Economic uncertainty, inflation, and the lingering effects of the pandemic are tempering expectations for this year’s Prime Day, the annual Amazon sales event that takes place on Tuesday and Wednesday this week.
The two-day event is still a big deal for the company and its more than 200 million Prime members. More than 60% of 1,115 U.S consumers surveyed for Adobe Commerce in June were “looking forward” to Prime Day and other sales.
However, 24% of those surveyed for Adobe said they planned to skip Prime Day due to smaller budgets for discretionary spending, driven by inflation and the higher cost of goods. Others cited concerns about the economy, a focus on necessities vs. luxury items, and a desire to put more money into savings.
Following an underwhelming debut in 2015, Prime Day has become one of the most important annual events for the company, effectively creating a second peak season, six or seven months after the holiday shopping rush.
JPMorgan forecasts that Prime Day 2022 will generate $3.8 billion in incremental revenue for Amazon, up 7% from last year. An earlier report by Insider Intelligence estimated a bigger bump, with sales of $7.76 billion, up 17%. But even that would be down significantly from the past 65% year-over-year growth from the event.
One big difference this year is the excess capacity in Amazon’s fulfillment network, due to overbuilding, which is creating extra costs for the company but removing many of the delivery bottlenecks that were prevalent last year.