Prime Day Uncertainty a Dilemma for Amazon Sellers | E-Commerce
By Jack M. Germain
Jul 2, 2020 4:00 AM PT
One of the e-tail world’s most pressing questions is: When will Amazon have its Prime Day sale this year?
Perhaps a better question is: Will Prime Day happen at all?
Amazon so far is not telling. Though usually reliable insider sources hinted that it may occur sometime in September.
Amazon canceled Prime Day, which is traditionally scheduled for July, in the midst of the COVID-19 pandemic — when consumers were locked down in their homes and most stores and businesses were shuttered, or trying to function with in-person skeleton crews and support staff working from home.
If Prime Day 2020 takes place in the fall, the biggest deal days of the e-commerce industry could happen within several weeks of each other. You know the other ones: Black Friday on Nov. 27 and Cyber Monday on Nov. 30.
Amazon Sellers in a Quandary
SupplyKick provides consultation and strategy services to Amazon sellers — and is a top 500 seller on Amazon with hundreds of category-leading brands. It posted a 170 percent growth rate over the past three years and has appeared on the Inc. 5000 list for three years running. The company recently hit a US$100M in sales milestone, Vanessa Ruminski, VP of partnerships for SupplyKick, told the E-Commerce Times.
For SupplyKick’s brand partners, Prime Day uncertainty could mean they will be forced to choose between Black Friday and Cyber Monday, and only participate in one or the other. That might be these sellers only way to balance deep discounts and still make sure their offers are compelling.
This means fewer opportunities for discounts for consumers. For SupplyKick’s brand partners and other allied merchants, choosing the right shopping bonanza may win or lose the battle for financial recovery, according to Chris Palmer, CEO and founder of SupplyKick.
“We’ve seen substantial increases and decreases among brands on our platform. It all depends on the needs of the suddenly home bound workers,” Palmer told the E-Commerce Times about the sales volumes they’ve experienced.
Sales Ebb and Flow
One of SupplyKick’s partner brands makes party supplies. Right after COVID-19 accelerated in March, that partner company’s sales were down by 90 percent due to the loss of large gatherings and graduations.
Other brands had product sales go through the roof. One brand sells gaming chairs that makes really comfortable seats, noted Palmer, to show the range of disparity.
“That type of product was in high demand for those consumers looking to spend time at home game playing or working from home. In this time period, the eighth most searched product on Amazon was gaming chairs. It was the most demand they had ever seen,” he said about the ironies of remote selling.
What drove that particular product sale? Circumstances of being at home, or the inability to buy from a store something the buyers were going to purchase anyway?
There’s no doubt that with all the shopping malls being closed at this time, traditional brick and mortar outlets were not available. So that was a factor. Another factor was the added time on their hands being stuck at home. Then there was a need to upgrade their home offices.
“So it was a combination of factors, not a one or the other,” Palmer said.
How Does Prime Day Fit In?
The big Amazon sale days — if and when they occur — will fall in the midst of changes in consumer buying patterns and outlets now that things are opening up, noted Palmer.
Retail sales in many states went to zero for a time. So, there is definitely going to be a resurgence in purchasing locally. Still, among consumers is a growing recognition about protecting their health, according to Palmer.
That will mean a resurgence of in-person shopping will be slow and steady. But stores will be open for business, even if how business is done is not the same as it was.
Retail merchants looking to rejuvenate their sales can get a big head start by participating in the Prime Day event. They can also jeopardize gaining a stronger foothold in Amazon’s marketplace if they do not sell on Prime Day, Palmer explained.
“Brick and mortar shops and mall operators that had minimal e-commerce are in overdrive now trying to figure out how to make up for all the lost revenue. How do they adapt to the times knowing there are millions of people who prefer to go to a website instead of a store first?” he reasoned.
New Marketplace Options
The digital ecosystem is now much larger than predicted several months ago. It will only continue to grow moving forward, according to Michael Lagoni, CEO of Stackline. It is more nuanced and complex with the rise of direct-to-consumer.
“The current DTC, e-commerce competitive landscape is going to be completely transformed,” he told the E-Commerce Times.
The Prime Day event is not very notable from the vantage point of third-party vendors, added SupplyKick’s Palmer. It comes down to people looking for deals on certain items.
“But for the normal stuff, I think Amazon is thinking volume sales,” he said.
Fall Prime Day Fallout
E-commerce consumer spending is slower during the summer months compared to other seasons. Prime Day has always been a way to amplify revenue for Amazon and merchants during this slower sales period. For brands, it is a way to unload their spring and summer merchandise to prepare for the next season, according to Ben Parr, co-founder and president of Octane AI.
“Unlike previous years, the summer months have seen higher-than-average e-commerce sales. Amazon’s sales are incredibly strong right now. They do not have enough people to fulfill the supply requests because their sales are so strong,” Parr told the E-Commerce Times.
Amazon deciding to push Prime Day will not break their system or their sales. They already are in great shape without it. But that is not true for potential participants, he countered.
There are categories that will be adversely affected by postponing Prime Day. If you are selling essential products, then you do not need Prime Day because you are already doing well. But if you are in a category not doing well, like travel, then Prime Day may have been really important for you for your revenue, Parr explained.
“The longer Prime Day gets pushed out, the longer these categories will suffer. These non-essential categories are the ones that will continue losing during the pandemic,” Parr predicted.
No Way Back
SupplyKick’s Palmer sees brick and mortar sales as here to stay. But he does not see consumer behavior going back to the way people used to buy.
“The majority of the way people buy things is changing. The curve for adoption to e-commerce sales has got to be structurally altered due to COVID-19,” he insisted.
Palmer also does not think the marketplace is going to go back to the normal way that people shopped before the pandemic. Instead, he sees a huge increase in remote ordering and delivery. For some industries that may become optional. For others, like restaurants, it is going to become mandatory if they want to survive.
“I think people are not that naive to think that they can rely on the same brick and mortar sales level. Take, for instance, the sporting goods stores. They are all actively pursuing an online presence or plan to do so in the short term,” he cited as an example.
Not One Way for All
Not every industry can adapt to a strict following of online first, retail store later, agreed Palmer. But every industry has to adapt.
The fashion industry is a good example, he suggested. People want to see fashion and beauty products up close, and touch them, and try them on.
To that end, he thinks consumers may eventually see a growth in virtual reality apps matched to a stored user profile to assist mimicking an in-store experience.
“We are nowhere near ready for that widespread adoption yet. Before COVID-19 it was maybe five years out. But the rate of innovation now is higher than it was before the pandemic. We are seeing more acceleration taking place,” Palmer said.
Thus, a fall or winter Prime Day sale event may leave too many potential vendors out in the cold. The typical products many vendors would have offered as deals are summer seasonal.
“The change in scheduling for Prime Day may be an issue for some brands who do not have a replacement product for a fall attraction,” he noted. “I can see many of our brand partners not participating in Prime Day as a result. The problem brands face is how to adapt and evolve. They do not want to forget who they are as a brand,” he warned.
On the other hand, the e-commerce marketplace is seeing a huge presence of vendors transitioning from physical storefronts. New entrants are going to take advantage of every chance for sales they can get.
“There are a lot of companies sitting on inventory built up over the pandemic shutdown,” mused Palmer.