Amazon expected to hit new sales record
E-commerce giant Amazon (AMZN) likely generated a record $1 billion in sales on Prime Day, a "holiday" the company invented three years ago to celebrate its twentieth anniversary. That would represent a jump of more than 50 percent from last year, according to Wall Street analysts.
If the forecasts are accurate, Amazon's Prime Day will rival some of the biggest online shopping days of the December holidays, including Cyber Monday, which comScore estimates generated nearly $2 billion in sales last year, and Black Friday, which netted $1.3 billion.
Those promotions are dwarfed by Alibaba's "Singles Day," which generated sales of $18 billion during last year's event. Amazon doesn't disclose sales figures though it did report a 60 percent increase over lat year's Prime Day along with record sign-ups for its Amazon Prime service, which provides free two-day shipping. Amazon Prime usually costs $99 annually but was offered for free during Prime Day. The 80 million or so members, who also get access to Amazon's original content, made 50 percent more purchases than they did last year.
Still, Amazon Prime Day, which ended yesterday, looks poised to keep growing. This year's event featured "hundreds of thousands" of deals, according to the company, an increase from 2016 when the company offered more than 100,000 offers. For the first time, Amazon this year also offered Prime Day discounts in China, India, and Mexico.
Prime Day customers bought 3.5 million toys, more than 200,000 dresses, 200,000 light bulbs and more than 50,000 TP-Link Smart Plus, according to the company.
"It does maybe pull some demand forward for back-to-school and the holidays, but most importantly it allows Amazon to test their systems to be prepared for the upcoming holiday season," JMP Securities Analyst Ronald Josey said. "The challenge that any website has, particularly Amazon, is figuring out what is the best deal for you as the individual. … That's the hardest thing to do."
Amazon has generated additional sales through "sneak peaks and deals" it began offering in late June, along with offers available via its Alexa digital assistant that will last through July 17th. Among the best deals, not surprisingly, were on Amazon's own electronics, such as the Amazon Echo smart speaker. The Echo is priced at $89.99, a 50 percent discount. According to BestBlackFriday.com, that's $50 lower than what it sold for on Black Friday of 2016 and $40 cheaper than last year's Prime Day. Not surprisingly, Amazon reported record sales for its devices.
Prime Day also allows Amazon to test its logistics capabilities months ahead of the critical December holiday season, while creating a shopping event during the otherwise slow summer period. Meanwhile, the event drives awareness of Prime media and entertainment offerings including Amazon Music Unlimited and the Audible audio entertainment services, according to JPMorgan analyst Doug Anmuth.
"While the single-day numbers are likely to be impressive, we believe the true benefits of Prime Day are more meaningful across [Amazon's] ecosystem," he wrote in a note to clients.
Among the biggest deals this year were 50 percent off select Callaway Golf Clubs, 35 percent off Graco car seats, strollers and other gear, and a 47 percent discount on a 6-quart programmable Crock Pot. Prime Day items that sold out Tuesday included the Black & Decker Waffle Maker, Tribe TRB Wireless Bluetooth 4.1 Fitness Headphones and the Gorilla Kids Gym, according to the Amazon website.
For Amazon, the payoff from Amazon Prime Day also comes in the relationship it can forge with customers.
"I would say about 80 percent of it is people who aren't necessarily thinking about wanting to buy something -- they are just looking around for a good deal," said Gene Munster, a managing partner with Loup Ventures. "This is just spurring demand, spurring consumer spending as people get more aware of Prime Day. In years to come expect them to plan their purchasing around it."
