Amazon dangles deeper ‘Prime Day’ discounts for stressed US shoppers

Reuters | July 11, 2023

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By Granth Vanaik and Ananya Mariam Rajesh

(Reuters) – Amazon.com hopes to tempt U.S. shoppers on Tuesday to open inflation-thinned wallets by offering deeper discounts on a wide range of goods and services during this year’s “Prime Day” 48-hour shopping event, including its first-ever travel discounts.

A year of inflation has lifted mortgage rates, rents and food prices for consumers ahead of Prime Day, which falls on July 11-12 this year.

CFRA Research analyst Arun Sundaram said Amazon’s U.S. Prime Day discounts this year are mostly deeper than in previous years. The online retailer is marking 60% off Gap clothing, 50% off on Sony headphones and 40% off Peloton exercise bikes, according to Bank of America.

Amazon Prime members can also save up to 40% on items such as Sherpani bags and ZOA Energy drinks, by checking out using “Buy with Prime,” directly from Amazon’s third-party merchants and sellers outside of Amazon.com.

The company in January said websites using Buy with Prime are seeing a 25% conversion rate increase. The feature offers an additional revenue stream for the e-retailer during Prime Day as it collects fulfillment, payment process and service fees during a time when shoppers are slowing discretionary spending.

Last year, U.S. online sales during Amazon’s Prime Day shopping event reached nearly $12 billion, up 8.5% from the previous year, as inflation-hit Americans pounced on discounted essentials and electronics, according to Adobe, which tracks online spending.

Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, said Amazon Prime sales growth will be slower this year, as many American consumers still have post-pandemic shopping fatigue and are cautious about “abusing their wallets.”

They “are looking to spend more on experiences, travel, and entertainment,” Schulman added. Running Point Capital Advisors has exposure to Amazon through Exchange Traded Funds (ETFs), among others.

He predicted Prime Day 2023 may add about $4 billion to $6 billion of incremental revenue for Amazon, up 10% to 16% from last year, as shoppers also take advantage of discounts for everyday staples like pantry items, toiletries, and cleaning supplies.

Criteo’s Global Chief Revenue Officer Brian Gleason said such discounts may have more appeal to shoppers in a more difficult economy.

Amazon is also offering its first-ever Prime Day travel discounts this year, partnering with travel booking site Priceline to offer an additional 20% off on Priceline’s Hotel Express deals, which offers 60% off hotels.

Prime Day is expected to encounter stiff competition from other retailers like Walmart which is offering extensive deals during its “Plus Week.” Geared to Walmart + members, Plus Week began on Monday.

Home electronics chain Best Buy is also giving out more discounts through its “Black Friday in July” savings event, which also began on Monday.

“This week is turned into a pretty major shopping event, similar to the likes of Black Friday and Cyber Monday,” Sundaram said, adding that all retailers are fighting over market share.

Bank of America projects this year’s Prime Day sales event will generate $12 billion in gross merchandise value (GMV) for Amazon in the United States, up 12% on year-over-year basis.

Amazon plans yet another Prime sales event this year, according to screenshots of its seller notification platform seen by Reuters. The company has notified its marketplace vendors to submit deals for a “Prime Fall Deal Event” that will begin in the fourth quarter. The exact date was unclear, and Amazon had no comment on the fall event. Last year’s sale was Oct. 11 and 12.

(Reporting by Granth Vanaik and Ananya Mariam Rajesh in Bengaluru. Additional reporting by Arriana McLymore in New York City; Editing by David Gregorio)

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