Happy post-Prime Day! This Prime Day 2020 was not the “biggest Prime Day/Shopping Day” for Amazon. Other retailers posted large Prime Day deals which made for a remarkable sales event regardless. Brands that were able to prepare for the event saw big days that exceeded our expectations.
In the operations world, Amazon seems to have settled on a new normal that involves limiting inbound shipments to manage their warehouse capacities. Even with these new limits, getting product into the warehouse is a much more challenging task today than it was a year ago.
Chris Moe and Jonathan Willbanks
Co-founders, Cartograph LLC
Prime Day - What we saw
SALES – deals, deals, deals
· Brands that ran Prime Day deals saw spikes from 4x to 10x daily sales during the 48 hours of Prime Day
· Brands that ran basic coupons saw smaller spikes of about 2x of daily sales - $ off coupons did better than % off
· Several SKUs that were featured in Prime Day deals were able to take Best Seller badges
· Whole Foods Market on Amazon now displays in-store promotions online
Though this Prime Day was not bigger than last year’s, our brands saw good lift from coupons and other Prime Day deals. This put them in better positions to improve best seller rankings, especially in categories where the competition stayed out of the shopping holiday. Deals that ran on the first day of Prime Day tended to do better than deals on the second day, a trend that we’re likely to see echoed on Black Friday/Cyber Monday.
Whole Foods Market in-store promotions are now echoed online, which can cause conflicts if the same SKU is available in both markets. This leads to some WFM listings taking top positions in search away from core .com listings, though these are only shown to customers within deliverable regions.
OPERATIONS – good sales lead to higher inventory limits
· Brands with big Prime Day sales saw significant increases in their inventory send-in limits.
· Many brands are experiencing missed pickup appointments for LTL shipments. Some brands have had success arranging their own freight or using small parcel for their shipments. We observe this to be the major bottleneck – check in times to warehouses no longer seem to be the issue.
IPI scores and restock quantity limits have been difficult to impact, which has been a big inventory planning constraint. Big sales from Prime Day increased the limits on units brands were able to send in, which makes Q4 inventory planning much simpler. As with every Q4, as the year continues it will become increasingly difficult to get inventory into the warehouses with any expediency.
What should grocery / essential category brands do on Amazon right now?
· Q4 Preparation - prepare for Q4 by focusing on seeding your sales rank before the holidays begin. Black Friday is your next big chance. As Amazon traffic increases, it becomes more difficult to move in best seller rankings. Brands with lead up momentum to the holidays (either from Prime Day or Black Friday) with deals and coupons are in a much better position to have a strong Q4. Last year, 80% of Prime users bought Grocery items for the first time during Black Friday; be sure you’re in a good position to take advantage of folks shopping Grocery.
· Holiday merchandising – sales of holiday-related items are extremely strong, starting with Halloween. You can take advantage even without launching new products: try creating “holiday theme” virtual bundles with existing inventory, launch Sponsored Brand campaigns with holiday-specific copy, and create holiday-related images.
· Restocking Limits – keep a careful eye on your restock limits – they change almost daily. If you are expecting a big sales season, make sure you don’t run out of stock by sending in inventory when you can. Check your score to see if there are any easy improvements, like returning or discounting overstocked inventory.
Our Future Outlook Consider whether you can position your product as a holiday or giftable product. This holiday season will see a much lower number of folks flying home to spend time with family. In response, it is likely that the number of gifts being sent through Amazon will see a higher spike in 2020 than in previous years. Gift baskets, holiday-themed SKUs, and other giftable products are in a good position to take advantage of the shift in holiday shopping behavior.
Overall, Amazon’s still figuring out how to handle fulfillment in a post-COVID world – there is certainly still “managing of demand” as voiced on earnings calls, and Prime Day was not promoted nor planned for with the usual intensity, as most Vendor Central brands saw very small purchase orders relative to prior years (typically a strong leading indicator for major sales days). We suspect that the missed pickup times, and sometimes inexplicable shipment status (e.g., “in transit” for weeks) are fulfillment centers gaming metrics being set by operations management.
As always, please reach out if you have any Amazon questions or puzzles we can help solve.
Cartograph Leadership Team
Chris Moe and Jonathan Willbanks