Prime Day Halo Effect In Full Force For Big Retailers

Even after a healthy holiday season and strong start to 2018, consumers haven’t lost their appetite for retail, new analysis powered by Adobe Analytics reveals.

Online shopping has become a favorite holiday pastime for U.S. consumers—and not just at the end of the year. Whether it’s July 4th, Memorial Day, or Amazon Prime Day, shoppers appear to come out in droves looking for deals on such special days, according to Adobe’s latest “Digital Dollar” report for this year’s second quarter.

The report, powered by Adobe Analytics, is based on an analysis of 1 trillion visits to over 4,500 retail sites and 55 million SKUs.

The Amazon Effect

Amazon’s Prime Day, which just wrapped up at midnight, validated that the e-tailer’s effect on online commerce continues to intensify. Amazon’s annual promotion for its Prime program members has been an insider treat the site aims to keep under wraps to prevent other retailers from matching, but it has blossomed into an industrywide shopping holiday, said Taylor Schreiner, director at Adobe Digital Insights (ADI), Adobe’s research arm.

This year’s Prime Day saw a substantial increase in online spending year-over-year, expanding well beyond the e-retailer to include large retailers ($1 billion-plus in annual revenue), which saw a 54% increase in sales versus an average Tuesday, according to ADI.

“As a result of Amazon’s holiday increasing in popularity, numerous retailers offered deals on their own sites to combat Amazon, turning mid-July into a mini holiday shopping season,” said ADI director Taylor Schreiner. “Amazon’s site glitches didn’t negatively impact sales, with the company revealing sales were higher than ever.”

In fact, sentiment via social buzz about Prime Day was high (80%), though down about 5% from last year, according to ADI analysis. Overall volume of Prime Day discussion was up about 6% versus last year. Amusingly, a significant amount of social buzz revolved around the dogs shown on the Amazon Prime Day error pages—enough for #DogsofAmazon to trend on Twitter.

Amazon’s acquisition of Whole Foods is also having an effect on online grocery sales. While it’s already popular in the U.K., online grocery shopping is catching on in the U.S., especially among the younger and health-conscious population. ADI surveyed 1,000 U.K. and 1,000 U.S. consumers and found that half of U.K. consumers have shopped for food online, and 40% purchase most groceries online, while one-third of Americans shop for food online, and 23% buy most online. In the U.S., younger shoppers are driving adoption, with 50% of Millennials and 47% of Gen Z shoppers buying food online.

Healthy food is a driver of growth, with vegetarian brands taking share of stock from non-vegetarian brands, sales of milk substitutes catching up to regular dairy, and organic items rising as a share of sales. But Schreiner noted that Baby Boomer consumers are also making significant online grocery purchases; almost a quarter have reported buying groceries online, most likely for the convenience. Indeed, Amazon made a big push on Prime Day for Whole Foods, having just extended Prime’s Whole Foods special offers to consumers nationwide.

Amazon is making a strong push to help Americans feel comfortable shopping for groceries online, Schreiner said. Prime offers include Dash ordering buttons for a number of products free after a $4.99 credit as well as sharp discounts on Alexa home speakers.

“We’re seeing that retailers have the power to create a holiday,” Schreiner said. “Prime Day is a great example.”

Continued Appetite

Indeed, even after a healthy holiday season and strong start to 2018, consumers haven’t lost their appetite for retail, the Adobe report found. Online spending reached $115.8 billion in the second quarter, up 15% from $101 billion in Q2 2017 and beating predictions.

Q3 will be a record-breaker in its own right, the report predicts, with online back-to-school shopping expected to reach $57.79 billion–surpassing $50 billion for the first time. Labor Day sales alone are expected to pass $2 billion, according to the report.

“We’re seeing a continued economic expansion and high consumer confidence few people expected late last year,” Schreiner said. He noted that many retail estimates have been revised upward due to continued low unemployment and continued GDP growth.

ADI found sales in the U.S. remained at a constant pace, with a spike around Memorial Day, one of this year’s fastest-growing shopping days. This year sales on that day rose 19% to nearly $2 billion in dollar volume. Q2 also experienced its annual sales boost from Mother’s Day and Father’s Day, though more so for the former. During the week leading into each holiday, online sales revenue rose almost 22% and 1%, respectively. All told, Mother’s Day generated $1.28 billion in sales, while Father’s Day generated $1.14 billion.

Of note, some interesting differences emerged between U.S. and U.K. shoppers. U.S. shoppers tend to treat holidays as shopping days, with predictable upswings, while U.K. consumers prefer not to shop during holidays or key events, ADI’s Schreiner said. Cases in point: Good Friday and the day of the recent royal wedding showed the lowest sales numbers of the quarter.

View the full report below or click here to view it on SlideShare.