Was Prime Day a bust for Amazon’s marketplace sellers?
July 13, 2016 04:33 PM
Amazon.com Inc. says consumer orders on Prime Day increased 60% compared with its inaugural Prime Day last year. But for marketplace merchants that sell on Amazon.com, the results from Tuesday’s big sale were mixed, and overall appear to be significantly lower than Amazon’s own sales gains
Marketplace sales grew a scant 1% year over year on Prime Day for CommerceHub retail customers, which include brands and retailers, while orders rose 7% compared with the Prime Day 2015, which was July 15, a Wednesday. In fact, marketplace sales of ChannelAdvisor e-retailers were down 3% compared with Prime Day last year in the U.S., and up 12% over Prime Day 2015 in the United Kingdom. CommerceHub and ChannelAdvisor help companies facilitate sales on online marketplaces such as Amazon.
CommerceHub and ChannelAdvisor’s data does not include sales of Amazon’s own inventory, including products such as the Echo, Kindle, Fire and others that had significant Prime Day promotions. Additionally, these numbers reflect same store sales, which means CommerceHub and ChannelAdvisor are reporting data for merchants that were selling on Amazon last year, and does not include new Amazon sellers.
Colin Sebastian, e-commerce analyst at Robert W. Baird & Co., says that while some marketplace sellers saw a bump, not all retailers had positive results on Prime Day. “While orders to Amazon marketplace sellers nearly tripled year over year, our conversations with multiple third-party sellers suggested there were some big winners [sellers that benefited from planning ahead and partnering with Amazon for some deals] and losers [sellers who saw no change or lower order volume yesterday],” Sebastian wrote in a note to investors.
One Amazon seller reported mixed results for Prime Day, despite betting big on the day with months of advanced preparation and increased investments in ads on Amazon.
Bling Jewelry founder Elena Castaneda says sales of her products on overseas Amazon sites, including Canada, the United Kingdom, China and Mexico, were up 30% Tuesday compared with Prime Day last year. Sales in the U.S., however, were flat, and sales of the three heavily discounted products that Bling Jewelry had included in Amazon Prime Deals had “a mixed performance.”
Bling Jewelry discounted its entire Amazon catalog by 20% on Prime Day and ran 40% to 50% discounts on the three products included in Prime Day-specific deals. The merchant also invested $20,000 in ads on Amazon to drive traffic to its storefront. That was far more than the retailer had ever spent on ads on Amazon.
Similarly, online sporting goods retailer Dazadi expected more from Prime Day. The e-retailer, No. 673 in the Internet Retailer 2016 Second 500 Guide, had a 55% increase in sales of its products on Prime Day compared with Prime Day 2015. Even so, that fell short of lofty expectations, Jason Boyce, co-founder and CEO of Dazadi, says.
“The first half of the day, growth was much lower than the second half of the day,” Boyce says. “We recently learned that Amazon's site had some issues in the morning that were resolved by the afternoon, which might explain the discrepancy.”
Prime Day comes with pros and cons for marketplace sellers. On the one hand, merchants can get a boost in a typically slow month. But Prime Day doesn’t necessarily build customer loyalty or facilitate repeat purchases, especially because marketplace sellers are prohibited from marketing directly to their Amazon customers.
Participating in Prime Day isn’t necessarily a strategy for long-term customer acquisition for marketplace merchants, says Eric Best, CommerceHub’s chief strategy officer. “This is a great opportunity to generate volume in a generally slow sales season,” Best says. Additionally, it’s an opportunity for merchants to put themselves in front of Prime customers, who shop twice as often—sometimes as much as five times as often—and who spend more at checkout than non-Prime customers, Best says.
That rings true for Dazadi. “The sad part about Amazon sales is that the customers do not belong to us,” Boyce says. “By far the biggest benefit of Prime Day are the big sales in a month that isn't our largest month. A lot of families vacation during this time of year and sales volume slows a little, so having a big sales day in the middle of July is really helpful.”
Having said that, Boyce believes that Dazadi’s presence on Amazon has boosted its brand and pushed at least some Amazon customers to Dazadi.com. Based on traffic and conversion rate data, Boyce says that he has reason to believe some Amazon customers come to Dazadi.com to make sure the retailer is authentic, and then go back to complete their purchases on Amazon. “We also think that customers buy directly from us as a result of our name exposure on Amazon, so in that way it helps us build our customers.”
Despite the lower-than-expected results, Boyce welcomes the boost in sales from Prime Day. Dazadi offered a handful of lightning deals, which are limited time deals offered throughout the day, and discounted some of its other best-selling items.
“We expected more, but we’ll take 55% growth with no complaints. Amazon has basically invented another Black Friday, which we appreciate greatly,” Boyce says.
Want a quick fact sheet on Amazon Prime Day from 2015 and how it compared to all other major e-retailing sale events?