Amazon’s Prime Day Starts Strong but the Game Is Long

In an aerial view, an Amazon delivery truck leaves an Amazon distribution center on July 16, 2024 in Richmond, California. (Justin Sullivan/Getty Images)

U.S. retailers’ summer sales extravaganza —led by Amazon Prime Day—is off to a solid start and remains on track to drive record-breaking online sales, according to new data from Adobe Analytics. But with the sales stretching longer than ever, consumers are waiting to pull the trigger, which will likely spread the sales out throughout the week.

Amazon and Walmart’s yearly summer sales event kicked off Tuesday, adding to the swell of retailers advertising Black Friday-like deals in the peak of summer, including Target, Costco Wholesale, Kohl’s, and Best Buy. Altogether, U.S. retailers drove nearly $8 billion in online sales on Tuesday alone, up 9.9% from last year and marking the biggest single e-commerce day in the year, Adobe said. The figure surpassed the $6.1 billion customers spent online during Thanksgiving last year, Adobe added.

Tuesday’s performance gave the firm confidence to reaffirm its forecast for consumers to spend a record $23.8 billion throughout the entire Prime Day period, ranging from July 8 through 11—or the equivalent to two Black Fridays. Top categories on Tuesday included appliances and electronics, with sales up 135% and 95%, respectively, compared with average daily sales in June. Back-to-school supplies also saw a surge, with spending up 190% for items such as backpacks, lunchboxes, and stationery.

Discounts ranged from 9% to 23% off listed prices on Tuesday, and Adobe expects them to remain in that range over the course of the week. Apparel, electronics, and toys should see the biggest discounts, Adobe added.

This is the first time Prime Day has stretched over four days. In the past, the event lasted two days.

The longer period will give consumers more time—and incentive—to spend, experts say. Justin Post, an analyst at BofA Securities, estimates Prime Day could generate more than $21 billion in gross merchandise value for Amazon, growing 60% from last year. Post has a Buy rating on Amazon stock with a $248 price target.

But it will also tweak consumer behavior in a way that could make it hard to interpret early data, including by giving them more time to mull over purchases, compare prices across other retailers, and spread out their shopping over the course of the week.

Momentum Commerce, a company that manages Amazon sales for dozens of brands such as Crocs and Therabody massagers, said that Prime Day sales for its brands fell 41% on Tuesday compared to a year ago. The performance on Tuesday prompted Momentum Commerce to revise its forecast for the four-day event Wednesday afternoon to a 9.1% increase, down from a prior 14% growth forecast.

That’s still “super, super healthy” growth, said Momentum Commerce’s CEO and founder John Shea, adding that the company and the brands it works with continue to expect strong results from Prime Day. Indeed, Momentum Commerce’s clients saw sales surge 477% on Tuesday compared to typical daily sale volumes, and Shea said engagement on the platform was high, even though first-day sales were soft compared to last year.

The stark annual decrease on Tuesday is more likely a function of the new four-day format than a broader decline in consumer demand or interest, Shea added, as consumers are strategically timing their purchases to make sure they get the best price. In practice, that means many shoppers are browsing the side and adding items to their carts—but are waiting to hit the buy button until they’re sure they have the best deal.

Uncertainty around trade policy may also be clouding the preliminary data, he added. Some brands scaled back their Prime Day inventories over fears their orders would be subject to new tariffs, constraining their ability to offer deeper discounts.

Momentum Commerce’s report and concerns over whether consumer demand was as robust as investors had hoped weighed on Amazon’s stock Tuesday, but shares staged a comeback Wednesday, and finished up about 1.5% at $222.54. Shares of Amazon’s competitors weren’t faring as well. Walmart dropped 0.3% and Costco was off 0.4%, while Target ticked up 0.4%.

An Amazon spokeswoman told Barron’s over email that Momentum’s numbers painted a “highly inaccurate” picture of Amazon’s actual data companywide, and pointed to comments made by Jamil Ghani, vice president of Amazon Prime, on Bloomberg TV Wednesday.

“We just started the event yesterday so it’s very early. We’re really pleased by the engagement that we’re getting from our customers and our members,” Ghani said.

It may do well for investors to remember that a four-day shopping spree is a marathon—not a sprint.

Write to Sabrina Escobar at sabrina.escobar@barrons.com