The DynamicAction Retail Index 2020 Prime Day Edition analyzes global online consumer transactions over Tuesday, October 13, 2020 (Day 1) and Wednesday, October 14, 2020 (Day 2). The Retail Index covers retail within general merchandise, home goods and apparel categories, while excluding grocery and Amazon transactions.
This upcoming holiday season promises a new set of challenges for retail, with the global pandemic influencing unprecedented growth in eCommerce, uncertain consumer budgets, reduced inventory, and limited shipping capacity. In anticipation, Retailers are planning to lure consumers to start their holiday shopping early, eager to spread demand and fulfillment over a longer holiday shopping horizon.
The 2020 holiday shopping season started with a bang This month retailers, led by Amazon, lured shoppers into a banner shopping day in the middle of October. Originally postponed in reaction to Covid-19, Amazon transformed Prime Day from a mid-summer shopping bonanza into an early start for the holiday shopping season. Customers, well-conditioned by prior sales, flocked to Amazon’s site, and the shopping frenzy spilled over to competitors. Retailers across the spectrum offered competing sales and promotions over the same period, hoping to capitalize on the momentum generated by Prime Day.
What did we learn from 2020 Prime Day(s)?
Day 1 Outperformed Day 2 Retailers saw the biggest lift on the first day of Amazon’s sale, and the most desirable cohort of customers shopped early. Day 1 saw 7% less Unprofitable Customers vs. Day 2. Day 1 also brought nearly a 5% increase in New Customers, who were 1% more profitable. While the number of VIP shoppers, (11+ lifetime purchases) decreased 3% on Day 1 vs Day 2, as a cohort they were 3% more profitable on Day 1. In contrast, profit for the mid-range (2-5 purchases) was down 5% on Day 1 over Day 2.
Enthusiasm and Profit Waned on Day 2 Day 1 offered the most exciting results, seeing increases of 5% on Overall Profit per Order, 1% for Demand Availability, 4% on Average Order Value and over 6% for Units Per Order. Day 2 results were less impressive, with a decrease of 4% in Average Selling Price.
Inventory – Going, Going, Gone? Despite media hyped fears of inventory scarcity, Retailers marketed the inventory they had in stock. SKU Availability & Views Availability stayed consistent across both Day 1 and Day 2. Noteworthy however, Day 1 purchases drove a 3% increase in overall Inventory Understocked by Day 2.
Promos are King We’re all well-versed in the long-term trend of consumers trained to purchase only on sale (promotion) or on clearance (markdown). True to expectations, the battle for a share of wallets was reflected during Prime Day(s) with an increase of 8% in Orders Using Promotions on Day 1, and a resultant 43% drop in Margin. On the flip side, Orders Using Markdowns decreased 16% on Day 1 with 28% lower impact to Margin on Day 1 vs. Day 2.
Retailers Pay the Cost of Shipping Free shipping remains a huge differentiator for Amazon and has become a key expectation for consumers. While Free shipping increased a modest 1% on Day 1 vs Day 2, the costs ate significantly into profit, dropping Shipping Profit per Order down nearly 17% for Day 1 as compared to Day 2.
Winning the 2020 Holiday Shopping Season More than ever before, the key to maximizing gross margin this holiday season is to react with speed and confidence. Successful retailers need a fast read of their business, especially across ecommerce, and the ability to identify and react to the most profitable opportunities across orders, profit and product.
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