Amazon takes on Home Depot, Meta with Big Spring Sale

The news: Amazon is adding a spring sale to its calendar in an attempt to fortify sales and fuel its thriving ad business.

• The retailer’s first-ever Big Spring Sale will run from March 20 to March 25, with deals on “seasonally relevant items” like outdoor furniture and clothing.
• Non-Prime members will be able to shop the event, although Prime users will have access to exclusive promotions.

Our crystal ball: We forecast back in July 2023 that Amazon might hold a Prime Day event in spring.

At the time, former EMARKETER analyst Andrew Lipsman theorized in an episode of Reimagining Retail that Amazon might use the sale to grow its share of the home improvement and furnishings market, like Wayfair attempted with Way Day.

• That appears to be Amazon’s thinking precisely.
• The event is timed to coincide with similar sales by Lowe’s and Home Depot and take full advantage of the fact that spring is typically the busiest period for home improvement.

It’s also an obvious effort to juice sales amid weakening consumer spending.

• US retail sales grew slower than expected in February—up 0.6% month over month (MoM) and 1.5% year over year (YoY), per the US Commerce Department.
• Those figures are unadjusted for inflation, which reached 3.2% last month, meaning that in real terms, shoppers are buying less.

Challenging the duopoly: The additional sales event should enhance the strong momentum Amazon’s ad business is seeing.

Prime sales events have been huge for Amazon’s ad business.

• Total ad spend on Amazon in July and October was up 37% and 33%, respectively, when benchmarked against spending in December 2022, according to Industry KPIs data provided by CommerceIQ.

The retailer is taking ad dollars from Meta and Google.

• Advertisers are increasingly turning to Amazon to drive brand awareness and sales due to skyrocketing customer acquisition costs on other platforms.
• Brands are now spending between 12% to 15% of their Amazon sales to advertise on the platform, up from 8% previously, Mark Power, the CEO of marketing agency Podean, told Business Insider.
• The additional spend is being allocated to new formats, like Prime Video ads, and features like Amazon’s data clean room—helping to crystallize Amazon’s retail media dominance.

The big takeaway: The Big Spring Sale should keep Amazon’s flywheel humming along nicely.

• Our forecast expects Amazon’s US retail ecommerce sales to grow 10.5% this year, outpacing overall ecommerce growth by over two percentage points.
• Ad revenues will grow even faster at 26.6%, helping the retailer narrow the gap further with Google and Meta.