ChannelAdvisor Scot Wingo By Scot Wingo

Amazon Prime Day Wrap-up…

Yesterday, July 12, 2016 was the second annual Amazon Prime Day.  Amazon started Prime Day last year to celebrate their 20th birthday and they are continuing the sales event this year (and we assume for the foreseeable future.   E-commerce has a rich heritage of ‘invented’ holidays.  The oldest is Black Friday from the traditional retail world.  Shop.org created/coined Cyber Monday.  Alibaba created Singles Day in China, etc.   What’s most unique about Prime Day is that it is in the Summer (mid July for the last last two years).

ChannelAdvisor SSS results for Prime Day

This table details the results for Amazon Prime Day 2016 compared to Prime Day 2015:

prime_day_results

As you can tell, based on our data, the US was a bit flat/down to last year and then we saw the most uptick in Europe led by Germany (DE) at 60% y/y growth, France (FR) at 15% y/y growth and then Italy and the UK at 12%.

What Amazon said about Prime Day

Amazon has made a couple of public statements about Prime Day now including:

  • Prime Day 2016 was 60% larger than 2015 globally and 50% more in the US.
  • The discounts (savings) this year on average were 2x last year.
  • 2016 Prime Day was the largest day for Amazon devices ever.  Amazon ran a $50 off Echo’s ($179->$129) that seemed to have deep depth as it lasted through the day and was ticking up (or down) only 1-2% an hour.
  • Record Prime Day (which implies bigger than last year which we would expect)
  • Amazon reported (via Bloomberg) third party sales on Prime Day were up 30 percent compared to last year, fueled largely by international demand.
  • Amazon published an interesting YouTube video showing the fulfillment side of the business highlighting what Prime Day was like in the FCs:

Why Does ChannelAdvisor SSS under-report Prime Day?

So ChannelAdvisor SSS was flat/down and Amazon reported 50% in the US – what gives?

As a reminder, there are two ways products are sold on Amazon – 1P or first party where Amazon is the retailer and 3P, or third party, where a third party seller or what Amazon calls ‘sellers’ or ‘small businesses’.  While Amazon expanded the number of 3P offers this year, they are still the minority of both the number of deals that are run as well as the transactional volume or GMV.  At ChannelAdvisor, the bulk of our GMV flows through the 3P system, or sellers, so we don’t ‘see’ the 1P sales.

What we report is Same Store Sales (SSS) and the reason we do that is for customer benchmarking.  SSS looks at customers we had on Amazon a year ago.  There are customers added over the course of that year and they are NOT included.  This mix of customers that are included and not included in our SSS data impacted the comparison (Amazon does not report SSS as they are not benchmarking for sellers) and is a driver for why ChannelAdvisor SSS is flat/down compared to Amazon’s 30% increase y/y.

Finally, another interesting change we noticed this year is the search results pages.  In past years, clicking on a deal for say a Samsung TV would take you to search results that featured the Prime Day deal, but other Samsung TVs would be listed. This year it appears a filter (like the ‘only show me Prime Eligible items’ filter) for Prime Day specials was applied and thus only Prime Day deals were shown.  This was an improved customer experience, but decreased the amount of ‘search’ spill over from Prime Day deals to non designated Prime Day deals lifting the sales of non-Prime Day offers.

What changed this year?

I’ve been an Amazon watcher for the last 15+ yrs and it is always amazing to watch the Amazon ‘machine’ take something like this and materially improve it cycle over cycle.  “Bugs” from Prime Day 1.0 were not only fixed this year, but smashed and turned into awesome new features.  Here are a couple of things we noticed:

  • Wider and deeper deals- Last year the best deals (large discounts on electronics) were launched in the AM and burned out quickly, that caused a lot of frustration with customers.  This year Amazon a. spread the deals out more evenly through the day and b. the deals seemed much “deeper”.  For example, the Amazon Alexa deal was $50 off and the ‘% sold’ only ticked 1-2% an hour so it lasted all day.  Amazon has reported this was a record day for Alexa, so they must have had very very very deep inventory on these.  We know from 3P deals, they asked for much deeper quantities than past years.
  • Alexa – This year Amazon had 5-10 deals that were available only through Alexa and featured an additional $10 discount which was a clever way to simultaneously reward Alexa ownership and activated existing Alexa owners on how to order via the device.
  • Promotion – Amazon really promoted Prime Day at an entirely different level than last year.  TV spots, digital and my personal favorite – advertising Prime Day on the Prime packing take 5-10 days before the event.
  • Prime Now – APN has a big enough footprint (reaching 80% of consumers based on some Wall St. reports) that Amazon pushed several Prime Day deals through that platform for the first time this year.  Like the Alexa promotion, this is a huge benefit to Prime membership and Prime Day is a great way to introduce and activate this Prime feature.

The only negative we saw is that early in the day in the US site some folks were reporting having problems ‘adding to cart’.  It seems like Amazon addressed this early and it didn’t impact the day’s results or consumers enthusiasm at all.

Prime Day ‘Pin Action’ at Other Retailers

This year many retailers ran their own specials on Prime Day in the hopes of catching some ‘Pin Action’ from the Prime Day excitement.  Walmart ran a ‘5 days of free shipping’ promotion, JC Penney ran a “Penney Palooza”, and eBay was the most snarky with their “Exclusives for Everyone” and “No Membership Required” deals.  Looking at our SSS, we did not see any evidence of the marketplace components of these retailers and eBay benefiting from Prime Day.

Conclusion

The second annual Prime Day was a huge success.  Growing a holiday that was already about the size of Black Friday  60% globally, 50% domestically and 30% for third party sales in the middle of July is truly impressive and something that only could be done by Amazon with their Prime subscriber base, private label devices and infrastructure.

This blog post was written by Scot Wingo, Executive Chairman and Co-founder of ChannelAdvisor Corp.

 

 

 

 

 

 

 

 

 

 

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