After its fall Prime-Day-like event fell short of expectations, Amazon continues to tighten its belt, encouraging its employees to do the same. It seems like the company has moved past its Day 1 mentality and is taking preventive moves.
The First Prime Day 2.0
Earlier this year, news broke out of Amazon’s plan to hold another major sales event in Q4 called the Prime Early Access Sale, a.k.a. Prime Day 2.0. It’s supposed to give customers an early access (hence the name) to discounted items so people can finish their holiday shopping before the rush. However, there are other underlying causes for the event—it’s a chance for the ecommerce giant to make up for losses from previous quarters and to increase revenue during the slower months leading up to the holidays.
If we look at Prime Day’s history, it started as a 24-hour sales event in 2015 and eventually went up to 30 hours, 36 hours, then a full two days. And with the Prime Early Access Sale this year, it seems like the company continues to add more major sales event to encourage customers to purchase.
Summer vs. Fall
Leaked documents obtained by Insider reveals that Amazon was already expecting the Prime Early Access Sale to have a significantly lower sales volume compared to Prime Day last July.
An analysis by consumer insights company Numerator reveals that the average order for Prime Day 2.0 is just $46.28, compared to the summer event’s $59.88. And while the Toys and Games category has seen a boost, all other categories declined in sales.
This might be partly attributed to the fact that fewer people knew about the Early Access Sale compared to the more popular Prime Day. There are also anti-Prime-Day events by other retailers such as Walmart’s Rollbacks and More (Oct. 10 to 13), Target’s Deal Days (Oct. 6 to 8), and Kohl’s Deal Dash (Oct. 11 and 12).
What This Means for Amazon Third-Party Sellers
Amazon seems to become more and more desperate to increase revenue and cut costs. There are a couple of ways this can affect third-party sellers.
First, Amazon may announce another major sales event next year or extend the periods of the current ones. While more Prime Days offer more opportunities for sellers to attract customers who are looking for great deals, it also has the potential to weaken the appeal of the event.
Second, Amazon may pass some of the costs to third-party sellers. We might see greater increases in selling and FBA fees, or new fees added to the list. It already added a fuel and inflation surcharge earlier this year, and there are already increases in seller fees during the holiday season.
Third, in order to keep its customers happy despite the increase in Prime membership fees, Amazon may change its policies to make them more favorable to buyers, some of which may potentially harm sellers. For example, the holiday returns window has been extended again this year, opening up more opportunities for returns fraud.
It’s Not Just Amazon
This “becoming more frugal” trend, however, is not limited to Amazon. Meta began quietly laying off workers to save 10% of operating expenses. Microsoft and Google scaled back its hiring efforts earlier this year, with the latter also laying off underperformers. Overall, Big Tech is getting more realistic about their ambitions and are focused on cutting costs amidst the worsening global economy.