Amazon’s (AMZN) most anticipated promotional event of the year has arrived.
The e-commerce giant kicked off Prime Day, its annual two-day promotional event, on Tuesday. Prime Day was launched nine years ago to highlight the value of a Prime membership by offering deals and perks to members.
“When it comes to Prime Day, Amazon remains the dominant player and is driving the majority of sales,” eMarketer analyst Sky Canaves told Yahoo Finance (video above). “We expect U.S. consumers to spend nearly $14 billion online over the two days.”
Last year, Prime Day generated $13 billion in sales, 60% of which came from Amazon and the rest from third-party sellers, according to eMarketer. Prime members purchased more than 375 million items during the event last year, Amazon said, making it the “largest Prime Day event ever.”
This year, Prime Day is expected to surpass that record, even though the pace of revenue growth has slowed. Nearly 80% of online shoppers are anticipating the best deals of the year, according to a study by marketing platform Skai.
Other retailers like Target (TGT), Walmart (WMT), Best Buy (BBY) and Costco (COST) have followed Amazon’s lead by offering competing deals to boost sales. For example, during Target’s Circle Week, a seven-day sale that ran from July 7 to 13, the retailer offered its loyalty program members up to 50% off clothing, skincare, fragrance, technology and food.
Retail sales flatlined in June, versus expectations for a 0.3% decline, Yahoo Finance’s Josh Schafer reported Tuesday.
Beauty category set to shine
Canaves expects essential goods and beauty to outperform other categories.
“Beauty is a category where Amazon’s online sales continue to outpace overall e-commerce growth for the category,” Canaves said. “And it’s a very strong and resilient category, and one where brands are eager to get on Amazon because so many consumers are looking for beauty products there.”
Amazon has been gaining market share in health and beauty, one of its fastest-growing product categories. In addition to competing with other retailers such as Ulta (ULTA) and Sephora (LVMUY), Morgan Stanley predicts that Amazon will overtake Walmart as the top beauty retailer in the U.S. by 2025.
Amazon has also expanded its beauty offerings to attract high-end brands, such as Clinique and Kiehl’s, Canaves noted.
According to a 2023 McKinsey & Company report, the trend toward “premiumization” of beauty and fragrance products is expected to continue in the coming years. McKinsey estimates that the prestige beauty category will grow 8% annually between 2022 and 2027, compared to 5% for mass-market beauty products.
These are major prestige brands that previously had given up on creating an Amazon store and have decided to reconsider the market.
“If beauty brands aren’t selling (their products on Amazon), third-party retailers will,” she said.
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News Source : finance.yahoo.com
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