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How Important Are Prime Day Promotions to Retailers’ Bottom Line?

Amazon’s Prime Day has become a massive shopping holiday. Prime Day 2019 sales increased 71% over 2018 sales, exceeding $7 billion, according to Internet Retailer. But what’s the best way to capitalize on this revenue bump? Specifically, what is the value of strategic promotions during Prime Day?

Retailers who ran promotions during Prime Day saw significant revenue growth while ACoS became more efficient.

To answer this question, Sidecar analyzed a sample of retailers active on Amazon and divided them into those who ran promotions during Prime Day (July 15 and 16) and those who did not. We pulled data a month after Prime Day to account for the full sales attribution window. Our team compared revenue and ACoS (Advertising Cost of Sale) changes during this period week over week. What we found was that retailers who ran promotions during Prime Day saw significant revenue growth while ACoS became more efficient.

Ad Revenue Outpaces Marketplace Revenue

Retailers who ran promotions saw increases for both ad revenue and marketplace revenue. Ad revenue experienced the largest gains with 65% week-over-week growth for retailers who ran promotions. Revenue growth was flat for retailers who did not. Marketplace revenue, or organic revenue, increased 37% for retailers who ran promotions and 15% for retailers who did not.

Retailers must have sponsored ads in order to run promotions on Amazon. That may be one of the reasons ad revenue increased drastically for retailers who ran promotions, compared to those who did not. 

Efficiency Boost on Prime Day

The cost of sale for advertised products also declined 14% during Prime Day for retailers who ran promotions. Retailers who did not run promotions saw cost of sale increase 6% week over week. Promotions are eye-catching on the search results page and the lower prices are appealing to shoppers. This combination increased retailers’ conversion rates and improved efficiency during Prime Day.

Looking Toward the Holidays

While Prime Day revenue is significant, Cyber Monday and Black Friday are still the dominant shopping days of the year. According to Internet Retailer, Cyber Monday 2018 netted $22.2 billion in revenue, over three times more than Prime Day 2019. To prepare for this valuable shopping season, retailers need to tap into promotions on Amazon. Even prior to the holidays, carefully planned promotions can boost product performance and reviews, setting retailers up for a more successful holiday season.

Amazon offers a variety of promotion options including BOGO, free shipping, percentage discounts, and giveaways. These are powerful tools for driving interest in specific products, capturing more customer reviews, and growing the customer base. All of these factors improve a retailer’s ranking on the search results page and can help products win the Buy Box.

Ahead of the holidays, it’s critical that retailers map out their Amazon promotion strategy and take advantage of the significant revenue gains. Stocking appropriate inventory will be key as Amazon does not list products that are out of stock.

If you are not advertising on Amazon yet, but want to utilize the channel during the holiday season, read our Complete Guide to Amazon Ads to learn how to get started.

Check back here for more advice on how to implement Amazon Ads for a successful holiday and to see how retailers performed during the 2019 season.

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