CommerceHub-Prime-Day-Impact-Report-2016

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CommerceHub

Amazon Prime Day

Impact Report

2016

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INTRODUCTION

In the middle of the typically slow summer shopping season, Amazon returned on July 12, 2016 with their own branded shopping holiday along the

lines of Black Friday and Cyber Monday – Prime Day 2016.

The very first Prime Day last year was a resounding success with a remarkable 142%1 growth in Gross Merchandise Value (GMV) over a business-

as-usual summer day, year over year. Prime Day 2015 revenues were comparable to those for the top shopping holidays of the year.

Not only did Amazon see a huge spike in revenues on Prime Day; thanks to the “surround sound” from Amazon’s promotions, retailers like Walmart

and Best Buy as well as other marketplaces like eBay enjoyed a ripple effect increase in sales.

Needless to say, Prime Day this year aimed at a repeat of last year’s exploits.

In this report we shall see how Prime Day 2016 fared vis-à-vis already high retail expectations. Did it top last year’s record breaking performance?

Which product categories stole the show? Let’s find out!

1 CommerceHub network data, 2015

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PRIME DAY 2016 EXECUTIVE SUMMARY

Prime Day 2016 lived up to last year’s performance and then some. On Prime Day this year, Amazon replicated the revenue growth from last year,

posting their largest ever sale day1.

CommerceHub’s third-party sellers on Amazon met last year’s GMV numbers and exceeded them this year by a healthy 9%. Order volumes grew

by 16% - a substantial growth over last year’s already impressive performance2.

The most striking difference between Prime Day 2015 and 2016 was the focus on Amazon’s first-party sales (products sold directly by Amazon

itself) this year. Heavy promotions including a custom Prime Day takeover on the homepage promoting Amazon’s own products like the Kindle,

the Dash button along with other first-party products resulted in stupendous growth in order volumes.

Interestingly, the healthy growth in order volumes over last year was coupled with a decrease in Average Order Value (AOV) for third-party sellers

on Amazon. We see this as a direct fallout of the deep discounts and the low value items that were promoted as part of the Prime Day sale.

Besides the marquee product categories like "Electronics & Computers” and “Toys, Kids & Baby” that took pride of place on the Prime Day

takeover home page, other categories like “Beauty, Health & Grocery” and “Sports & Outdoors” enjoyed a halo effect and grew substantially YoY.

CommerceHub Amazon Prime Day Impact Report 2016 |

GMV increased 9% Orders increased 16% AOV decreased 5.6%

! Amazon press statement: http://www.cnbc.com/2016/07/13/amazon-prime-day-is-biggest-day-for-online-retailer-ever.html2 Figures in this report are based on aggregated CommerceHub network data

http://www.cnbc.com/2016/07/13/amazon-prime-day-is-biggest-day-for-online-retailer-ever.html

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PRIME DAY TOPLINE STATS BY DEPARTMENT

• Beauty, Health & Grocery +33%

• Sports & Outdoors +24%

• Automotive & Industrial +14%

• Clothing, Shoes & Jewelry +12%

THIRD-PARTY SELLERS ON AMAZON 7/12/2016

Topline GMV increased 9%


GMV

Gross Merchandise Value or GMV grew 9%

over and above the huge gains they saw on

Prime Day 2015.

5%

12%

14%

24%

33%

9%

0% 5% 10% 15% 20% 25% 30% 35%

Home, Garden & Tools

Clothing, Shoes & Jewelry

Automotive & Industrial

Sports & Outdoors

Beauty, Health & Grocery

Department Total

Department Results

GMV

5

19%

30%

36%

55%

64%

16%

0% 10% 20% 30% 40% 50% 60% 70%

Toys, Kids & Baby

Sports & Outdoors

Home, Garden & Tools

Automotive & Industrial

Beauty, Health & Grocery

Department Total

Department Results

Orders

Topline Order Volume increased 16%

Third-party sellers benefitted from the exponential

growth in shopper traffic to Amazon with

significantly higher order volumes

PRIME DAY TOPLINE STATS BY DEPARTMENT

• Beauty, Health & Grocery +64%

• Automotive & Industrial +55%

• Home, Garden & Tools +36%

• Sports & Outdoors +30%

• Toys, Kids & Baby +19%.


Order Volume

THIRD-PARTY SELLERS ON AMAZON 7/12/2016

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TOP TACTICS BY GMV GROWTHWhat Worked, What Did Not


Besides guiding our merchants towards the most profitable promotional

ideas for Prime Day, we also offered them a comprehensive checklist of

recommended measures , in preparation for Prime Day 2016.

Top recommendations included:

• Making as many products Prime-eligible as possible

• Updating product categories and aligning them perfectly with Amazon

using the CommerceHub Category Mapping Tool

• Offering a minimum 20% - 40% discount directly via the product feed

• Leveraging the CommerceHub DemandStream Amazon Price

Optimizer tool

The CommerceHub team tracked and audited 13 key tactics that were

deployed across our entire portfolio of third-party sellers.

http://www.commercehub.com/essential-checklist-amazon-prime-day-2016/

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FBA SKUsFree shipping

promo

Lightening

Deals

Followed Best

Practices

Participated 17% 17% 15% 13%

Did Not Participate 3% -2% 5% -7%

-10%

-5%

0%

5%

10%

15%

20%

Av

era

ge

GM

V C

ha

ng

e

Top 4 Tactics

1

3

2

Merchants that offered their products under the

Fulfilled by Amazon (FBA) program saw the best returns

of +17%. Amazon’s focus on FBA, Prime eligible products

for Prime Day helped these sellers tremendously

Merchants whose products were not Prime-eligible, but

who offered free shipping nevertheless, enjoyed an

equally good +17% growth

Merchants whose products qualified for Prime Day

Lightning Deals, which were heavily promoted by

Amazon, saw a +15% boost in numbers

What Worked, What Did Not

TOP TACTICS BY GMV GROWTH


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DEMAND SHIFT DURING WEEK OF PRIME DAYWeek starting Sunday, 7/10 – Saturday,7/16

In response to the success of the first Prime Day, Amazon

went all out to get maximum mileage from this year’s sale

event. They ran a series of promotions billed as the

“Countdown to Prime Day” in the days leading up to 7/12.

Expectedly, these promotions led to some of the Prime Day

shopping getting spread over the rest of the week.


Sun Mon Tue Wed Thu Fri Sat

% of Weekly Sales: 6/12 - 7/3 15% 16% 16% 15% 14% 13% 12%

% of Weekly Sales Prime Day: 7/10 12% 13% 26% 14% 13% 12% 10%

Difference -3% -3% 10% -1% -1% -1% -2%

16%

26%

10%

-5%

0%

5%

10%

15%

20%

25%

30%

% o

f W

ee

kly

Sa

les

% of Weekly Sales by Day of Week

• The Tuesday of Prime Day had a 10% point increase in

demand for the week compared to a typical Summer Tuesday.

• Prime Day pulled back Wed – Sat demand between 1-2% each

day. Prime Day pulled demand forward 3% on both Sunday

and Monday.

• The effect was most pronounced in Beauty, Health & Grocery

and Clothing Shoes & Jewelry categories.

• Sellers in the future should expect a lower distribution of

weekly sales in the run up and post-Prime business days.

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PRIME DAY 2016: 3 KEY TAKEAWAYS

The “Primes” vs. the “Prime-Nots”As is evident in its name, Prime Day focused largely on Prime-eligible products. The Kindle, the Dash Button, the Echo, all registered record

breaking sales this year. Non-Amazon products sold directly by Amazon rounded out the winner’s circle. For third-party sellers, Prime Day’s deal

requirements this year strongly favored merchants who were eligible for Fulfilled by Amazon (FBA) and/or Seller Fulfilled Prime (SFP). From the

Prime Day home page featuring only Prime sellers to promotions on inside pages all highlighting Prime products, FBA and SFP sellers enjoyed

incrementally higher visibility, traffic and consequently, higher revenues on Prime Day.

Fast & Free Deliveries Make All the DifferenceThe ability to deliver rapidly, at minimum cost is clearly the most important aspect of going to market on Amazon. Despite Amazon favoring sellers

that offered FBA and SFP, this Prime Day showed us that non-Prime eligible merchants that were able to offer fast and free shipping did equally

well from a revenue perspective. CommerceHub’s SmartShipping solution helps sellers do just that – offer deliveries at maximum speed and

minimum costs.

Expert Advice that WorksIn the end, whether Prime-eligible or not, the sellers that did well on Prime Day were those that implemented the tried and tested best practices

recommended by our Marketplaces team. For example sellers that implemented simple improvements like ramping up inventory levels, cleaning

up listing errors, improving product feed frequency, participating in the “Count Down to Prime Day” deals as recommended by CommerceHub saw

a +38% GMV growth for same-department products the day before Prime Day (7/11/16).


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REPORT METHODOLOGY

• Results showcased in this report are confined to qualifying third-party sellers/merchants on the

CommerceHub DemandStream platform and do not include first-party sales where Amazon is the retailer.

• Our active portfolio of merchants/sellers together generate more than $1B annually in direct-to-

consumer e-commerce Gross Merchandise Value (GMV).

• A merchant is a retail entity comprised of a distinct brand, product catalog assortment, and website

domain selling products online via their website and/or marketplace.

• To qualify for inclusion in the report a merchant must be active on a channel program for a full 15 months

or more prior to the start of each reporting period.

• Historical GMV from qualifying merchants and channels that have ended their CommerceHub

subscription will remain included in our data until their last month on the platform.

• All department results are aggregated and summarize the performance of at least 20 CommerceHub

merchants per department.

• Unless otherwise noted Sales are reported in GMV which excludes promotional discounts, shipping and

tax plus order adjustments from returns, billing issues, shipping, and inventory availability.

• Average order value (AOV) is GMV divided by the number of units ordered.

• Amazon, Amazon Prime, Dash, Amazon Echo, and Kindle are trademarks of Amazon.com, Inc. or its

affiliates. CommerceHub and the CommerceHub logo are trademarks of Commerce Technologies, LLC.

All other product or company names are trademarks or registered trademarks of their respective owners.


11Copyright © 2016 Commerce Technologies, LLC

CommerceHub, the CommerceHub Logo, OrderStream, ProductStream, and DemandStream are trademarks of Commerce Technologies, LLC.

CommerceHub helps retailers and brands increase sales by expanding product assortments, promoting products on the channels that perform, and enabling rapid, on-

time customer delivery. With its robust platform and proven scalability, CommerceHub helped more than 200 major retailers and brands achieve an estimated $11.6 billion

in GMV in 2015. Through CommerceHub’s integrated platform, orders are successfully processed and fulfilled directly to consumers by more than 9,000 integrated

suppliers, distributors, manufacturers and third-party sellers.

© 2016 Commerce Technologies, LLC. CommerceHub and the CommerceHub logo are Registered in the U.S. Patent and Trademark Office. “Keep Growing” is a trademark

of Commerce Technologies, LLC. Other product names, logos, and brands are the property of their respective owners.

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CommerceHub-Prime-Day-Impact-Report-2016