Despite clouds looming over consumer spending, Amazon.com is predicting even higher numbers than before for Prime Day 2023.
The Amazon shopping bonanza will be a good test to see if consumer spending is the same or dipping below last year’s sales due to consumers tightening up their purse strings.
Yesterday Channel News reported on the findings of the Commonwealth Bank Household Spending Intentions index, which reported customer buying activity has declined by 1.7% in June in categories such as fitness, entertainment, home goods, and travel.
Amazon’s yearly Prime Day usually acts as a good indicator of what consumer patterns will be for the summer, and the day tends to be a huge revenue boost because the company can make more than three times the normal sales in one day for this quarter, J.P. Morgan projected.
For the consumer retailer giant, their numbers have slipped in recent quarters, and have had thousands of layoffs of Amazon employees.
“There is a need for some momentum in Amazon’s business,” said Andrew Lipsman, an e-commerce researcher at market research firm, Insider Intelligence.
“Prime Day will show how willing consumers are to open up their wallets for retail.”
Specifically in the last two years, Prime Day’s growth has stalled hitting under 10% in the United States when before, Amazon’s growth was closer to at least 25% and up to 60%, according to Insider Intelligence.
Prime Day hasn’t been quite the consumer draw it once was back when it began in 2015.
Originally launched as a way to gain subscribers, J.P. Morgan analyst Doug Anmuth estimates almost 300 million Prime members will sign up by the end of the year. This is up from around 200 million in 2021.
“Macro headwinds will likely continue to pressure consumer spending,” Anmuth wrote in June.
Despite numbers being down and the economic slowdown, an Amazon spokeswoman said they are anticipating the event to be “bigger and better than ever” without saying how or why.
This year Amazon shares have soared to around 53% already, and on Tuesday shares rallied up around 1%.
In comparison with the Nasdaq Composite Index’s rally of around 30%, perhaps Amazon deals can push shares even higher as they already have done this week.
According to Insider Intelligence, Amazon Prime Day 2023 is forecasted to rake in about $12.9 billion, spiking around 11% from last year.
Already Prime Day has a typical order size of $56.26 as of Tuesday afternoon, when last year during the same sale, orders were only at $52.22, according to research firm Numerator.
“We know our customers love great deals, and we are optimistic they will prove the naysayers wrong,” the Amazon spokeswoman said.
In less than 24 hours Amazon Prime Day 2023 will be over and the numbers will determine how successful the day was. If profits have slumped, there’s always the option of hosting a second Prime Day-like event in the fall like in 2022.
