by Pete Andrews

This report is first in a three-part series recapping Prime Day 2018.  Expect the 2nd and 3rd installments in the coming weeks, covering Amazon Category Performance and Top Prime Day Performers respectively.

Prime Day 2018 was nothing short of a huge success. To simply say that Prime Day is growing every year would be a huge understatement – it’s expanding even beyond the most optimistic forecasts. In what has now become an annual tradition, Amazon once again broke all previous sales records during this year’s event. Prime subscribers flooded the site to take advantage of nearly two million unique deals on offers worldwide, purchasing a staggering 100M items.

And there is one more way in which Prime Day is growing every year: it’s getting longer. Despite its name, Prime Day has grown in duration every year. In 2016, deals rolled out at 9pm the day before. Last year, the event lasted 30 hours. This year it expanded again, beginning on July 16 at 3pm EST and lasting until July 18th at 3am EST, for a grand total of 36 hours.

At this point, data is still coming in about Prime Day sales and brand performances around the world, but based on what we’ve learned so far, we want to share our initial insights on the 2018 event, which we think brand marketers will find very valuable.

Beyond Expectations

We are on record predicting that Prime Day 2018 would once again exceed expectations – but even we didn’t think that it would take Amazon by surprise.

15 minutes into the event, Prime members began experiencing intermittent outages, varying in severity depending on their location. Customers were hit the hardest in the coastal areas of the United States, where outages could last 75 minutes or more. Based on sales volumes during Prime Day 2017, we estimate that Amazon lost approximately $1.2M per minute in sales during the outages.

This was not a total disaster, however. Amazon quickly realized their systems’ inability to keep pace with projected demand and took measures to correct the problem. For those manufacturers impacted by the outage, Amazon re-ran the impacted promotions the following day. Furthermore, the press coverage surrounding the outage, by communicating the massive consumer interest in Prime Day, seemed to generate even more hype, causing sales to accelerate even faster. Together, these factors elevated the buzz to a whole new level, and we will see the full impact of that publicity next week when we have all the sales numbers in.

Deal Volume

This year, the total numbers of deals on offer increased by 37% compared to 2017. Of the roughly 1.9M promotions globally, third-party (3P) marketplace sellers were responsible for more than half, or 54% of the total deal count – the same proportion as 2017, which reveals that 1P and 3P engagement in Prime Day is growing at the same rate.

We also saw a noticeable increase in deals spanning multiple items and colors, with 84% of discounts being applied to multiple variations of the same item, as opposed to only 67% last year. Brands are choosing to offer consumers more choice even during promotions, which suggests that in previous years discounted only one product variation was less effective than giving shoppers multiple options.

Prime Day 2018: Initial Insights

 

The biggest Prime Day growth is taking place outside of the U.S. This year nearly 60% of Prime Day deals originated on Amazon’s international marketplaces: the U.K., Germany and Japan together capturing 36% of total deal volume; Japan, Mexico, Italy, and Spain each more than doubled their deal volume compared to 2017.  The pie chart above illustrates the inroads Amazon is making with customers in these markets, as well as the growth potential that still exists.

Discount Levels

When looking at discount levels, over 33% of promotions were in the 20-29% range, which is consistent with previous years.  Brands have learned over the years that discount levels and sales lift aren’t directly correlated –  too low and people will look for a better deal from another brand, but too high and it harms the perceived value. However, past years have shown us that brands often err on the side of too-little: discounts tend to provide the best results in the 30-39% range, but many brands are reticent to offer that good of a deal. When we have the compete sales data next week, we will have a better idea of which discounts were the most effective in 2018.

Prime Day 2018: Initial Insights

 

The mode of choice for manufacturers remains Lightning Deals, the most leveraged and productive deal type.  While Amazon offers a variety of different options, Lightning Deals are the runaway favorite, making up 85% of the total deal count globally, three times as many as last year. This deal type has three major advantages:

  • They create a sense urgency with their time-limits which motivates customers to buy;
  • They are limited to one per customer, which eliminates the risk of third party reseller buying up the stock; and
  • Brands can set a limit on the total number of discounted items that can be claimed, allowing them full control of their inventory and profit margins.

Category Performance

Brands in the Apparel category were the most aggressive discounters during Prime Day 2018. 1P and 3P Apparel brands accounted for almost one third of the total global deal count, with 14% of their deals offering at least 30% off. Shoe brands also offered similarly deep discounts and came in as the #2 category in terms of total deals with 15% of the global count. Amazon also followed the lead of the marketplace by aggressively discounting their private label clothing and shoe lines, such as Lark & Ro, Franklin & Freemen and Amazon Essentials. Despite being a relatively small number of brands, Amazon’s softline private labels accounted for a whopping 8% of global Prime Day deals – so we expect to see further investments in the clothing space from Amazon later this year.

Prime Day 2018: Initial Insights

 

In terms of how these discount strategies translated into sales within these categories, we will have to wait until we finish gathering the sales data for Prime Day 2018. Next week we will be publishing our findings in the second installment of our Prime Day recap series. Stay tuned!

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