Are retailers ready for Amazon Prime Day?
By Matthew Peck, CEO and founder, Market Rocket
The date for ‘Amazon Prime Day 2023’ has been confirmed, with the online giant announcing its shopping extravaganza will take place on Tuesday 11 July and Wednesday 12 July, with early deals already dropping.
This annual sale is a seasonal highlight for consumers, second only to Black Friday in terms of revenue and spend.
2022 was the event’s biggest yet, generating an eye-watering $12bn US, which was a 21% increase on 2021. Against a backdrop of rising bills, inflation rates, and an ongoing cost of living crisis, the UK consumer’s appetite for discounted bargains is expected to be as veracious as ever.
With retailers looking to add a mid-year bounce to sales and revenues, by offering huge deals and discounts on everything from TVs, laptops, tech, and Apple products to mattresses, fans, and home appliances, the stakes couldn’t be higher for Amazon Prime Day 2023.
But in a bid to avoid a race to the bottom, Matthew Peck, CEO of specialist Amazon agency Market Rocket, explains the value that Prime Day can add to brands, and how to avoid the pitfalls of discount selling.
“Amazon Prime Day is a fantastic opportunity for brands that want to get a real mid-season jump. If you normally sell a hundred units a day and can instead sell a thousand units over these two days, or even better in the weeks leading up to and following the event, then that’s obviously going to have a positive impact on your Amazon sales ranking, which will give you a great springboard for the second half of the year.
“Equally, if you have stock that you want to liquidate, whether it is new or old, then Amazon Prime Day represents a fantastic vehicle for that too.”
Top tips for Amazon Prime Day
But, before brands rush headlong into a discount war offering the lowest price point they can possibly manage, Matthew urges caution and encourages businesses to consider their product portfolio and then stock holdings.
“Brands need to ask themselves, is their product mix seasonal? Does it have a peak sales period at this time of year or when the weather warms up? How relevant is the product in summer? This, along with available stock levels – or the appetite for running them down-is quite relevant.”
“If brands run more aggressive, Amazon Prime deals that deplete stock levels to a point where they are unable to fulfill orders for a period later in the year, then there’s a real chance they are giving away sales that they would have been able to charge for. Also, if brands have a market leading position then using Amazon Prime Day to increase volume at the expense of margin can ultimately be detrimental.”
A Prime Time to Generate Revenue
But for those brands that have measurable demand, a position of difference in the market, and a set of products that can be Fulfilled by Amazon (FBA), Matthew describes Amazon Prime Day as a bountiful source of revenue that is ready to be tapped.
“At the halfway point in the year, Amazon Prime Day can represent a fantastic opportunity, but brands need to enter into it with their eyes open. Retailers should not be giving away sales at half price just because they think they need to because there is always the risk that they will then struggle to justify the full RRP during the next sales period.”
Get A Strategy Primed
Matthew explains that instead of a hugely discounted strategy brands need to conduct far more analysis to succeed during the Amazon Prime sales period.
“First of all, retailers need to seriously consider the category and the competitor products they are going up against. There are a number of methods available that can identify what offers or discounts other businesses might be running on Amazon. There’s a variety of different tools available, not least a review of what has happened previously; if competitors consistently employ a hard price drop then they are probably going to do so again this year.
“Brands need to be prepared for that and select the right Stock Keeping Units (SKUs) from their catalog to cope with a reduced margin, increased volume approach. Most sellers have more than one product available in multiple subcategories but it’s not really feasible to approach Amazon Prime Day by discounting an entire catalog so being strategic is critical.
“Then brands need the right ads, the right creative, and the ability to constantly monitor their performance to look for weaknesses or opportunities in their strategy and adapt accordingly. But critically they should also have a plan and a budget for the period directly after Amazon Prime Day to put advertising and spending in place to support the improvement in sales ranking they will have gained.”
Ultimately, the draw for consumers is the massive price drops retailers are prepared to make in order to steal market share. For this reason, Matthew is clear, above all else, brands need to understand the likely price points of the competition and the level of margin they are prepared to sacrifice in order to drive the volume of sales needed to make a return.
Says Matthew, “It all comes back to the price! For a consumer shopping on Amazon Prime Day, the single most important factor in their buying decision is the price of the product. Consumers are savvy, they will know how good the deal they are getting is. For sellers it has to be stock levels; there’s no point selling through all their stock in two days unless perhaps it is a discontinued SKU.”
While Amazon has created a whole campaign based on price, with so much direct competition on the page, sellers have to be competitive to be considered in the buying decision process. The trade-off is a potentially massive increase in sales volume but at a lower price point than a premium position with the knock-on effect that stock levels could remain low for some time after the sale. With all this to consider, are retailers primed for Amazon Prime Day?