Today, the Amazon Prime Day sales event kicked off with the company promising millions of deals over this year’s two-day sales event.
Prime Day was moved by one month for 2021 as Amazon believes this is a better time period for the mid-summer sales event the company started 2015 in July.
Last year, the company moved Prime Day to October due to the Covid pandemic. But for this 2021, it is again a summer sale globally except for Canada and India, where Amazon has postponed Prime Day for now due to the ongoing Covid emergencies in those countries.
Some sellers see Prime Day as an opportunity to reduce inventory they store at Amazon warehouses to make room for the holiday season. For other sellers, the summer is an important sales period, and Prime Day can be a catalyst to jump-start sales not just for seasonal sellers but all-year sellers.
Amazon Prime Day 2021 New Challenges For Sellers
The 2021 edition of Prime Day may not be as profitable for some sellers facing new storage limitations by Amazon to ramp up inventory. Amazon recently updated its Inventory Performance Index algorithm, with some sellers reporting significantly reduced storage thresholds on what they can send to Amazon for the Prime Day sales event.
The Inventory Performance Index allows Amazon to maximize its warehouse storage capacity by avoiding sellers sending items to Amazon fulfillment centers and inventory products at much higher levels than they sell. Even so, sellers are charged for storage, it appears Amazon puts a higher premium on warehouse storage space and the ability to manage inventory levels, likely caused by the bottlenecks it faced last year when the Covid crisis quickly ramped up demand.
In addition to storage limitations, some sellers have faced supply chain interruptions due to increased manufacturing costs and delivery delays at ports. As a result, these sellers worry that they may not have the inventory to handle the sales if they discounted merchandise too much for Prime Day.
In many ways, this year’s Prime Day sales event is again full of challenges that are different from last year when sellers had to manage a postponed Prime Day that effectively kicked off the holiday season.
While Prime Day in 2021 will not impact the holiday season the way last year’s edition did, some of the problems sellers face this year may trickle into the holiday season later.
Krish Iyer, Head of Industry Relationships & Partnerships at ShipStation, an online shipping platform solution for small business merchants, summed it up this way.
“Yes, Prime Day will be an indicator of trends to expect this holiday season. It’ll be key to watch not only the spillover effect on a specific item but the ‘reasonable substitutes’ that get purchased. If buyer interest is created, but the product is not available, we’ll need to monitor what the reasonable substitutes/brands/items that the consumer might be willing to accept are, and at what price point. This often happens during holiday shopping: ask any parent who has tried to buy toys for their child at holiday time…a lesson of bitter experience.”
Amazon’s experiment to move Prime Day one month earlier will be interesting to watch. But, of course, everyone expects higher sales than last year, or at least 2019, a more comparative sales period.
The company likely will be able to deliver on higher sales over 2020 or 2019, but the growth curve may not be as good in 2021 if many sellers who previously had success on Prime Day had to pull back in 2021.
Amazon didn’t seem concerned and said to CNN that it is offering more deals for Prime Day in 2021 versus last year, “with more than one million deals from small and medium-sized businesses around the world and more than two million deals total” over the two-days.
But if those deals are not as good or deep as previously, shoppers may not bite, which will impact overall sales for the sales event.
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