Reimagining Retail: How consumers view October Prime Day and how it's changing holiday shopping behavior

On today's podcast episode, we discuss whether the October Prime Day is actually a holiday event, how events around this time of year are changing how folks shop throughout the back half of the year, and what the disruptors are likely to be as we head into the holidays. Listen to the conversation with our analyst Sara Lebow as she hosts analysts Zak Stambor and Rachel Wolff.

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Episode Transcript:

Sara Lebow (00:00):

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(00:11):

Learn more about better measurement on TikTok at TikTok.com/business.

(00:18):

Hello, listeners. Today is Wednesday, October 16th. Welcome to Behind the Numbers: Reimagining Retail, an eMarketer podcast made possible by TikTok. This is the show where we talk about how retail collides with every part of our lives.

(00:32):

I'm your host, Sarah Lebow.

(00:34):

Today's topic is Amazon Prime's Big Deals Day and what it means for the rest of the year.

(00:45):

Before we jump into all that, let's meet today's guests. Once again. We have two of our analysts joining me for today's episode. First up is Zak Stambor.

(00:55):

Hey, Zak.

Zak Stambor (00:56):

Hey Sarah. Happy to be here.

Sara Lebow (00:57):

Happy to have you.

(00:58):

Also happy to have with us, Rachel Wolff.

(01:00):

Hey, Rachel.

Rachel Wolff (01:01):

Hey, thanks for having me.

Sara Lebow (01:02):

Thanks for being here.

(01:04):

Okay. It happened again. Amazon had another Prime Day style event.

(01:09):

Prime Big Deals Day took place on the eighth and ninth of last week. Probably going to end up calling it Prime Day the rest of the episode because I can never remember that.

(01:17):

I didn't buy anything. Did either of you?

Rachel Wolff (01:19):

I did not.

Zak Stambor (01:20):

I did. I did. I bought a raised garden bed.

Sara Lebow (01:23):

Oh yeah. Okay.

(01:25):

So, we're at one for three in purchases.

(01:27):

Let's talk about what else happened on Prime Big Deals Day. What are the numbers telling us about this event?

Zak Stambor (01:35):

Well, as usual, Amazon came out with a statement that doesn't say a whole lot, but does say it's the biggest October shopping event ever.

Sara Lebow (01:44):

It's always the biggest ever.

Zak Stambor (01:46):

Always, always, always, more prime members shopped than ever before. Beyond that, not a lot of detail.

(01:53):

Looking at some other sources, there were plenty of discounts to be had. The discount rates were up 4% year over year to an average of 21% according to Salesforce, and consumers, by and large, were pretty happy with the deals. The majority, I think it was 57, 58%, said they were happy or extremely happy with the deals offered by Amazon during the event.

(02:18):

So, by and large, big sale with steep discounts, consumers shopped, seemed to drive some significant revenue, and that's by and large the story of the sale, but there are some other elements. Traffic was down about 2% according to Salesforce, but that's probably the result of the hurricanes causing massive disruptions in the Southeast and just diverting consumer's attention away from the sales event.

Rachel Wolff (02:48):

One said, that I thought was interesting, was Momentum Commerce, which manages e-commerce sales for Clorox and Lego and a couple of brands like that, they said that the gap between during this Prime Day versus July Prime Day was much smaller than it has been in previous years, which I thought was interesting. It just shows that consumers are getting used to having an October Prime Day to shop.

Sara Lebow (03:10):

That is interesting because usually October is the more... Like the little brother of the "Real Prime Day." Real Prime Day is obviously still the biggest ever every year, but it's slowing down a bit also, so that might be contributing to that gap closing.

Zak Stambor (03:25):

Yeah, but I think what that says is these are huge tentpole events that consumers have come to expect now. This is just part of the shopping calendar and consumers are waiting for these sales to happen to click the buy button and buy stuff.

Sara Lebow (03:41):

Yeah, let's talk about that a little.

(03:43):

When Amazon introduced, its later Prime Day, a couple years ago we talked about how this pushed the holiday season even further forward. We've talked about the holiday season extending from just November and December into all of Q4.

(03:59):

Is this October Prime Day actually a holiday event?

Zak Stambor (04:02):

I think kind of, sort of.

Sara Lebow (04:05):

Solid.

Zak Stambor (04:06):

Yeah. Numerator Data said about a quarter a of consumers bought holiday gifts during the sale, but I think a lot of people were like me and just bought some stuff that they were thinking about buying and because it was at a discount, they decided to buy it.

(04:24):

That said, that's not that wildly different from the way consumers shop during November and December and in the peak of the holiday season where you certainly do buy holiday gifts, but if you're anything like me, you're certainly buying stuff for yourself as well.

Sara Lebow (04:38):

Yeah, you're not going into Target and just doing holiday shopping.

Rachel Wolff (04:42):

To that point I was looking at Numerator Data to see has it changed? Are people buying more gifts this year than they were last year? And it's held pretty steady at 25%. So, I think that, Zak, as you said, some people are buying gifts, but for the most part you're using these sales to stock up on everyday items or just get a deal while you can.

Zak Stambor (05:02):

The holidays are still ways away, so if you are buying a lot of your holiday gifts, you've got to keep them somewhere and... I don't know, who wants to have their holiday gifts eating up lots of space in their house? Certainly some people, because a quarter of people did that, but I think 75% of people are like me and just saying, "I'll deal with that in December."

Sara Lebow (05:25):

That's a wild statement as the only person on this episode who doesn't live in an apartment in New York City, the only person with maybe some space.

(05:36):

Something that stood out to me this year is that everyone else also has an October sales event also. Did that stand-out to you guys?

Zak Stambor (05:45):

Yeah, totally.

(05:46):

And what stood out to me was usually these other retailers are trying to get a head start on Amazon and not go head-to-head, but this year was a little bit different in that respect.

(05:59):

The Target Circle Week coincided with Prime Big Deal Days, so did the Walmart sale, and so there was a lot of head-to-head competition where when you went from site to site you saw pretty much the same deals. And that's something different than particularly last year where the sales were very much staggered throughout October with Target, I think their sales started on October 1st of last year.

Sara Lebow (06:28):

Yeah. Why do you think they're all going head-to-head? Are they assuming that people are browsing around?

Rachel Wolff (06:34):

I think, yeah. I think a lot of people are comparison shopping. They're going to Walmart and Target just to see whether Amazon really is the best deal and a lot of retailers are just trying to take advantage of that fact.

Zak Stambor (06:44):

Yeah. Also, this sale started, I think, a day or two earlier than last year. It's really early. This is really early in October, and so there isn't that much time in Q4 to launch a sale before this sale.

Sara Lebow (07:00):

Yeah.

(07:00):

Rachel, you were talking about how you were surprised that TikTok didn't have a sale and then the day that you mentioned that they announced a sale.

Rachel Wolff (07:07):

They announced it.

Sara Lebow (07:08):

So, it's really everyone has a sale.

(07:10):

And it's changing how people shop. October is becoming a shopping month in a way it wasn't before. Usually you had back to school ending and the holidays not really starting yet.

Zak Stambor (07:21):

Yeah, that's exactly right. It used to be October was a bit of a lull within the retail calendar and then during the pandemic when we saw a lot of supply chain disruptions, everyone got nervous and went to buy their holiday gifts super early to ensure that they were to arrive on time and retailers took note and said, "Hey, we might as well capture sales as early as possible because consumers have limited budget and we want to grab as much of that budget as we can."

(07:50):

So, retailers took note and started launching these sales to grab share, and they've taken root and consumer shopping behaviors have recognized this and are just assuming that these sales will exist and hold off for a little bit to see when and how the items that they want will be discounted and then click the buy button.

Sara Lebow (08:12):

These retailers can't convince me not to procrastinate. I will still procrastinate all of my holiday shopping until I need to do it.

Zak Stambor (08:20):

Yeah, totally. But when you are shopping around or just going online to go on Amazon and see what's for sale, you might buy some household essentials. You might buy some of the stuff that you would buy normally, but it's a few dollars cheaper, so you decide to buy it before you're out of paper towels, for example.

Sara Lebow (08:41):

I was listening to a podcast today that talked about that boat that got stuck in the Suez Canal a few years ago. I miss when supply chain disruptions were just a boat being stuck. Our disruptions are a lot more complicated this year. We've had two hurricanes which are in part supply chain disruptions, but also just consumer chain disruptions also. People still don't have power. There's also the minor matter of a presidential election taking place in just a few weeks. So, it's a year of disruption for better or for worse, some of it worse. How is that all influencing the holiday season?

Zak Stambor (09:20):

It's true, and you left out the port strike.

Sara Lebow (09:22):

I did leave out the port strike.

Zak Stambor (09:23):

Which was a short-lived blip, but had the potential to disrupt things quite a bit.

Sara Lebow (09:29):

Yeah, that really rose up in the headlines and then got swatted down.

Zak Stambor (09:33):

Right.

Rachel Wolff (09:33):

You did see people going to the store early trying to stock up, so it may have had a slight impact on consumer behavior.

Zak Stambor (09:40):

But as the hurricanes have put front of mind is anything can happen at any time, and so retailers need to move quickly. And this year in particular, that's the case because there's a lot of quirkiness within this holiday calendar.

(09:58):

You have the presidential election coming up. Sales generally slow down the week of the presidential election when people are very much distracted by the election. I think that's certainly going to be the case this year. I think everyone will be paying attention to that. I also think the presidential election could drag on...

Sara Lebow (09:58):

Oh yeah, absolutely.

Zak Stambor (10:21):

... For quite a long time this year because if Trump loses... And I think it's safe to say this is a Trump specific situation. If he loses, there will be many challenges to the results and that will take weeks to remedy or come to some end result. And how that end result takes shape remains to be seen, and that's going to take up a lot of time and suck up the oxygen out of the room.

(10:50):

And so people will not be thinking about shopping for the most part when there's just a lot of news and stuff going on. So, there's that, and that could be much of November.

(11:04):

And then there's a very short window, or shorter than typical window, between Thanksgiving and Christmas and so all the retailers that didn't move as much inventory as they expected during that time period and during October are going to be in a bit of a frenzy because they don't want to get stuck with a backlog of stuff like they were a few years ago. And so that's going to lead to a lot of discounting, at least among some retailers.

(11:36):

So, there's a lot of stuff happening and so there's no time to waste, essentially, is the end result is you got to start thinking about and start acting upon promotions and discounts and overarching strategy to get consumers to shop before all of these known disruptors take shape.

Sara Lebow (12:00):

Yeah, it's complicated to trivialize these events, but obviously they do affect retail and I think no matter what happens in the election, the days of knowing who the next president is the night of the election are probably behind us. That might present an advertising opportunity not to once again trivialize it, but for people scrolling social media, scrolling through their news apps and watching a lot of news, potentially an okay time to be agile as an advertiser. At the same time, you're probably not in the state of mind to buy while you're scrolling through those things trying to figure out what is happening in the world.

(12:34):

So, how do you prepare for the unknown?

Rachel Wolff (12:38):

One thing I saw was that I read that a lot of marketers are trying to use self-care messaging because I guess they feel like people will feel that they need a lot of self-care in the events leading up to and post-election. So, that's one possibility.

Sara Lebow (12:52):

Yeah, like unplug kind of messaging?

Rachel Wolff (12:54):

Yeah, or buy my lip balm.

Zak Stambor (12:57):

Yeah.

(12:58):

I think this is a moment where marketers need to be mindful of how they are messaging to that point, because everyone's going to be extremely sensitive at this moment, and so you don't want to say something that can be construed in a way that could offend people. And so you got to walk a careful line here. I think.

Sara Lebow (13:22):

Well, there are two ways you can really go with this as a marketer. You can lean into everything, the Ben and Jerry's approach, we might call it, where you take a clear and specific stance as a brand on everything. Or you can try and walk that tightrope. Both of them are going to get you in trouble undoubtedly. So, I guess it's just a question of which side of the tightrope you're going to fall on.

Zak Stambor (13:44):

Well, and part of it is authenticity, and this is always the case, but it's about what is your brand and what does it stand for? And so Patagonia and Ben and Jerry's can do one thing that Coca-Cola and Heinz ketchup up can't because Patagonia and Ben and Jerry's have forever leaned in a particular direction and stood for something. And Heinz Ketchup has not, for good reason. It's a product that everybody buys. And so it's just about being true to who you are and messaging in that way.

Sara Lebow (14:18):

Okay, so circling back to our Prime Day conversation, putting both of you on the spot, can you each give me one takeaway from the Prime Big Deals Day that brands should keep in mind for the rest of the year?

Zak Stambor (14:30):

I think that the holiday season's going to follow a similar pattern that we've seen throughout much of this year. Consumers are spending, they will continue to spend, but they're very much focused on value and ensuring that they're getting a good deal as well before they decide to buy.

Rachel Wolff (14:48):

You stole my takeaway Zak.

Sara Lebow (14:52):

I've got one to my own question, which is absent of a ton of prime-specific data to show this. It's a weird time because a lot of economic indicators are quite good and indicate that consumers should maybe feel more confident than they are, but they don't, and I don't think that the election, the hurricanes are going to make consumers feel better. So, as brands, you need to find opportunities to make sure that your product is worth buying.

Zak Stambor (15:18):

Yeah, I think that's a really good point, because this is... It's a good economy. I think it's very safe to say that at this point. The labor market is very solid. 4.1% unemployment is excellent. That is historically an excellent labor market. The inflation is down. When you look at some of the key areas in which inflation was really bothering people like grocery prices, it's been at one point something percent for almost this entire year, and yet consumers have bad vibes about the economy.

(15:58):

But again, there's a disconnect between consumers' response to a survey and their behaviors. And so consumers are still spending. If you look just at retail sales, they're pretty good and that's why we expect pretty good results this holiday season, is because consumers are still spending, even if they're saying they don't feel great.

Rachel Wolff (16:21):

And I wonder, even if consumers say they don't feel good, maybe that just means they do more self-gifting or these things that will make them feel better about their personal situations.

Sara Lebow (16:31):

Yeah, I can promise you that around the election, I'm probably going to be engaging in some retail therapy.

Zak Stambor (16:37):

I think we all might.

Sara Lebow (16:38):

Probably, my book budget is going to go way up.

Rachel Wolff (16:40):

I think my ice cream budget may increase significantly.

Sara Lebow (16:44):

Okay, well that is all we have time for today, so thank you Zak for being here.

Zak Stambor (16:49):

Yeah, thanks for having me.

Sara Lebow (16:50):

And thank you, Rachel.

Rachel Wolff (16:52):

Thanks.

Sara Lebow (16:52):

Thank you to our listeners and to Victoria who edits the podcast and does an Amazon job, an amazing job. That's one that I wrote out and it doesn't quite actually work when I'm saying it.

(17:04):

We'll be back next Wednesday with another episode of Reimagining Retail, an eMarketer podcast made possible by TikTok.

(17:12):

And tomorrow join Marcus for another episode of the Behind the Numbers Daily.