the year like last year plus with COVID cases on the rise, overall holiday spending can be hampered. We do need to compare the total overall holiday sales YoY to see the impact of these early promotions.
I believe that Amazon’s Prime day is, this year, the start of holiday shopping in a big way. It may have already started before this, given the overall environment this year. That makes Amazon the temporary winner. That does not mean that Walmart, Target and others wont have “wins” as the season plays out, but I think this year more than ever, Black Friday and the traditional shopping time is less important.
I do think that sales overall for the season are going to be pretty flat and that all the hubbub this week will only help to support that flat level — a LOT of people are furloughed or out of work.
Also, I think that from experience over the last 5 months, people know that supply and delivery is somewhat interrupted or disturbed, so I really think a lot of people are going to be early on their purchases to avoid “lateness” that may cause a holiday problem.
And I believe that holiday shopping this year is owned by online, with in store a last minute option or a small part of a lot of customers’ experience for 2020.