Retailers

Amazon’s Prime Day a Big Win for Small Businesses, Own Brands

Could success in certain categories spell a future grocery super sale?
Amazon
Photograph courtesy of Amazon

When most consumers think of Prime Day, they think killer deals on electronics, small electrics, home goods and more. And while initial analysis of the event’s sales data reveals a strong purchase lift in these categories, Amazon is boasting most about the success of its small business selling partners—makers of typical grocery fare such as coffee, chocolate, health and beauty care items and pet products.   

“A key goal for Prime Day 2021 was helping Amazon’s small business selling partners connect with new customers and grow their sales,” said the company website. As part of a new $100 million investment to help small business sellers succeed, Amazon funded a "spend $10, get $10" promotion in the days leading up to Prime Day. With the promo, Prime members received a $10 credit to spend on Prime Day when they spent $10 on small business products offered by more than 300,000 sellers in Amazon’s store during the two-week lead-up to Prime Day from June 7 to 20.

According to Amazon, in the first 24 hours of the promotion, more than 2.5 million customers bought products from small businesses, and after the full two-week period, customers had spent over $1.9 billion on more than 70 million items, which was more than a 100% year-over-year increase on sales compared to the Prime Day 2020 promotion in October.

Amazon’s website also highlights a number of grocery item success stories, including Volcanica Coffee of Georgia, which said it sold 69% more units on the first day of Prime Day than they did on the same day the previous year. Mother’s Shea, a New York-based maker of lotions, which notes participating in Prime Day significantly extended its audience reach. And Pawstruck, a supplier of dog chews and bones from Kansas, said Prime Day was “by far one of [its] best sales days in the company’s history.

“It’s telling that there isn’t a Prime Day designed for grocery,” said Mike Black, CMO of Profitero, an e-commerce analytics and insights platform. “It’s still more of an add-on or more of an opportunistic play not a strategic play for grocery brands right now,” continued Black, who said that down the road, he “wouldn’t be surprised if there were a Prime Day specifically for grocery.”

As the e-tailing giant behind Amazon Fresh and Whole Foods Market, Amazon promoted its Prime Day in its physical grocery stores and online. But while select products like Tide Pods—which Profitero finds made the list of top 10 biggest sales gainers across all categories—were on sale, the promotions appeared more designed to advertise the benefits of a Prime membership than bolster sales in grocery.

Why Small Businesses?

As to Amazon’s small business focus for its June 2021 Prime Days, Black sees it as a strategic move motivated by supply chain issues.

“Amazon was a little more strategic in the things they were trying to accomplish with this Prime Day. It’s clearly an event that they’re using to attract more marketplace sellers,” Black told WGB. “Emphasizing that they are going to be partners for small businesses gives those businesses all the more reason to be on their platform, and in addition it presents an alternative to Shopify.”

Supply chain challenges surrounding some historically popular Prime Day items opened the door for lower profile items in many brands’ portfolios this June, noted Black.

“Small businesses make Amazon successful,” he said. “We’re in a volatile situation with the supply chain. The more they can have sellers make sure they have the selection consumers want.

“One of the linchpins of Amazon’s advantage is their marketplace,” Black continued “It has continued to be one of the major drivers of their flywheel for selection. The more small businesses they can attract, the bigger their selection is going to get and that’s always been their mission in terms of their competitive advantage.”

While Amazon undoubtedly benefited from the expansive inventory its small business partnerships provided on Prime Day, it also used the sales event to promote its own brands.

Profitero’s Sandy Skrovan reported that “in electronics, nine of the top 25 biggest winners were Amazon devices. In home and kitchen, five of the top 25 biggest winners (20% of the list) were AmazonBasics/Amazon-owned brands (based on our initial cut of the data after the first 12 hours). In pet, three of the top five biggest winners were Amazon brands, including Wag, after Day 1.”

Prime Day Fever

With Prime Day, Amazon has created a major sales event “from nothing” that helps brands sell through massive amounts of inventory at key times of the year, Black said. Prime Day is essentially the new Black Friday, so much so that Walmart and Target have joined the action, offering their own highly competitive deals during the same time period.

Prior to Prime Day, Profitero conducted a survey that revealed the majority of consumers intended to shop around this Prime Day.

“Prime Day has become more than just Amazon’s event; it’s a signal to the market and consumers that all retailers [are going to offer deals],” Black said. “Does that have an affect from taking away from Prime Day? Probably, but I still think that a lot of the deals that are being run on other retailers’ sites are different,” he said. “There’s some overlap, but they’re making choices. The don’t want to get into this game where they’re all offering the same products and matching prices.

“Prime Day does a couple of things,” continued Black. “First and foremost Prime Day was designed to attract prime members. It was the best reason for consumers to sign up for Prime membership. And now it's an opportunity to showcase to small businesses that they can be a platform for them to grow. Small businesses see the advertising Amazon does for Prime Day and the money they put behind it, and they want to be a part of it.”

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