Client Letters: Pre Prime Day Findings, What To Expect + News Bites
Pre Prime Day Findings
Happy Sunday! Prime Day begins this Tuesday, July 12th and finishes Wednesday, July 13th. A couple of findings headed into the event:
Increased CPC - Our accounts are seeing an increase in average cost per click of +26% to last year. We anticipate an acceleration in bids late Monday headed into the event start on Tuesday. Commerce Take: Run ads hot into the event, pull back as other advertisers exhaust their budget early, layer in advertising dependent on sales rankings.
Higher Inventories - The majority of our 1P Vendor Central accounts have higher overall months of supply versus prior years. Like most of the industry, Amazon is overstocked. Commerce Take: Run higher markdowns on products in excess or subject to long term storage fees.
Page 1 Slots - When excluding the sponsored/advertised slots on page 1 of search results, Amazon 1P listings are earning more of the organic slots. This is highly dependent on category but the overall trend shows Page 1 favoring 1P Vendor Central listings. Commerce Take: Diversify your catalog to have both 1P and 3P listings. Hybrid accounts are necessary in today’s Amazon world.
What to Expect
As we head into Prime Day, here is what you should expect:
Sales Comps - Anticipate a strong year over year in July given the timing of Prime Day in June last year. This is a major reason why many accounts saw a difficult year-over-year in the month of June. Most accounts are already seeing a strong year-over-year comp to July.
Underwhelming Results - Although there will be a sizeable increase in daily sales, do not expect Cyber 5 like numbers of 5-10x normal daily sales. Prime Day is helpful but pales in comparison to the volumes of Black Friday and Cyber Monday.
Another Event - As reported back in February, Amazon is already planning a similar Prime Day like event in October.
We reiterate what was mentioned in our last Client Letter:
Although we believe Prime Day is a “flash in the pan” event, we still believe the event is worthwhile for clearance and launch items. Knowing that Amazon and most retailers are overstocked, we are confident that Amazon will use this event to provide preferential slotting to items that are sold to Amazon under Vendor Central 1P.
Please let us know if you have any questions pre, during or post Prime Day!
Lastly, some other news bites that caught our attention this week:
How Wish built (and fumbled) the internet’s dollar store. Link
Google offers concessions to fend off US antitrust lawsuit. Link
TikTok abandons plans to bring shopping to the US. Link
Walmart tells suppliers new fuel and pickup fees coming. Link
Amazon continues to refine EU antitrust concessions. Link
Amazon Prime members receive “free” Grubhub deliveries. Link
Strike has yet to happen in LA but deal has expired. Link
Thank you for reading and good luck on Prime Day!
Ryan Craver
Disclosure: Client Letters are intended for Commerce Canal clients, investors and employees. Commerce Canal and its officers, directors and employees provide this content for informational purposes only.
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