In case you were wondering, Prime Day is still a big deal. Worldwide, Amazon Prime customers made 300 million purchases this year alone — more than any Prime Day in Amazon’s long history. Why was this year’s Prime Day such a hit? And what does Prime Day’s popularity mean for small- and medium-sized businesses, let alone the increasingly burdened American consumer?
Amazon Wins Big Amid Recession Woes
To understand the success of this year’s Prime Day, it’s essential to view it within the lens of the current economy. The consumer price index climbed more than nine percent in June 2022, a 41-year high. Consumers have committed to cutting back on just about everything, from dining out to subscription-based services to driving, so from an economic standpoint, it was unclear just how this year’s Prime Day would go.
For Amazon’s part, it was quick to frame this year’s Prime Day success by highlighting consumer dollars saved, rather than retail dollars profited — which is an interesting shift in how it is presented. Still, big-box retailers did profit. In fact, total online retail sales throughout the United States hit almost $12 billion on Prime Day — almost 9 percent higher than overall e-commerce during last year’s event. And though Prime Day is an Amazon event, many other retail giants, from Best Buy to Target, were able to capitalize on Prime Day’s Success — and Americans’ desire to save. If you were watching the news leading up to Prime Day, you’d think Black Friday came early in 2022.
Efforts Made to Spread the Wealth
It’s no secret that Amazon has experienced its fair share of criticism for what many feel is the demise of small business. Even during the pandemic, which forced many businesses to shutter, Amazon was able to double its sales profit from $2.6 billion in 2019 to $5.2 billion in 2020. In recent years, Amazon has been looking to change the narrative, making extra efforts to direct customers to small- and medium-sized sellers in an effort to spread the wealth.
From June 21 to July 11, customers were given a chance to win prizes like an all-expenses-paid trip to the Super Bowl for registering in the small biz sweepstakes. Once registered, customers received additional entries for every $1 they spent on eligible small business products. In addition, Amazon curated a selection of products from small, American brands and makers to create a dedicated storefront on Amazon itself. The program was fully funded by Amazon, and all in all, it was a great success. Customers spent over $3 billion on more than 100 million small business items included in the Support Small Businesses to Win Big sweepstakes. If you’re counting, that means 1 in 3 items sold on Prime Day went to supporting smaller businesses. So, overall, it’s a win for smaller businesses in America. Still, with small businesses accounting for 44% of the economy, it would be nice to see that number continue to grow toward those smaller retailers.
Consumers Go Where the Bargains Are
What we learned from this year’s Prime Day isn’t so much rocket science as common sense: when a recession is looming, consumers will go where the deals are. And we’re not just talking household necessities. Sure, most (nearly 60%) of Prime Day items sold were less than $20, but consumers didn’t focus only on home essentials like garbage bags and paper plates. No, they really wanted to shop. Some of the most popular items sold included things like diapers and wipes, but they also included things like Fire TV sticks, Echo smart speakers, sunglasses, Apple Watch Series 7, and Le Creuset kitchen “essentials.” (If you’re following, Apple Watches and Le Creuset cookware are nowhere near cheap or essential.) What we saw at this year’s Prime Day is that consumers are still willing to buy if the price is right. Indeed, almost 35% said they waited for Prime Day to buy something at a discount, while just 28% said they actually passed on a deal because it wasn’t necessary. (Doing the math, that means 72% were willing to buy something they didn’t need because the price was right—a clear majority.)
Prime Day, Amazon’s small business promo, and the myriad other discount events that happened this month really do provide a litmus test for consumer confidence at this point post-pandemic. I was concerned that a major slow down on Prime Day could have led to even more recessionary fears. However, it simply didn’t turn out that way. Right now, it’s safe to say that consumers are willing to spend now to save some later if there are items they were hoping to buy anyway. The problem, of course, is that the economic landscape of today’s marketplace is anything but stable. Coronavirus cases are rising. Interest rates are rising. Prices for almost everything are rising. And as those costs continue to weigh on American consumers, we must ultimately see some break in their willingness to buy.
Amazon’s Focus on Small Business
Perhaps ending on small business is fitting for a Prime Day that was unequivocally a winner for its small business partners. From Amazon’s perspective, focusing on small businesses just makes sense. This is something that I have commented on for a long time and while it isn’t all altruistic, they are still earning revenue by helping others. Couple this with their other initiatives like using technology for good to help fight fraud and protect brands intellectual property, and it’s clear that Amazon is doing its part to make the entire retail industry better. Yes they are still an e-commerce giant, but they aren’t snuffing out the competition for their own gain, which is refreshing to see.