Amazon.com (AMZN 3.25%) has delayed the kickoff of its annual Prime Day sales extravaganza until the first week of October because of the coronavirus pandemic.
The online retailer was overwhelmed with orders due to the COVID-19 outbreak shutting down all nonessential retail stores, that Amazon even temporarily halted its third-party shipping program so it could prioritize shipments of personal protective equipment.
Now that the onslaught has abated some, though shipment volumes remain high, Amazon is able to return to a semblance of normalcy and the third-party shipping program has resumed. So while the annual promotional event is being rescheduled, Amazon.com really doesn't need to hold a Prime Day sale this year.
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A celebration of selling
Amazon held the first Prime Day on July 15, 2015, celebrating the 20th anniversary of its founding as a humble online bookseller. It was like the retailer was throwing a party for itself, but giving gifts in the form of big discounts to its loyal Prime members who now pay $119 a year in membership fees to belong.
While Amazon doesn't divulge how much it makes in sales from the event, preferring instead to highlight the number of items ordered, and which items were particularly popular, analysts estimate that first Prime Day generated around $900 million in sales. And it's only grown every year thereafter.
Last year Amazon expanded the sales celebration to two days and pulled in an estimated $7.1 billion.
Every day is a sale
As successful as Prime Day has been for Amazon, it is but only one of several global shopping holidays that have sprung up around the world.
China's JD.com (JD 5.37%) arguably got the ball rolling back in 2004 when it launched a midyear sales holiday on June 18 to celebrate its own founding anniversary (it's now called the 618 sale), and online peer Alibaba (BABA 0.69%) followed up five years later by tethering its sales extravaganza to the culturally significant Singles Day holiday in China on Nov. 11.
Walmart (WMT -0.02%) and JD.com have since partnered up to hold their own joint "omnichannel shopping festival" on Aug. 8 called, appropriately enough, 8-8.
Prime Day may be huge for Amazon, but Alibaba generated $38.4 billion in gross merchandise sales on its Singles Day sale last year and JD.com and Alibaba handled a combined $136.5 billion in sales through their respective platforms this past June 18. That it was the first sales event since the coronavirus pandemic gripped the world probably explains the massive growth experienced.
All day, every day Amazon
While Amazon will undoubtedly also see a big spike in sales when it finally holds Prime Day, financially it doesn't need to juice its revenues this year.
According to data from Earnest Research, the e-commerce giant typically sees sales volumes the week of Prime Day rise between 1.5 times and 2 times the typical volume, but this year Amazon's sales volume has been elevated ever since the pandemic began.
As consumers turned to e-commerce to buy goods after retailers were shut down or ran out of essentials due to hoarding, the research firm says Amazon has "actually been enjoying Prime Day sales levels every week since April." It found sales volumes have ranged between 1.9 times and 2.3 times the baseline for 15 consecutive weeks.
Although consumer spending remains generally depressed due to lockdown orders and store foot traffic has leveled off, Amazon.com is still pulling in sales at higher than usual rates. While the last three weeks ending July 13 seem to have plateaued, sales volumes remain elevated.
An ulterior motive?
A delayed Prime Day may benefit consumers still looking for a deal, but it does present some logistics problems for third-party sellers as an October date makes it difficult to adjust inventory levels in time for the Christmas selling season that follows right on its heels.
And other retailers will be starting their holiday sales early to recapture some of those lost to the pandemic. Target (TGT 0.62%), for example, just announced it will begin its Christmas promotional events in October.
So while the e-commerce leader doesn't need to hold its Prime Day event this year to have an immensely successful and profitable year, doing so would ensure consumers continue to shop its site more than they do the competition's.
