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If Prime Day Apparel Discounts Went This Low, What’s in Store for Holiday?

With Prime Day in the rearview mirror, trends emerging from the two-day commerce event could influence the second half of the year. Beyond data around discounts on apparel, Amazon’s annual shopping blowout also got a boost on TikTok, where tens of millions of users turned for inspiration on what to buy before the clock expired.

While total spend during Prime Day resulted in $11.9 billion on year-over-year growth of 8.5 percent, revenue flowed in well beyond the shopping extravaganza’s July 11-12 spread.

When including sales from the full week, Prime Day drove online spending of $22.4 billion dollars across e-commerce, amounting to 6.1 percent annual growth, according to data from the Adobe Digital Economy Index.

During Prime Day, the average online revenue lift across the U.S. was up 141 percent compared to an average June day (the month when Prime Day was held in 2021). Online spend for July is up month over month, hitting $44 billion total and counting as of Tuesday.

As inflation affects consumers’ discretionary budgets and a growing number of retailers is trying to offload more goods, discounts drove the sales bump. This is an indicator that markdowns are being reestablished as the norm after a 2021 that saw a surge in full-price sales.

During the week of Prime Day, toys saw the biggest discounts across retailers at 15.4 percent, with apparel also showing sizable discounts at 12 percent, Adobe said. Recent research from Impact Analytics corroborates apparel’s heavy discounting, noting that the category alongside home improvement represents the deepest discounts of Prime Day 2022.

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The Impact Analytics report indicated that on a three-year basis, when normalizing to pre-Covid levels, discounts on Amazon Prime Day are twice as steep when averaging all categories.

Look to the biggest retailer in the U.S. to see the mindset of where retail is going with price cuts and tactics to drive sales. Walmart CEO Doug McMillon said that the company has made good progress clearing hardline categories in the second quarter, but noted that apparel sold in the U.S. is “requiring more markdowns” due to the increasing levels of food and fuel inflation.

The company said it’s marking down apparel and general merchandise to quickly move through inventory.

According to Adobe’s data, which covers more than 1 trillion visits to U.S. retail sites and over 100 million SKUs in 18 product categories, electronics saw discount levels hover around 6 percent. Within the electronics category, computer prices dipped by 8 percent while for TV prices declined 3 percent.

For example, popular product categories that saw an uptick in discounts included boys’ and girls’ apparel, audio equipment and appliances.

Research from Impact Analytics indicated these deep discounts suggest that the average Prime Day order value actually increased by 16 percent to 17 percent over last year, while gross merchandise value jumped between 8 percent and 9 percent.

When looking at the Prime Day data, there may be hints into the potential discounting strategies deployed during the holiday season, particularly Black Friday, the Impact Analytics research said.

In one instance highlighted, the deals in the small appliances segment during Prime Day 2019 were 7 percent to 10 percent lower than the historical average, while the same were higher by 5 percent to 10 percent in 2020. A similar trend followed in the subsequent Black Friday sales for each year, with deals being 5 percent to 7 percent lower in 2019 and 5 percent to 7 percent higher in 2020 than the historical average.

“After nearly two years full of facing supply chain woes, watching inventory levels bottom out, warehouses are overflowing this year,” the report said. “A classic bullwhip has led to a widespread inventory glut across most major retailers in the U.S. This means that the holiday season will likely be sweeter this year, and possibly earlier too. Due to inaccurate assortment decisions, and flawed demand forecasting, retailers will have to resort to steep markdowns this holiday season.”

BNPL, TikTok take larger role in Prime Day

Worthy of note within Adobe’s analysis is the increased use of buy now, pay later (BNPL) platforms throughout Prime Day. Over the two-day event, BNPL platforms utilization increased 13 percent over Prime Day 2022 versus Prime Day 2021, while average order values (AOVs) when using the platforms were up 12 percent year over year.

The BNPL adoption comes as more people use Klarna, Afterpay, Affirm and other platforms in the space. Amazon, which linked with Affirm last August, got in on the frenzy this year by allowing Prime members to choose from three BNPL plans for Prime Day purchases of $50 or more. Shoppers could choose to finance their purchases over three, six or 12 equal monthly payments at zero percent interest, which deviates from Affirm’s traditional plans that often carry an APR between 10 percent and 30 percent.

Prime Day was a much bigger social media sensation in 2022 thanks to the hype it generated on TikTok. According to data from e-commerce intelligence firm Marketplace Pulse, videos tagged with #primeday2022 were viewed 52 million times on TikTok, a massive jump from the 30 million views the 2021 version of the hashtag reeled in. In 2020, such videos only got 6 million views.

In a blog post, Marketplace Pulse founder Juozas Kaziukenas said shoppers are turning to TikTok because Amazon has focused too much on promoting deals, instead of personalizing them to individual shoppers. This has seemingly opened the door for TikTok, he said.

“’I had no idea what to buy on Prime Day, so I went to TikTok,’ was a sentiment shared by many shoppers during the event. ‘True story: when I wanted to find out about all the best Prime Day deals, the first place I searched? TikTok,’ shared others. Most of Prime Day was on TikTok rather than Facebook, Instagram or Twitter; its content model works best for that,” Kaziukenas said.

Prime Day also was a boon for brick-and-mortar retailers that offered buy online, pick up in store (BOPIS) options, Adobe’s data says. For retailers offering BOPIS, there was a 20 percent boost in conversion compared to an average June day.