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Prime Day 2021 Redux
June 21, 2021

(Update – as of June 25, 2021, 11AM ET)

As we predicted, Amazon Prime Day results are in and CommerceIQ‘s data analysts once again proved they were spot on with their crystal ball:

2021 delivered an average 2.2X lift in sales (exactly what we predicted) compared to the 1.8X lift during Prime Day 2020.

Amazon ads were a hit – brands spent almost 45% more on ads in 2021 than last year (just shy of our 50% projection!).

Profitability was up – despite offering lower discounts, brands still saw sales rise by 6% compared to last year.

For CommerceIQ customers, our technology and automation kept their digital shelves full stocked, delivering 63% lower RepOOS rates (less than pre-pandemic levels!!).

(Update – as of June 22, 2021, 1PM ET)

While we are celebrating our  Series C raise, our team continues to monitor Prime Day trends. Yesterday, we talked about CPC prices and ad spend. Today, we have some fresh observations on what consumers are actually searching for and buying.

The fact is, most search terms only account for a few customers. The bulk of customers are represented by the top 1% of terms, so we looked at how those search terms changed on Prime Day vs the most popular terms from last week, the prior month and the prior quarter to detect changes in consumer behavior. 

Our findings: 

  1. Only about 30% of searches with big short-term increases in frequency were driven by customers seeking Prime Day deal products. 
  2. Social media and seasonality were still far bigger drivers of even short-term increases in the number of customers looking for particular things.
  3. Prime Day deal shoppers are primarily interested in electronics, particularly TVs and tablets.
  4. People seem to always be looking for Prime-eligible bath towels on sale. 8×10 rugs are also popular.

Here, for example are the top 20 terms that changed the most week over week from the 1% most frequent search terms.

Most of the very top terms remain the same as they have been:

The exceptions, the top terms that showed a real increase in the number of customers over long-time averages, are almost all seasonally-driven changes.

Looking at the entire list of search terms currently being used and filtering for “deal” or “Prime Day” does give us an idea of what customers are looking for, and it fits in with expectations: electronics, TVs, 10-inch tablets, Harry Potter videos. One surprise was 8×10 rugs. Another surprise is that customers are looking for prime-deliverable bath towels on sale pretty consistently over time. Interest in deals overall is middle of the road but consistent.

(Update – as of June 21, 2021, 4PM ET)

  • Ad spend is trending what we saw last year
  • Even though budgets are higher, it doesn’t look like there is a big spike in actual spend
  • CPCs have not jumped the way they did in the past, even though traffic is higher; in fact, CPC was actually coming down until 5 days ago.

In 2019 and 2020, we saw higher CPC increases pre-Prime Day than we’ve seen so far this year. In 2019, CPC jumped 10% in the 5 days before Prime Day. In 2020, the increase was less steep but CPCs did start to climb a full week and a half before the event (some of this could have been normal Q4 increases). This year, because we are in Q2, baseline CPCs are already lower than the October base CPCs that 2020 saw, and they have not started to increase at nearly the pace of 2019 or 2020, meaning that although traffic increases on Prime Day will be substantial, it should cost brands relatively less to grab each click.

We say should. It’s still possible to spend a lot of ad dollars wastefully on higher-CPC, unproductive terms without careful attention to the way bids, terms, products, inventory levels, competitive pricing levels, and current organic search position are matched. The impacts of an AI-driven system that can manage all of these factors in real time can be seen in the iACOS levels (total sales vs. ad spend) of CIQ clients before and after they began using our platform during Prime Day (with ACOS, lower is better :)) 

(Update – as of June 18, 2021 6PM ET)

  • Discounts:
    • Prime Day really is Prime Day. Even though Prime Day Discounts start a few days before the actual event, these deals are not always the greatest and in general, customers should wait for true Prime Day Deals. So far in 2021, we are seeing greater discounts but not as many products being discounted in advance, suggesting that brands are holding out to offer their deepest discounts until Prime Day itself.
      • In 2019, brands started discounting by almost 10% higher than average 2 days before Prime Day. Actual Prime Day discounts were 20% higher than average. 
      • In 2020, brands started discounting by almost 20% higher than average 2 days before Prime Day. Actual Prime Day discounts were 30% higher than average. 
      • In 2021, the same trend is appearing where brands have started launching Pre-Prime Day discounts. Even though the average Pre-Prime Day discount for 2021 is as high as Prime Day discounts of 2020, we expect the real discounts on the day of Prime Day
  • Ad Spend:
    • For items like rumba and air poppers, shoppers already know what they want and are searching organically. On these discounted products, the amount of ad spend or discount percentage doesn’t impact sales. However, it is a great opportunity to convert customers to non-deal products, and smart sellers will boost ad spend to drive sales on non-discounted higher margin products.
      • Brands Increased their Ad-spend 3X during 2019 Prime Day
      • Brands Increased their Ad-spend 2X during 2020 Prime Day
      • Brands across all categories are expected to spend 2X their monthly average during 2021 Prime Day
  • Cost Per Click (CPC) prices during Prime Day
      • In 2019, the pre-Prime CPC was $1.50 rising to $2.25 during Prime (50% increase in CPC)
      • In 2020, the pre-Prime CPC was $1.80 rising to $2.20 during Prime. (22% increase in CPC). Of particular note is that in 2020, CPC was already 20% higher than 2019.
      • In 2021, the pre-Prime CPC was $1.80 and is expected to rise to almost $2.25 during Prime, representing a 25% increase. 
    • Brands are spending more (2x YOY), but it’s relative because their fixed budgets don’t go as far as they used to given rise in CPC. Brands leveraging CommerceIQ have 65% lower iACOS/TACOS on average, which means their ad spend is much more efficient.
  • Category Specific Ad Spend Insights
    • Furniture and Decor are by far the leading spender on Prime Day 2021 (4X above monthly average). This is not surprising, as this Prime Day is in Summer 2021.
    • Other Categories like Health and Household, Patio, Lawn & Garden and Electronics have amped up their spend as well (2X above monthly average).
    • What is an outlier is Beauty and Personal Care. This category spent more in 2020 Prime Day (50% more) as opposed to 2021 Prime Day. 
  • Other Predictions
    • Traffic:
      • Even though brands start discounting prior to Prime Day, customers are holding out for the real discounts to come on Prime Day. 
        • In 2019, we saw a 1.8X increase in traffic during Prime Day
        • In 2020, we saw a 2.1X increase in traffic during Prime Day
        • In 2021, we expect to see a 2.4X jump in traffic
  • Sales (OPS):
    • In 2019, brands saw a 2.25X jump in sales 
    • In 2020, brands saw a 2.4X jump in sales
    • This year, we expect brands to see a 2.5X jump in sales

Is Prime Day turning into Prime Week (or Prime Month)?

Prime Day began as a single day, but by its third year, it was 30 hours, then 36, and now 48. And as the deal space gets more crowded and advertising gets more expensive (the CPC have gone up by almost 20% Y-o-Y), some sellers and brands turn to early deals to try to get a jump on the competition by rolling out even more early deals, turning the event into a “Prime Week”. 

However, the big question is, does it work? 

Our research and data say no, it does not. In 2019, we saw an increase in discounting in the days leading up to Prime Day, with average discount levels on Amazon increasing by about 10%. In 2020, we saw a bigger, clearly intentional 20% spike in discount levels 3-4 days before the event itself.

Figure 1: Spikes in discounts 2 days before Prime Day in both 2019 and 2020

However, none of these discounts created a real lift. Sales and Traffic pre-Prime Day remained flat. Deals actually performed worse than they would have normally.

Figure 2: Sales Drop immediately before and after Prime Day in 2019 and 2020

Psychologically, it appears that customers have been conditioned to believe that pre-Prime day deals are not as good as deals on Prime Day itself, and they prefer to wait. 

Figure 3: Significant drop in Glance Views Prior to Prime Days

Our advice to brands is to not lose focus trying to figure out an early deal strategy and focus on getting it right on the day of the event itself. Traffic spikes will create the sales you are looking for, and that — by the way — includes focusing the bulk of your attention on the products you are NOT discounting.

Post-Prime Day, there is an opportunity to leverage Prime Day traffic to drive additional sales through two strategies

  1. Subscribe & Save discounts on Prime Day purchases
  2. Smaller discounts and advertising surges, on high-converting, high-margin variants of products purchased on Prime Day. See our “Prime Day Success Punch List”.

Note: one reason customers may believe pre-Prime day deals aren’t as good as actual Prime Day deals is that they are not. Looking at the deals on televisions that Amazon is advertising right now, it’s clear that those “discounts” are more a result of list price manipulation than real value pricing. This 32-inch HDTV, for example, looks great at $119.99, or 40% of its list price of $199.99.

But a quick check on any price history tracker, shows that as recently as March, the list price on this product was only $119. 

  The seller (ironically – in this case – Best Buy using Amazon as an eCommerce sales platform), raised the list price in May so that it would be at a higher price for 30 days, meeting Amazon’s requirements for qualifying as a deal with this new discount, but really it’s just the old price. So, my advice to customers is the same as my advice to brands. Don’t waste your time and effort trying to smoke out pre-Prime Day deals. The real goodness is on the day itself.

Part 2: Prime Day 2021 Insights & Predictions

The data below is for:

  • Prime Day 2019 (July 15-16, 2019)
  • Prime Day 2020 (October 13-14, 2020)
  • Prime Day 2021 (June 21-22, 2021)

Deal Discounts:

Prime Day really is Prime Day. We are seeing fewer pre-sales events leading into Prime Day as in previous years.

  • In 2019 Prime Day Sales for 2 days were almost 2.24x the average for the month
  • In 2020 Prime Day Sales for 2 days were also 2.5x the average for the month
  • In 2021 Prime Day Sales for 2 days are expected to be 2.6X the average for the month

Key Takeaways:

  • Customers do hold off until Prime Day to purchase; they believe early deals are not that good and they are right.
  • Discounts are the deepest (up to 26%) on Prime Days.
  • Customers are used to already discounted products. Y/Y discounts on products at the start of Prime Day have been steadily rising over the past few years.
  • In 2019, Prime Day Discounts were almost 20% better (24% instead of 20%) than average daily discounts.
  • In 2020, Prime Day Discounts were almost 20% better (26% instead of 22%) than average daily discounts. It is important to note that 2020 pricing was already lower than in 2019.
  • In 2021, Prime Day Discounts are already higher than 2020 and 2019 discounts prior Prime Day. Discounts are already averaging 24% (10% higher than 2020 average). 

Backup Data:

  • In 2019, we saw an increase in the number of products being discounted at “pre-sale” events up to 2 weeks before Prime (about 20% discount).
  • In 2020, we saw a more intentional effort just a few days ahead to get a jump on Prime Day itself by slotting in deals to capture attention before the sea of noise on Prime Day.
  • As of now in 2021, we are seeing a smaller number of items ahead of Prime Day deals being offered at >20% discount compared to this time last year.

Advertising Spend

Prime Day is a halo event to drive traffic and promote/advertise high margin, undiscounted products. Discounts alone do not drive sales/incremental traffic.

Key Takeaways:

  • For items like rumba and air poppers, shoppers already know what they want and are searching organically. On these discounted products, the amount of ad spend or discount percentage doesn’t impact sales. However, it is a great opportunity to convert customers to non-deal products!
  • Smart sellers use Prime Day to make money on un-discounted, higher margin products by boosting ad spend. Lots of upsell and cross sell with tons of traffic.
  • Brands are spending more but that’s relative because their fixed budgets don’t go as far as they used to given rise in CPC.
  • YOY spend has gone up by 2X. But since CPC prices have also risen by almost 25% (see next section), they have to be efficient with what they can afford.

Ad Prices (CPC)

Prime Day ads are on average 25-50% more expensive during Prime Days, and they are on average 20% higher YOY.

  • In 2019, the pre-Prime Day CPC was $1.50 rising to $2.25 during Prime (50% Increase in CPC)
  • In 2020, the pre-Prime Day CPC was $1.80 rising to $2.20 during Prime. (22% Increase in CPC). Note that CPC on Prime Day that year was already 20% higher than in 2019.
  • In 2021, the pre-Prime CPC was $1.80 rising to $2.20 during Prime Day, representing a 25% increase in CPC). 

Ad Efficiency

As brands are spending more Ad Dollars on Amazon and on Prime Days, it is very important for Brands to be more efficient with their ad dollars. 

Not only they have to make sure their ad dollars are lowering their ACOS, they have to make sure ad-dollars are driving Incremental Sales Growth, hence improving their iACOS/TACOS (Total Advertising Cost of Sales). 

  • Below you can see that prior to joining CommerceIQ in 2019, the average iACOS/TACOS was 7. That means the brands were spending $0.07 to drive $1 in overall sales. 
  • Customers leveraging CommerceIQ, had nearly 350% better ad-efficiency. They have lowered their iACOS/TACOS to 2.5 on average, which means they spend only $0.025 to drive $1 in sales (65% less even with higher CPC and Ad-budgets). 

RepOOS (Replenishable Out-of-Stock)

OOS is like the plague for e-commerce sellers. This translates not only into lost immediate sales, but lower rankings and more business for the competition. Without automation, brands CommerceIQ surveyed experienced a 5% OOS rate. With automation, we saw that decrease to as low as 1% (based on detailed views to their product pages).

Pre-COVID in 2019, RepOOS was not much of an issue, but as supply chain issues started creeping up with the pandemic, RepOOS in 2020 went up on average by 500% or 5X (2.5% vs 0.5%). But with automations and technology, brands are able to lower their RepOOS by 40% (1.5% vs 2.5%). 

Category Specific Ad Spend Insights

Brands are on average spending almost 2X in 2021 of what they spent on Prime Day 2020. 

Furniture and Decor are by far the leading spender on Prime Day. This is not surprising, as this Prime Day is in Summer 2021. 

Other Categories like Health and Household, Patio, Lawn & Garden and Electronics have amped up their spend.

What is an outlier is Beauty and Personal Care. Their Prime Day Spend is only 10% higher than 2020 Prime Day.

If you’d like to understand how CommerceIQ can help your brand succeed at Amazon, be sure to contact us for more information or request a demo today.