It’s no secret that the pandemic, as devastating as it has been on myriad levels for well over a year now, has churned out explosive growth for Amazon, in terms of generating revenue, creating new jobs, boosting stock, and increasing advertising costs.
At the height of COVID-19 in spring / summer 2020, the world quarantined indoors, with cabin-feverish shoppers turning to Amazon for all their needs—from everyday basics like toilet paper and groceries, to pricey at-home entertainment and fitness nice-to-haves to ease the quarantine fatigue and allow for as much normalcy as possible in a shutdown economy.
With the pandemic shifting sales online and stimulus checks boosting consumers’ checking accounts, a veritable online shopping frenzy ensued, with unprecedented numbers following suit. Of note, in July 2020, Amazon reported its valuation had skyrocketed from $920 billion to $1.49 trillion.
What’s more, even after the global rollout of vaccines and the gradual decrease in COVID-19 cases, Amazon still continued to boom. In April 2021, Amazon reported $108.5 billion in sales in the first three months of 2021, up 44% from a year earlier. It also made $8.1 billion in profit, an increase of 220% from the same period last year.
However, as the pandemic continues to wax and wane and shoppers step (mask-faced) foot into brick-and-mortar locations once again, what does the future of Amazon look like for your budding brand?
For continued success, the name of the Amazon game will be helping to boost traffic to your brand’s page, not simply relying on the past uptick from 2020. Here, the Amazon strategists at MuteSix take a closer look at the potentially shifting e-commerce landscape in a near-post-pandemic world and offer words of advice for brands looking to continue boosting sales and creating brand awareness.
According to Forbes, Prime Day 2021, which took place months earlier this year in late June, was projected to hit 19% YoY growth. By contrast, in 2020, Prime Day sales increased nearly twice that by 43% over 2019, with a massive shift toward online shopping during October, when most nonessential stores closed shop. Forbes also cited the June timing as a bit curious, given it’s not an optimal time of year for August / September back-to-school shopping and the November / December holidays.
True to Forbes’ projections and despite the success third-party sellers that leaned heavily into the event enjoyed over 48 hours, it appears as though this past Prime Day may not have been as successful as that of 2020 for a number of reasons (though not confirmed by Amazon).
Unlike its specific and impressive 2020 earnings reports, Amazon seemed pretty vague when discussing this year’s performance. CNBC notes, ”Amazon has previously characterized the event as its ‘biggest day ever’ or the ‘largest shopping event in Amazon history.’ That language was noticeably absent from this year’s results, with the company instead opting to note that Prime Day was the ‘two biggest days ever’ for merchants.”
Additionally, while Amazon was quick to disclose that third-party sellers racked in $3.5 billion during last year’s event, such figures were missing from this year’s results.
So, why the suspicions about relatively poorer performance?
CNBC speculates that supply chain issues may have contributed to a more tame Prime Day for third-party sellers because of widespread supply chain disruptions, including a spike in COVID-19 cases at two of China’s busiest ports.
Other insiders speculate that it’s simply because shoppers aren’t pining for online deals now that brick-and-mortar stores, salons, and even gyms have reopened their once-shuttered doors, and life outside-the-home is slowly returning.
While Amazon stayed tight-lipped about its exact earnings, Prime Day 2021 was, nevertheless, a huge success, as it was the biggest e-commerce event of the year thus far, especially for SMBs. Amazon reports that customers spent over $1.9 billion on 70 million plus small business products during the promotional period, more than a 100% YoY increase on sales compared to the Prime Day October 2020 promotion. It’s important to note, however, that the two weeks leading up to Prime Day helped small-business sellers with the Amazon-funded “Spend $10, Get $10” promotion.
So, who came up on top? According to the Amazon experts at MuteSix, brands that leaned into aggressive pricing and promotions reaped the biggest rewards, showing how critical pricing and advertising are to the Amazon shopper. Such brands included such MuteSix clients as Pivo (Consumer Electronics), TevraPet® (Pet), LilyAna Naturals (Beauty), and Sunwink (Health & Supplements), all of which saw better-than-expected lifts this year thanks to a few key factors. Such tactics included their competitive pricing with Prime Exclusive Coupons and/or Prime Lightning Deals, as well as aggressive advertising efforts, using a mix of Sponsored Ads and/or Amazon DSP.
However, brands that did not partake in such discounts (paired with ads and promotions) saw less-than-ideal sales as a result.
If one takeaway was more clear than ever this year, it’s that brands cannot simply rely on the 2020 uptick in marketplace traffic to drive higher numbers during the event.
According to Aaron Mizrahi, VP, Amazon at MuteSix, “Coming out of Prime Day, it will be important for advertisers to take pricing and promotion into consideration and complement that deal with Sponsored Ads and/or Amazon DSP advertising, especially since the next e-commerce holiday isn’t until November.”
Additionally, the MuteSix Amazon team suggests brands reconcile the potentially lower number of sales and lower traffic by better speaking to the consumer who is no longer confined indoors.
As more consumers venture outdoors in social settings, their e-commerce shopping behaviors have shifted from buying higher-price-point items suitable for at-home recreation to more everyday essentials. For the former items, we’re recommending a complete creative strategy overhaul to refresh brands’ detail pages and video content to better speak to today’s consumer with a fresh narrative. For example, for pricier at-home fitness items, we are encouraging clients to market their equipment as entertaining workout strategies to be enjoyed in the company of friends.
Additionally, we suggest a more aggressive approach to brands’ promotional strategy. As we see a decrease in purchases of giftable nice-to-haves and higher-price-point at-home recreational items, we’re seeing shoppers default to lower-price point items like everyday essentials, much as they did prior to the pandemic. As such, in order to boost top-line sales growth for our more premium brands, we’re layering on different coupons and Lightning Deals to help incentivize consumers to make a purchase and help move through inventory to keep sales steady and stable.
Amazon will continue to perform well, even as the pandemic dust settles. However, as consumers venture outdoors and even begin to shop in brick-and-mortar locations, the e-commerce giant, like all online retailers, will inevitably see a dip in traffic, as well as a major shift in consumer shopping trends. The key will be to adjust your brand’s narrative to better speak to today’s eager-to-socialize consumer, while pushing for a more aggressive promotional strategy to incentivize them to buy more than simply their everyday repeat purchases.
If you’re looking to increase sales for your brands’ more premium items and stay top-of-mind as consumers glance back at the pandemic through their rear view mirrors, reach out to MuteSix’s Amazon strategy experts today through our website.