The Amazon Effect   //   June 26, 2024

Inflation-battered shoppers are expected to drive another sales record for Amazon’s Prime Day

Prime Day, Amazon’s biggest sales event of the year, is expected to bring in $14.7 billion in sales during the two-day period, beating last year’s record, according to data intelligence firm Similarweb. 

The bump in revenue — based on tracking of sales trends between January and May by Similarweb — would mark the biggest Prime Day ever, a more than 14% jump from the prior record of about $13 billion, set last year, when deal-hungry shoppers bought more than 375 million items worldwide, according to Amazon. Earlier this week, Amazon announced that Prime Day would return on July 16 and July 17. 

Similarweb’s analysis is based on a range of factors. For example, activity on is up 10% by revenue compared to last year, according to Similarweb estimates. Units sold are also higher by 14%, and traffic has climbed 7% year over year. 

Shoppers looking for sharp discounts will be driving the sales event as stubborn inflation continues to weigh on spending. Consumers are more deal-conscious than ever before, Modern Retail previously reported. Higher interest rates also make financing bigger purchases more costly.

Although inflation data cooled somewhat this month, U.S. consumer confidence was more downbeat as customers still wrestle with higher interest rates and higher prices. U.S. retail sales were also muted in May, signaling ongoing economic pressures facing consumers.

The average selling price on Amazon is down 3% year over year, according to Similarweb, a sign that high prices are making shoppers hunt for deals. At the same time, sales for consumer electronics — a top-performing category during Prime Day — were down 10% year over year in May, another sign that shoppers are skimping on big-ticket purchases in anticipation of Prime Day discounts. 

“Even though inflation is going down, there is still a high amount of pressure on customers,” Inès Durand, an e-commerce research leader at Similarweb, said in an interview. “For a large share of the population, they still want to leverage these deals in order to get more bang for their buck.”

Amazon declined to comment. 

Sticker shock among consumers also coincides with the rise of Amazon competitors like Temu and Shein, which have surged in popularity in the U.S. due to their ultra-low prices. While Amazon is still the king of online shopping, there are a few signs that such Chinese e-commerce upstarts are increasingly gobbling up market share. 

According to a survey of 1,000 shoppers conducted by marketing firm Omnisend, one in five Americans shops on Chinese platforms, including Temu, Shein, TikTok Shop and AliExpress, once a week. The same survey found that 21% of shoppers think Amazon is too expensive, suggesting that discounts have become a top priority for inflation-weary consumers. In 2023, Temu was the most downloaded iPhone app in the U.S., according to Apple. In 2022, that rank belonged to Shein. 

Amazon has steadily grown its Prime Day revenue every year since the summer sales event launched in 2015, according to Similarweb’s Durand. Prime Day began as a way to drive new subscription sign-ups, a membership that currently costs $139 a year. In exchange, subscribers get access to delivery discounts, Amazon’s streaming service Prime Video and other perks.

Prime Day has become so popular among shoppers that other retailers have rolled out membership-only sales of their own, all generally around the same time as Prime Day. Walmart announced on Monday that it will hold a July sale of its own from July 8 to July 11, shortly after wrapping up a weeklong subscribers-only sale in June dubbed Walmart Week. 

This year, Amazon is relying on a slew of social media influencers to promote Prime Day, including early access to certain deals. The company also tapped rapper Megan Thee Stallion to create music for its biggest sales event. It’s a sign of how the e-commerce giant is leveraging TikTok, which debuted its own e-commerce platform in the U.S. last year, to power Prime Day sales, especially as more Gen Z users utilize the app as a search engine.

“TikTok is playing a bigger and bigger factor for people and their shopping list,” said Similarweb’s Durand. “Anything that is trending on TikTok that people can build a wish list for is likely going to be a big hit, and it’s going to become a more important part of the online shopping experience.”

It also suggests that Amazon is looking to protect market share in the increasingly competitive e-commerce landscape, especially from upstarts like TikTok Shop. “It’s an attempt to recapture the public attention given there’s this intense competition in e-commerce, especially in terms of pricing,” said Jon Mercer, a retail analyst at Coresight Research. 

While electronics generally fly off the shelves during Prime Day, Similarweb’s Durand expects beauty and personal care products will also dominate sales this year, as well. Amazon has beefed up its portfolio of beauty brands in recent months, especially prestige labels. In its press release announcing the dates for this year’s Prime Day, Amazon touted several of its top beauty brands, including Estée Lauder’s Clinique and Kiehl’s, which each joined Amazon’s marketplace in March and May, respectively. 

Still, some of Prime Day’s luster has faded since the event first launched as Amazon introduces more sales events throughout the year, according to Jason Goldberg, chief commerce strategy officer at Publicis Groupe. For example, Amazon hosted a second Prime Day-like sales event in October of 2022 — the first time the tech giant held two such events in the same year. Amazon repeated the tradition last fall, too, ahead of the holiday shopping season.

“Amazon has done a great job of teaching people how to hunt for deals, but Prime Day is becoming less effective in the overall Amazon ecosystem,” said Goldberg. 

Indeed, Andy Jassy’s tenure as CEO has focused on cutting costs while investing in the company’s higher-margin businesses, such as cloud computing and advertising. Amazon’s $47 billion advertising unit, for example, should get a boost from Prime Day, as the company pitches itself — and its first-party customer data — as a go-to provider for marketers who want to more precisely target and measure their advertising. 

As Goldberg put it, “It all feeds on each other.”