Amazon Prime Day 2022: Three Trends From This Year’s Annual Shopping Event
Amazon Prime Day may have returned to its sweet spot of mid-July, but it was not immune to the current economic challenges. And neither were the retailers that planned to ride the coattails of the annual shopping event.
With inflation at a 41-year high of 8.6% in June, many consumers are tightening their belts and being more conservative with their spending. At the same time, many retailers have found themselves with excess inventory because of the shifting consumer shopping behavior.
To help uncover the latest consumer trends for Amazon’s annual shopping event, Blue Yonder surveyed over 1,000 consumers who participated in Prime Day 2022 to explore the impact of inflation, competing retailer deal days and more.
Here are three trends we uncovered:
Although Walmart did not host a rival “branded” event on Prime Day, consumers still flocked to its site for deals (and in greater numbers than last year).
The week before this year’s Prime Day, a Walmart spokesperson shared that the company would not host its own sales event that coincides with Amazon’s sales, which they have done in past years with the “Deals for Days” promotion. This year, Walmart found that most of its merchandise is already on sale as they attempt to right-size the excess inventory levels.
Although Walmart did not host a “branded” event, that didn’t keep shoppers from flocking to the retailer for discounts, with 49% of consumers saying they participated in deals on Prime Day with Walmart, as compared to 35% in 2021. Consumers also shopped at Target (40% in 2022 versus 26% in 2021) and Best Buy (26% in 2022 versus 15% in 2021) who held their own competing sales.
Amazon likely felt the impact of these promotions, with 59% of consumers saying they made a purchase on Prime Day this year, slightly fewer than last year’s 61%.
With excess inventory levels continuing into the coming months, retailers will need to take advantage of peak business periods, such as back-to-school and the upcoming holidays, to run similar initiatives to reward loyal shoppers. Many retailers are beginning to leverage store fulfillment as a distribution node to help move through excess inventory and avoid deeper markdowns. Blue Yonder’s Luminate® Commerce suite offers retailers the opportunity to unlock inventory throughout the network, utilizing multiple cost factors such as store labor, split shipments, and markdown costs to ensure the fulfillment method has the most optimal cost to serve, which is key for maximizing profitability when margins are being stretched.
Inflation slightly impacted spending in 2022, but consumers were still pleased with this year’s deals.
According to the same survey we issued last year, many consumers were disappointed with stockouts, with 32% of consumers responding that they experienced out of stock products when shopping on Amazon Prime Day. This year, with retailers trying to get rid of inventory, there were many deals for shoppers, even outside the traditional technology categories. However, inflation may have slightly impacted how much consumers were willing to spend:
- 72% of consumers said they spent the same or more on Prime Day this year compared to last year (down slightly from 78% in 2021).
- Still, 48% said they spent more this year and 23% said they spent significantly more.
- 73% said they were pleased with the deals/discounts they were offered while shopping on Prime Day this year; 35% said they were very pleased and only 7% said they were displeased.
When it comes to determining markdown strategies for excess inventory, retailers can use artificial intelligence (AI) and machine learning (ML) technology to ensure that they are pricing their products as strategically as possible. Blue Yonder’s Luminate Lifecycle Pricing solution provides retailers with insights into the factors that are influencing consumer behavior and uses that information to make optimal pricing decisions. When retailers understand how much they can charge for an item before a customer decides it costs too much, they are able to maximize their profits.
More consumers made back-to-school purchases on Amazon Prime Day 2022
The back-to-school shopping season keeps starting earlier and earlier. However, with Prime Day being moved back to its typical timeframe as compared to last year, more shoppers had back-to-school on their mind. According to the survey, 42% of consumers said some of their Prime Day purchases were specifically for back-to-school (up from 38% in 2021).
As market dynamics continue to shift (and with the holidays just around the corner), retailers can also use AI and ML to harness the power of forecasting. Luminate Demand Planning can analyze hundreds of demand-driving variables to provide a unique demand projection that includes both business impact and risk. This data gives retailers the opportunity to improve productivity and inventory management, while also understanding what consumers are looking for based on their behavior. This allows retailers to balance stockouts and excess inventory to make sure that they have the products that their customers want, where they want them, and when they want them.
What this means for the retail industry
While in this instance excess inventory leading to markdowns on in-demand products put retailers in an optimal position to compete with Amazon Prime Day, this is not a sustainable practice for retailers who need accurate predictive demand forecasts to avoid excess inventory, and fully optimize sales and margin through in-stock. As consumers continue to cut back on spending, retailers that right-size their inventory and set the most optimal prices are in the best position to succeed as we head into the busy holiday season and beyond.
At the same time, retailers will always need to be able to fulfill these orders in a timely manner and from the most cost-efficient location to ensure customer satisfaction while balancing cost and time to serve.
Retailers should remain focused on in-stock availability using advanced AI/ML capabilities for demand forecasting and inventory management; however, in the event of inventory overage, leveraging AI/ML-powered, advanced pricing solutions can provide excellent value to consumers and optimize margin for the retailer at the same time. Retailers should also take advantage of a broader fulfillment network – but is key to ensuring that expansion is profitable and not another hit on margin.