Skip to main content

As retail goes, so goes Prime Day

Amazon Prime Day 2021 followed some broader trends in the emerging post-COVID-19 retail environment.

Amazon scheduled Prime Day 2021 at an interesting time – only eight months after the 2020 edition of Prime Day and several weeks ahead of the event’s traditional mid-July date, when more consumers are engaging in back-to-school and holiday shopping. The e-tail titan also moved ahead with its sales extravaganza even as the industry (and consumers) are still feeling the effects of the pandemic.

Early analysis of the results indicates that Amazon Prime Day followed at least two macro-trends which are having an impact across the industry. These include:

E-commerce keeps growing – at a slower rate
According to Adobe Digital Economy Index data, total U.S. online spend across retailers surpassed $11 billion during Prime Day (June 21-22). This represents 6.1% growth compared to $10.4 billion in total Prime Day 2020 online revenue. In contrast, total Prime Day 2020 spending represented a sharp 45.2% increase from the estimated $7.16 billion global sales performance during the 2019 edition of Prime Day. 

A moderation in year-over-year growth following the dramatic COVID-19-fueled jump in online spending during 2020 seems to be the overall direction e-commerce is heading. The new 2021 U.S. Online Retail Forecast from FTI Consulting Inc. predicts U.S. online retail sales will rise 13.5% to $865 billion in 2021, following 2020’s 32% increase. And data from Brick Meets Click and Mercatus reveals that U.S. online grocery sales actually fell 16% from May 2020 in May 2021, but remained 3.5 times higher than pre-COVID-19 levels.

Weak links in the supply chain
Several experts told Chain Store Age that continuing supply chain disruptions caused by COVID-19 would have an especially pronounced impact on third-party Amazon sellers during Prime Day 2021. 

“From important shipping materials to labor shortages, we’ll likely see some (supply chain) backlogs,” said Andrea Wasserman, head of global commerce, Verizon Media. 

“There are several factors that contribute to (performance variability),” said Ben Hartwell, Perch category manager. “But the main two are product seasonality and unreliable supply chains, which have forced us, and virtually all third-party sellers, to be more selective with our promotions.”

“2021 has presented sellers with a myriad of challenges ranging from logistics headaches and skyrocketing raw material costs,” said Jon Elder, founder of Black Label Advisor. “For many sellers, Amazon has severely limited their inventory capacity, resulting in cancelled deals.”

A recent SAP survey indicates 35% of consumers said their favorite retailers are still dealing with out-of-stock issues. Close to half (48%) of respondents have changed buying habits due to the pandemic, such as buying more items in bulk or restocking household items earlier than before. 

On the retailer side, the issue is severe enough that the NRF recently sent a letter formally asking President Biden to help fix supply chain disruptions which have “added days and weeks to our supply chains, (as well as) led to inventory shortages impacting our ability to serve our customers.”
 

More Blog Posts in This Series

X
This ad will auto-close in 10 seconds