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Prime Day 2022 So Far

July 7, 2022

With less than one week to go until Prime Day 2022, we have been keeping a close eye on our data as it becomes available. If you are interested in our initial predictions and observations based on what has already happened earlier this year as well as Prime Day in 2020 and 2021, you can read our thoughts here.

Since we are less than two weeks away from Prime Day, we have taken a look at our daily data on our CommerceIQ 1P brand customers on Amazon from 15 days before Prime Day through that following week from 6/27/ to 7/3. Those days are then compared to similar periods from 2020 and 2021 to get a sense of what could happen in the days ahead.

Supply Chain

Some good news: Revenue lost due to OOS is lower now than it was this many days ahead of Prime Day last year. The relative calm of aggregate ‘revenue lost due to out of stock’ figures for 2022 however dissipates when we look at the category level. Big shifts occur from one day to the next across many categories, suggesting that the calm experience so far is under no guarantee to continue until Prime Day or during Prime Day itself.

Figure 1: Out of Stocks Improved From Last Year

Figure 2: However, Out of Stocks are Volatile

On the backend margins, are also being pressured immensely compared to prior years with a steep drop in the past several days.

Figure 3: Margins are Pressured

Revenue Levels

OPS for an average brand on Amazon is higher than it was in either 2020 or 2021. Given Amazon’s recent struggles, this may also have to do with the timing of Prime Day given that 2022 falls in the middle of the key summer selling period. The true test of OPS lift is still to come. While OPS may index above levels achieved in previous years for an average 1P brand on Amazon, the overall lift could be below prior years when it is compared to surrounding baseline levels which are already starting from an elevated position as we see in this chart.

Figure 4: Higher Baseline OPS in 2022 Could Pressure Prime Lift

We see that daily OPS levels are falling in the run-up to Prime Day as consumers might be holding off on purchasing until they find deals closer to or on Prime Day. Office and patio goods have experienced especially deep drop-offs.

Figure 5: OPS Falls for Many Categories in the Lull Before Prime Day

Glance views are roughly at the same level as they were last year. Given that OPS is higher, this suggests that 2022 is so far experiencing higher conversion rates than Prime Day 2020 and 2021. Most of the Glance view drop-off that has occurred since 15 days before this coming Prime Day has occurred in Patio, Lawn, & Garden, roughly mirroring what’s happening with OPS for the category.

Figure 6: Glance View Similar to Prior Years

Figure 7: Glance Views Category Trends Roughly Mirror OPS

Discounts

In the leadup to Prime Day 2022, discounts are significantly lower than last year’s period before Prime Day (as they have been throughout the year so far) and also lower than the average discount level for 2022 by two percentage points. Discount levels track the steepness of discounts for those items that are on sale. Steep discounts are becoming less important not only for Prime Day but for online retail as a whole. There has not been hardly any change from day to day so far in the discount levels in the leadup to Prime Day 2022.

Figure 8: Discounts Far Lower than Prior Years So Far

Discount levels vary widely by category so far. Grocery has the highest discount level at 27%followed by beauty, patio, and home goods at around 24%. Tools & Pet lag the average discount level at approximately 15%. All categories are consistent over a several-day period.

Figure 9: Discount Levels Bifurcated by Category

Retail Media

We predicted ad spend would rise for 2022. So far, we see ad spend levels in 2022 that vastly surpass the leadup to both Prime Day 2020 and 2021. Brands are spending more on retail media this year, even as they start to rein in some spending in the week leading up to Prime Day.

Figure 10: Ad Spend Elevated Heading Into Prime Day 2022

Since ad spend is not as effective in driving sales in advance of Prime Day as opposed to the day itself, we already see many categories reduce their ad spend ahead of Prime day one week out vs the prior week. Office; Beauty; Patio, Lawn, & Garden are seeing significantly reduced levels of ad spend over several days while Home & Kitchen and Tools & Home Improvement appear to be driving awareness in advance of the period.

Figure 11: Ad Spend Drops for Several Categories in Days Leading up to Prime Day 2022

Ad spending is further encouraged with higher than average ROAS for 2022 compared to both of the most recent previous years in advance of Prime Day. This suggests ad spend could soar for Prime Day itself. The best ROAS can be found within durable categories such as Patio and Home & Kitchen. 

Figure 12: High ROAS Could Boost Ad Spend for Prime Day

Figure 13: ROAS Much Higher for Durable Goods

Key Takeaways

  • Revenue lost due to out of stocks is low in aggregate but excessively volatile from day to day within different categories. Past performance is no guarantee of the future.
  • OPS is higher this year than during prior year periods before Prime Day. While this is good news for brands in general, it also means that Prime Day 2022 might have less of a singular lift vs. the baseline of days before and after the even if revenue is already elevated.
  • Steep discounts are becoming less important not only for Prime Day but for online retail as a whole.
  • Not only is ad spend elevated so far in 2022 ahead of Prime Day, but ROAS is also higher than in years past, especially for durable goods, suggesting that brands are incentivized to spend more on ad spend this year.

 

As we approach Prime Day 2022, keep an eye on our page on LinkedIn for updates https://www.linkedin.com/feed/ as well as from our CEO https://www.linkedin.com/in/gurushyam/

If you want to know how to make the most of your advertising strategy for Prime Day and beyond, check out our ebook on integrating DSP at every stage of your marketing funnel

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