By Jeff Brown, Director of Client Services, & Jacob Andra, Marketing Director, at One Click Retail
Prime Day 2017 has come and gone and, this year, it brought a few surprises with it. Now that the dust has settled and we’ve had a chance to sift through the data we gather from Amazon’s first-party sellers (i.e. any brand whose product descriptions read “Ships and Sold by Amazon”), we’ve noticed some distinct trends.
Prime Day is the quintessential deal day. The whole point of shopping on Prime Day is to take advantage of all the discounts offered by just about every major brand you can think of – no special occasion to celebrate, just the joy of finding a good deal. In the US, sales of items from first party brands grew by 15% to over $600 million and had 16,000 more promos than last year; when factoring in Amazon private brand items (e.g. Echo, Kindle, etc.) and sales from third party sellers, we estimate total US sales of roughly $1 billion. First-party sellers across the globe understood that to truly win on Prime Day they needed to make 2017 the best deal day ever. The countries that saw the largest YoY growth in sales also had the largest increases in promotions: UK had 11,000 more promos than in 2016; Canada, 5K more; and Germany 8K more. Globally, promotions were up 115%.
Nearly 50 cents on every dollar was spent on a discounted item, amounting to more than 4.7 million items sold at an average of 24% off. These discounts drove a lift of over 1000% (10 times the sales!) compared to the pre-promo period and helped the following items cement their place as the bestsellers of the day:
Lightning Deals are king, but are the new Alexa Deals better?
Even though Amazon offers brands “Prime Day Deal” promotions, Lightning Deals are still the bread and butter for first party sellers. Over 333,000 Lightning Deals were on offer on July 11th, plus another 100,000+ Prime Early Access Lightning Deals, compared to only 20,000+ Prime Day Deals. Experienced brands know that if it ain’t broke, don’t fix it.
But Amazon did introduce something this year designed to be a game changer – the Alexa Deal. This promotion was targeted at Alexa users to encourage them to order deal items through Amazon Echo, and the discounts were made available exclusively to Alexa users one week early, on July 5th, then made available to all Prime members on July 11th. Though this initial trial of the promotion only included 169 items, sales were high on these deals with 4 of the items appearing in the top 10 most effective promotions, including the number 1 item. What is driving these high sales; however, is in question as the playing field is not level. Alexa Deals have the following distinct advantages:
- An extra week to obtain sales;
- Deeper manufacturer discounts;
- Extra Amazon discounts to incent trial of Alexa; and
- More advertising visibility from Amazon directly.
Furthermore, One Click Retail’s research has shown that fewer than 2% of customers are willing to buy a $25+ item using ONLY Alexa; rather, customers review the item online and then complete via voice to obtain the extra discount. This calls into question whether customers are willing to complete voice purchases without the added incentive.
Most Successful Promotions
The discount “sweet spot”
It may be counterintuitive, but discount levels do not directly correlate to sales lift. Too low and people aren’t interested, naturally, but if a discount is too high it has the same effect: items more than 70% are often passed over in favor of less discounted but more desirable items.
The sweet spot on Prime Day 2017 landed in the 30-35% range, with good results throughout the 25-45% range. Be careful: surprisingly, there is a null in the 20-25%, generating a very poor lift in sales. The null may be caused by this being the most popular discount bucket this Prime year, causing it to appear as merely an “average” deal and encouraging shoppers to seek deeper discounts.
1st party sellers have more competition than ever
It’s not all wine and roses for first-party sellers. Though the Instant Pot pressure cooker was a standout in 1P sales, it was beat by two other items: Amazon Echo and Amazon Echo Dot, Amazon’s proprietary voice-activated, Alexa-enabled speakers. And it’s not only private brands; third-party sellers performed much better than last year, when only 1 item sold more than $1 million, by offering good deals on cheap (under $10) items such as car mounts and USB extension cables and selling in high volume. In fact, the total promos offered by 3rd-party sellers unexpectedly surpassed those offered by 1P brands, a sure indication that these sellers now want their piece of the pie.
In 2016, first-party sellers were very much the stars of Prime Day, but it’s clear that others have now taken notice. Not only has Amazon’s private brands strategy really come into its own over the last 12 months, but third-party sellers have learned that they have just as much to gain by participating in Prime Day. Let this be a lesson to 1P sellers not to take Deal Days for granted – there’s more competition than ever.
Kitchen is the product group of the year
The standout product group of Prime Day 2017 was Kitchen – further evidence that millennial buying habits are shifting as they are settling down and becoming homeowners.
The top first-party item of the day by a wide margin was the Instant Pot Pressure Cooker, selling over 230 thousand units in the US and Canada alone—worth more than $30 million in sales even after a Prime Day discount of 31%. Overall, Kitchen was the highest-revenue product group with $60 million in sales and high growth rates across North America and Europe. Two thirds of the sales total was made up of promotional items with an average discount of 24%, generating a lift of 7000% (70 times the pre-promo sales!).
Prime day is going global
The final significant development compared to last year is that in 2017, Prime Day is clearly on track to become a global event. Originally a US phenomenon, now consumers are coming on board in Canada and throughout Europe with sales driven by Health & Personal Care, Kitchen and—especially in Canada—Beauty. Much of the 60% growth announced by Amazon came from outside the US, where the growth rate tends to be steeper. Brands can take advantage of this by cross-promoting their products on Amazon’s international marketplaces.
Germany’s Prime Day 1P sales reached €150 million, driven by growth in the Home Improvement (70%), Kitchen (60%) and Grocery (60%) product groups. With three items in the top 10, Samsung demonstrated their Amazon strategy prowess by offering the right type of deal and discount: the Galaxy S7 offered a 15-26% discount on a lightning deal, while the Galaxy Smartwatch and Galaxy A3 benefited from the brands 18-43% discount on selected Samsung Electronics. More evidence that lightning deals do work is Sodastream’s rise to the #2 top selling item, thanks to a 50% discount.
Top-selling DE 1P Items, Prime Day 2017
The UK’s Prime Day 1P sales reached £70 million, driven by growth in the Health & Personal Care (140%), Kitchen (110%), Lawn & Garden (70%) and Apparel (70%) product groups. Like Samsung in Germany, Sony’s Prime Day strategy paid off as they captured two of the top 10 by offering the ideal discount of 23%.
Top-selling UK 1P Items, Prime Day 2017
Canada’s Prime Day 1P sales reached $40 million, driven by growth in the Beauty (440%), Kitchen (140%) and Home (80%) product groups. Like in the US, the top selling item was the Instant Pot 8-quart pressure cooker. The Xbox One rose to #2 in Canada thanks to a sweet Amazon Daily Deal of 17% off.
Top-selling CA 1P Items, Prime Day 2017
France’s Prime Day 1P sales reached €20 million, driven by growth in the Grocery (40%), Health & Personal Care (30%), and Toys (30%) product groups. While the number one spot goes to the Microsoft Surface Pro, ASUS emerged as the winning brand with 3 of the top 10 items. But did they do anything differently than the other laptop brands? Thanks to Amazon’s multi-item promotion (up to 30% off on laptops: Acer, Asus, HP, Lenovo), French Prime Day shoppers scored on their preferred make and model.
Top-selling FR 1P Items, Prime Day 2017
Beyond being the day of the year with the single biggest sales potential for Amazon first-party sellers, developing a smart Prime Day strategy can capture the minds of innumerable consumers. A clever combination of Prime exclusive, early access, and Alexa deals can generate a lift in sales that will, as we witnessed last year and after other deal days, sustain itself long after the day is over.
One Click Retail is the industry’s most accurate source of sales data for the world’s top eCommerce marketplaces. With 98% accuracy, OCR delivers the best insights, analytics and strategies to their brand manufacturer clients, giving them a critical edge on online platforms. To catch a glimpse of the unique data and expertise OCR provides to its customers, subscribe to our weekly eCommerce insights blog, and follow us on Twitter and LinkedIn. Additionally, if you are a brand manufacturer and would like to learn more about your Prime Day performance vs that of your competitors—or would like to see your market share and category growth insights—email us at firstname.lastname@example.org for a free capabilities demo.