Amazon’s Late Prime Day Is Set to Fuel Record End to Year

While Prime Day has become a promotional tool for Amazon, the sales period is influential in the retail industry and funnels many customers into Amazon’s Prime membership. Walmart Inc., WMT 0.12% Target Corp. TGT -0.33% and many other rivals typically offer their own discounts during the event to counter Amazon’s effort.

Amazon, which has more than 150 million Prime members world-wide, has added roughly 50 million members since 2018. Members pay $119 a year for free shipping on many items, discounts at Whole Foods Market, video-streaming content and other services, and receive access to all of the deals during Prime Day.

The company first rolled out Prime Day in 2015 to juice up sales during the typically slow summer period. Amazon this year pushed the event to later in the year after it became overwhelmed with customer demand during the onset of the coronavirus pandemic.

In the spring, an Amazon executive expressed concern in an internal company email that the delay to Prime Day had led to an “overhang” in devices of five million units. Amazon would have to sell the devices at a discount that would cost between $100 million and $300 million, according to the memo, which was reviewed by The Wall Street Journal.

Retail analysts expect Amazon to have a big showing in the fourth quarter because of the combined Prime Day and holiday shopping period, as well as a general consumer shift to e-commerce in the pandemic. The holiday period typically provides retailers with their highest sales of the year. Amazon consumer chief Jeff Wilke said Prime Day will be an “opportunity for Prime members to get their holiday shopping done early.” That could potentially hurt competitors but also undercut some of Amazon’s holiday sales.

Amazon “will leverage Prime Day as a ‘test run’ to manage yet another surge in demand ahead of an unprecedented holiday situation,” analysts at investment firm Cowen Inc. wrote in a research note. Cowen said Amazon is expected to expand its fulfillment square footage by about 50% this year to meet the uptick in demand.

The pandemic has given Amazon record quarterly sales and accelerated its growth. Amazon made $88.9 billion in sales in its April through June quarter. The company is on pace to easily blow past the $280.5 billion it made in sales last year.

The retailer has ramped up hiring at its package-fulfillment centers in anticipation of the fourth quarter. The company this month said it would hire 100,000 additional hourly warehouse workers in the U.S. and Canada, adding to the hundreds of thousands of workers it hired earlier this year. It has also implemented tighter limits around the amount of inventory third-party merchants can hold at its U.S. warehouses for the holidays.

Amazon has faced a growing amount of competition around Prime Day. During last year’s event, roughly 200 retailers also offered deep discounts during the period, according to online coupon tracker RetailMeNot. Among the typical players are Best Buy Co. BBY -1.00% and Walmart, which this month launched its own subscription service named Walmart+. Priced at $98 a year, membership includes free grocery delivery, a discount on gas from Walmart parking lots and the ability to check out via a mobile phone in stores.

Target said Monday it will host its own two-day online sales event on Oct. 13 and Oct. 14. The company said it would share details later this week.

Amazon has tried to add enticements to Prime Day for customers. Last year’s event included a concert from Taylor Swift and an exclusive that began during Prime Day to sell a new beauty product by Lady Gaga. The company said this year “celebrities and influencers will be joining live to surprise customers with exclusive experiences,” without providing further detail.

Amazon said it would be offering discounts for many of its most popular products, including its Echo smart speakers and Fire TV products. One sale includes two Echo Dot devices for $39.98. The company on Thursday unveiled several new devices it plans to release that included a redesigned Echo lineup, car-alarm system and drone security camera.

Write to Sebastian Herrera at [email protected]