Amazon employees sort packages for delivery in New York, July 12, 2022.
Michael M Santiago | Getty Images News | Getty Images
AmazonPrime Day is off to a good start, boosting online sales from third-party and other retailers, early data shows.
On Tuesday, the first day of Amazon’s 48-hour sales event, U.S. online spending rose about 6% to $6.4 billion. This is the biggest e-commerce day so far this year in US retail locations, according to Adobe Analytics, which measures transactions.
Prime Day started on Tuesday and lasts until Wednesday. Amazon created the event in 2015 to attract new Prime subscribers, strengthen existing members’ loyalty to the program, and promote its own products and services. Other major retailers including Walmart, Goal, cabbage And best buy have given discounts to be competitive.
Adobe expects total U.S. online sales to increase 9.5% year over year to $13.1 billion during the two-day event. Last year, US consumers spent more than $11.9 billion.
According to Numerator, Prime Day shoppers were spending more per order as of Wednesday lunchtime, with an average order size of $56.07, compared to $53.14 a year ago. Both Adobe and Numerator reported that consumers are reaching for home goods and appliances, household items, toys and clothing. Fire TV sticks and Apple Watches were also the best-selling items.
Analysts and investors will be watching the event closely to see if economic uncertainty puts pressure on consumer spending. US inflation slowed in June, rising 3% year-on-year, the lowest in more than two years. Ex-food and energy, core inflation rose 4.8% on a yearly basis.
“We believe Amazon’s Prime Day 2023 has sparked buying momentum across retail amid a weaker consumer spending environment,” analysts at Telsey Advisory Group wrote in a note to clients on Wednesday. The company maintains an Outperform rating on Amazon stock. “The company appears to have successfully leveraged its relationships with brands – which have seen weaker trends due to a challenging environment – to offer good deals and attract buyers.”
Fahim Naim, a former Amazon employee who now runs e-commerce consultancy eShopportunity, said Prime Day promotions were paying more for several of his customers than they did last year. Protein powder maker Ascent Protein and BOX Partners, which owns shipping packaging brands Aviditi and BOX USA, have seen sales during Prime Day so far be nearly 40% up year over year, Naim said. Another customer, Harmless Harvest, known for its coconut drinks and smoothies, doubled its sales.
The strong preliminary Prime Day sales data is the latest indicator that consumer spending may be more resilient than feared. According to Jungle Scout, a provider of software and research for Amazon sellers, around 28% of consumers said their spending increased in the second quarter, compared to 23% in the first quarter.
“There’s a big chunk of the market that’s saying it’s making cuts, but there’s also people who have a lot of catching up to do post-Covid,” Mike Scheschuk, president of small and medium-sized businesses at Jungle Scout, said in an interview. “So they’re like, ‘You know what, I’ve got enough money and I’m back and stable, so I’m ready to start spending again.'”
Scheschuk, who also sells pet products under his own brand on Amazon, said his sales are up 25% year over year since the start of Prime Day. They’re up 50% week over week, he added.
Amazon typically does not provide Prime Day sales data. However, third parties, including Adobe and Salesforce, are expected to announce the event’s total online sales on Thursday.