The seventh annual Amazon Prime Day is coming up this July 12 and 13, but there’s a slightly different glow on this year’s epic shopping holiday. While Prime Day 2021 saw supply chain pressures putting the biggest strain on brand performance, this year, inflation poses the biggest challenge for brands and consumers across the globe. Can Amazon deliver on the deals it promised? Will this year’s Prime Day be a damp squib? We think not, in fact, this could be the most interesting Prime Day event we’ve seen. Much of this has to do with the underlying cause of inflation, particularly in the U.S., Amazon’s leading market and the country with one of the highest inflation rates in the world (last May it hit 8.6%, the largest year-on-year jump in 40 years). But what’s driven that inflation? One word: demand.
During Covid, while shoppers in most countries felt the financial crunch due to lock down measures, Americans were cushioned from the blow by the huge $5tn government spending in the form of direct checks to households. Goods like furniture and electronics saw a surge as Americans redirected their spending from restaurants and travel onto household goods. One study by the Federal Reserve Bank of San Francisco suggested that pandemic relief packages contributed 3% to the rise in inflation and explains why US inflation has outpaced most other countries since 2020.
Data from Blackfriday.com suggests that Prime Day demand among Americans is stronger than ever:
- Americans say they’ll spend an average of $233 on Prime Day 2022
- 88% of American Prime members plan to shop Prime Day 2022
- 47% of American shoppers are waiting for Prime Day to make their biggest purchases of 2022
- The biggest category by far is apparel - 35% of consumers will shop for clothing and shoes (19% will shop for home decor and 17% for headphones)
Deal days: The biggest global e-commerce growth opportunity for brands?
Prices might be up, but consumers still love to buy and they love a deal. And while America might be the biggest market for Amazon (eMarketer predicts that America will contribute to the bulk of Prime Day sales, at approximately $7.76 billion of a predicted $12.52 billion globally), shoppers globally are eager for a bargain. Nielsen found that Asian consumers are the biggest bargain hunters globally. Wherever you look, shoppers are looking to cut spending in the face of rising costs of goods, but they still want to buy, potentially making deal days like Prime Day one of the biggest growth opportunities in e-commerce for brands.
3 Ways Amazon Prime Day 2022 Is Different
- Timing: By hosting Prime Day in July rather than June, Amazon is tapping into back-to-school shoppers, summer weddings and events, and summer travel. (85% of American shoppers are planning to shop for back-to-school items during.)
- Amazon is hosting two Prime Day events in 2022 for the first time ever, one this month, and another in October. Why two? If shoppers are curtailing their spending this July, Amazon may be hosting a second prime day to spur another sales flurry in case the usual Prime Day doesn’t meet targets. Still, Prime Day has seen increasing profits every year since its launch in 2015 and we don’t anticipate a change this year. A second Prime Day may just be a strategic move to further cement Amazon as the e-commerce retailer with the best deals.
- Prime Day for Free: Amazon is offering free Prime Day trial memberships during the event to pull in even more shoppers.
So which categories will rule the day? You can always guarantee that Prime Day will be a big event for categories like electronics, but the timing, combined with inflation and post-Covid shopper attitudes will yield some interesting results across categories.
The Top Performing Categories will be Electronics, Apparel, and Beauty
Electronics are always big on Prime Day with Amazon’s own devices getting the heaviest price cuts. Prime Day’s the time to get a deal on Echo, Fire TV, Kindle as well as Amazon-owned brands like Ring and Blink. We also expect to see big discounts on headphones, TVs, small appliances, and gadgets like electric toothbrushes. Thus far, shopper demand for products like airpods, ipads and headphones remains similar to that of last year.
Apparel, particularly women’s clothing, will be huge this year, driven by shopper demand for summer fashion. As of July 5, 2000, “summer dresses for women 2022” had the highest search frequency rank of all Amazon.com searches, and 13 of the top 50 searches are for women’s products:
We’re also expecting Beauty to be big this year, thanks in part to the post-pandemic inspired “Lipstick Effect” - the beauty industry concept that in times of crisis, women will indulge in small luxuries that provide an emotional uplift without breaking the bank. Indeed, lip makeup grew 48% in Q1 2022, while L’Oreal alone reported 16.1% growth - twice the market average. According to eMarketer, 52.5% of Prime members bought beauty products in the last 12 months, and we expect more of that on Prime Day 2022.