Thursday, July 14, 2016

AMAZON PRIME DAY SUCCESS

Amazon just had its biggest sales day ever


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So much for concerns that the second Prime Day event didn't live up to Amazon's expectations.
The online retailer said Wednesday that the self-created holiday was its biggest sales day ever, with worldwide orders rising more than 60 percent compared with the previous Prime Day. In the U.S., orders rose by more than 50 percent.
The company declined to share how many people signed up for Prime to participate in the sale. To qualify for the sales event, which was created last year to celebrate Amazon's 20th birthday, shoppers need to be members of the service.
"The numbers blew me away," R.J. Hottovy, Morningstar's consumer strategist, told CNBC. He estimates the event may have added between $500 million and $600 million in incremental sales to the retailer's topline.
FBIC analyst Deborah Weinswig estimates sales at $525 million, up 26 percent from their projected sales of $415 million a year ago.
Analysts attributed the lift in Amazon's order volume to several factors. For one, it stocked its virtual shelves more deeply, allowing more customers to buy the deals they wanted, R.W. Baird analyst Colin Sebastian said. For another, it rolled out new discounts as often as every five minutes, compared with every 10 minutes last year.
"Naturally if you increase the number of offers you have substantially, you're also going to increase sales volume substantially," Forrester analyst Sucharita Mulpuru told CNBC. Given that Amazon accounts for roughly one-third of Cyber Monday's $3 billion in U.S. sales, Mulpuru "wouldn't be surprised" if the event was a billion-dollar day for Amazon, she said.
"That's significant, but it's one day," she said, adding that some purchases of big-ticket items may have come from shoppers who were already planning to buy those things a later date. Still, there were likely a fair amount of sales stolen from competitors, as well as unplanned impulse purchases on lower-price items.
Amazon shares closed slightly lower, at $742.63, Wednesday. That added to losses Tuesday, which began after a midday sales update from ChannelAdvisor. The e-commerce software company, which helps power the online operations of roughly 3,000 retailers, said Prime Day sales for its customers selling on Amazon were flat with the prior year's event.
But Piper Jaffray analyst Gene Munster cautioned investors about overreacting to that data point, as ChannelAdvisor's numbers represent just a sample of Amazon's sellers, he said. He added that the figures only capture same-store sales trends; and given that the number of vendors participating in Prime Day was more than double the prior year, they did not capture the complete picture.
Meanwhile, Amazon spread out its deals further into the day, including more than 800 of its limited-time "Lightning Deals" launching well into the evening. The retailer said Prime members saved more than double the amount they did last Prime Day — and it is already working to amp them up for next year's event.
"After yesterday's results, we'll definitely be doing this again," Greg Greeley, vice president of Amazon Prime, said in a press release announcing the results.
On its inaugural Prime Day, Amazon sold more units than it did on the previous Black Friday, which at the time was its largest sales day ever. The company did not provide an explicit sales forecast for this year's event, but said it anticipated the "record-breaking" day it received.
Other retailers hoped to capitalize on Prime Day's buzz by launching their own promotions. That includes Wal-Mart, which eliminated its $50 free shipping minimum this week. But the world's largest retailer was mum on Tuesday's results.
"While we aren't breaking out sales or providing updates outside of quarterly earnings, I can tell you millions of customers have been saving all month long on Walmart.com. Yesterday was no exception," Wal-Mart spokesman Ravi Jariwala said in a statement to CNBC.
Though analysts predicted other retailers would once again see a lift in traffic on Prime Day, Steve Osburn, a director at Kurt Salmon, said competitors' deals didn't stack up.
"They don't have nearly the product availability," he said.
Amazon sold more than 90,000 TVs and more than two million toys on Prime Day, the company said. Ordering on its mobile app also accelerated compared with the prior year, increasing more than two times among Prime members.
But the day was not without speed bumps. Just a few hours into the sale, Amazon shoppers reported issues adding items to their digital shopping carts. The problem was resolved a few hours later. Amazon would not comment on whether that hiccup caused it lose out on sales, though Munster was skeptical that it hindered the retailer's performance.
"The results indicate that the Amazon Prime brand remains strong and user engagement continues to improve," he told investors. Amazon's 60 percent unit growth topped Piper Jaffray's baseline expectations for 37 percent growth, and likely added 0.5 percent of incremental unit growth in the third quarter.
The retailer's July sales event is about more than generating revenue in an otherwise slow shopping month. The bigger goal is to encourage shoppers to sign up for a Prime subscription, which offers free two-day shipping and other perks for members. A monthly membership costs $10.99; an annual membership is $99. Last year's event led to more people trying Prime than any day in the site's history, Amazon said. But this year, it did not provide details on signups.
By getting shoppers to enroll in this service, it encourages them to spend more money with Amazon. Whereas Prime members spend an estimated $1,200 a year on Amazon, non-members spend roughly $500, according to Consumer Intelligence Research Partners.
Once Amazon persuades shoppers to sign up for the service, they tend to be loyal. Separate data from CIRP has found that people who sign up for a free 30-day trial are converted into paying members 73 percent of the time. And after one year, 91 percent of members renew for a second.
As the pool of Prime members grows, however, it will be increasingly difficult for it to attract new signups. Amazon does not specify the number of Prime members, but CIRP estimates roughly 63 million people in the U.S. are part of the program. A separate estimate from Cowen & Co. analyst John Blackledge pins the figure at closer to 45 million.
Both firms estimate that Prime shoppers account for roughly half of Amazon's purchases.
For more, here's the full press release from Amazon:
The second annual Prime Day was the biggest day ever for Amazon. Amazon today announced customer orders surpassed Prime Day 2015 by more than 60% worldwide and more than 50% in the U.S. It was also the biggest day ever for Amazon devices globally and record Prime Day for each Amazon device category including Fire TV, Fire tablets, Kindle e-readers and Alexa-enabled devices. Prime Day was a great savings day too - members globally saved more than double on deals over Prime Day 2015.
"Prime itself is the best deal in the history of shopping, and Prime Day was created as a special benefit exclusively for our Prime members," said Greg Greeley, Vice President, Amazon Prime. "We want to thank our tens of millions of members around the world for making this the biggest day in the history of Amazon. We hope you had as much fun as we did. After yesterday's results, we'll definitely be doing this again."
Prime Day 2016 highlights globally:
• Sold over 2.5x more Amazon Fire TV devices compared to Prime Day last year - Fire TV Stick was the best-selling Amazon device.
• More than two million toys and more than one million pairs of shoes were purchased by customers on Prime Day 2016.
• More than 90,000 TVs were purchased on Prime Day 2016.
• Hundreds of thousands of Kindle e-readers sold on Prime Day.
• Prime member orders on the Amazon app surpassed Prime Day 2015 mobile app orders by more than 2x.
• More than a million customers used the Amazon app for the first time on Prime Day to shop and to watch-a-deal.
• The Prime Photos sweepstakes had two million submissions worldwide during the lead-up to Prime Day, the winner will be randomly selected on or about July 14.
Prime Day 2016 highlights from the U.S.:
• Amazon devices were up over 3x compared to Prime Day last year.
• Biggest day ever for Amazon Echo - up over 2.5x compared to previous record day.
• The most popular Amazon Dash Button brands purchased on Prime Day were Cascade, Charmin and Tide.
• Members purchased over 215,000 Instant Pot 7-in-1 Multi-Functional Pressure Cookers.
• Members purchased over 200,000 headphones.
• Members purchased over 24,000 Double Hammocks by Vivere.
• Members purchased over 23,000 iRobot Roomba 614 Vacuum Cleaning Robots.
• Members purchased over 14,000 Lenovo laptops.
• Members purchased on average one Alexa-exclusive deal per second during Prime Day using their voice.
• Prime members had exclusive access to deals on top rated TV series and blockbuster movies to rent or purchase and instantly stream on the Amazon Video app on TVs, mobile devices, Amazon Fire TV, Fire TV Stick, and Fire tablets, or online - the top three Prime Day deal titles purchased or rented were: Deadpool, Kung Fu Panda 3 and 13 Hours: The Secret Soldiers of Benghazi.
• Customers saved over $1 million on Kindle Unlimited memberships on Prime Day and the Prime Day Lead-up Deal on July 5.
• The most selected Audible audiobook on Prime Day was A Game of Thrones: A Song of Ice and Fire, Book 1.
Fire TV Stick was Amazon's best-selling device globally. Other top sellers around the world, excluding Amazon devices were:
• U.S.: Instant Pot 7-in-1 Multi-Functional Pressure Cooker
• UK: Oral-B Pro 6000 CrossAction Electric Toothbrush with Bluetooth Connectivity and Smart Series
• Spain: SanDisk USB memory stick
• Japan: Calbee Breakfast Cereal 800 grams
• Italy: Lexar JumpDrive
• Germany and Austria: Tefal Jamie Oliver Frying Pan
• France and Belgium: Game of Thrones DVD - season 1 to 4
• Canada: Sennheiser HD 598 Special-Edition Over-Ear Headphones
Prime Day was another record-breaking success for the sellers and small businesses worldwide participating in the event. Small businesses and sellers on Amazon offering deals to Prime members saw orders nearly triple year-over-year on Prime Day - both worldwide and in the U.S. Feedback from sellers includes:
• "On Prime Day we had one of the largest sales days in our company's 108 year history. Prime Day is a win for sellers and customers." - Larry Frankel, Director of Business Development, Huppins/OneCall
• "Prime Day was our biggest day of the year! We more than quadrupled the number of sales from our previous biggest sales day." - Emily Wilcox, Founder, Fayebeline
• "We offered customers our best products at great deals and they responded in a big way. Prime Day helped us reach our highest sales day ever." - Dovi Brafman, CEO of Sharkk
• "On Prime Day we offered customers a great deal for the Nikon D3300 camera and the deal sold out within the first hour!" - Elazar Klein, Merchandising Director, Ritz Camera
• "We are absolutely thrilled. Gaining access to millions of Prime members on Prime Day was a huge win for us." - Brian Buccella, Vice President of Marketing at Segway
• "Prime Day introduced Cielo to countless new customers and increased my daily sales 1000% in a single day!" - Christine Boerner, Founder, Cielo Pill Holders
• "On Prime Day this year Etekcity experienced unprecedented growth not just in the U.S. but globally through Fulfillment by Amazon." - James Li, Director of Marketing, Etekcity
• "Amazon gives small businesses an amazing opportunity to get in front of a new audience with Prime Day. Prime Day was our biggest sales day of the year!" - Bridget Hilton, founder, LSTN Sound Co.