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Why Amazon’s lackluster first quarter made a second Prime Day event inevitable

June 28, 2022, 5:44 PM UTC
The Amazon Prime day logo seen displayed on a smartphone.
Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images

In these unsteady times for overextended Amazon, why not tap the well that routinely produces a sales gusher?

Insider reported Monday that the nation’s largest e-commerce company plans to hold a second Prime Day-like event in the fall, aiming to juice revenue and maximize overhead as inflation weighs on online shopping. The decision follows an April earnings report that showed Amazon experienced its slowest quarter of revenue growth in 21 years, the result of several economic headwinds that only figure to worsen as 2022 drags on.

On its face, the move comes with a whiff of desperation. 

The event will likely launch in October, pre-empting the Cyber Monday and Christmas holiday shopping bonanzas. 

Insider reported that the occasion feels rather slapdash to some merchants, who are being asked to throw together deep discounts without much information about Amazon’s latest production. 

Another day of big deals also could further dilute the novelty of the Prime Day event, which is scheduled this year for July 12 and 13. As The Wall Street Journal reported Sunday, Prime Day’s revenue growth has slowed over the past few years, with buyers spending slightly less money per order and item. 

Insider Intelligence forecasts Prime Day sales of nearly $13 billion this year, up 17% from the prior year. By comparison, Amazon’s Prime Day sales jumped 65% year-over-year in 2019.

“As consumers, we are so used to Prime Day by now that the novelty has gone,” Guru Hariharan, CEO of the digital-sales firm CommerceIQ and a former Amazon manager, told The Journal.

Reports of Amazon’s plans for another Prime-like event didn’t inspire the market, either. Amazon shares fell 3% on Monday and tumbled another 5% in mid-day trading Tuesday. The company’s share price is now down 36% year-to-date, a deeper dive than top rivals Apple and Walmart, and on par with Target and eBay

Nonetheless, Amazon can’t be faulted for playing the hits.

At a time when the company is overstaffed and sitting on idle warehouses, anything that cuts down on excess overhead will obviously get explored. Amazon has not laid off employees so far this year, though the company experiences high attrition that helps trim its headcount.

Amazon already has a bit of experience with an October bargain blowout. The company registered about $10.4 billion in sales, per Insider Intelligence, during its Prime Day event in October 2020, which was pushed to the fall due to the pandemic.

And while Amazon doesn’t disclose profit margins on Prime Day events, its blockbuster advertising business will benefit from increased traffic. The company’s advertising services unit recorded its best period of growth in the second quarter last year, when Amazon held its 2021 Prime Day.

Amazon undoubtedly risks some long-term damage to the Prime Day brand, as well as its relationship with merchants, with this latest ploy. But in these trying economic times, when Wall Street is growing weary of stagnant sales—everything must go.

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Jacob Carpenter


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