A Closer Look At Amazon's (NASDAQ: AMZN) Prime Day Success

Amazon.com, Inc. (NASDAQ: AMZN), the largest e-commerce company in the world, announced last Thursday that this year’s Prime Day sales event hit a new record with the company booking $14.2 billion in revenue during the event. This is an improvement of more than 10% compared to the previous year. Amazon also revealed that a record number of new customers signed up for the Amazon Prime subscription in the three weeks leading up to the sales event, highlighting the growing popularity of this worldwide sales event. According to Numerator, the average order on Prime Day 2024 was $57.97, compared to $56.64 in 2023. Amazon achieved this success despite Target Corporation (TGT) and Walmart Inc. (WMT) also running similar discount campaigns this month to take business away from Amazon. This suggests that Amazon continues to be in better standing among consumers than traditional retailers.

What's New?

Amazon Prime Day, introduced in 2015, is a major global sales event that offers discounts on products listed on Amazon to Prime members. Over the last decade, the Prime Day event has grown in stature to become one of the biggest sales events globally, often drawing parallels to Black Friday and Cyber Monday. This year, Prime Day attracted investor attention for several reasons, including the record-breaking sales reported by the company during the event, the high number of deals offered by small businesses amid Amazon’s push for SMEs to participate in Prime Day actively, substantial discounts offered for Amazon-branded products such as Echo devices and Kindle e-book readers to improve the visibility of Amazon-owned brands, and the introduction of AI-powered shopping.

Zooming Out

Leading to the Prime Day event, Wall Street analysts had strong expectations for sales with most analysts projecting a 10% jump in revenue to approximately $14 billion. The company, despite inflationary pressures, exceeded these expectations, which is likely to trigger a series of positive earnings revisions in the coming weeks. After digesting the sales numbers, BofA Securities analyst Justin Post commented positively about Amazon’s ability to take market share within the retail sector, which points to strong earnings growth in the foreseeable future. Overall, the strong Prime Day performance sends a positive signal to the investing community about Amazon’s growth potential in the short run. The company’s ability to thwart the threat of competition from established retailers during the event also demonstrates Amazon’s dominance in the online shopping space.

From a macroeconomic perspective, record-breaking Prime Day sales indicate the strength of the consumer despite inflationary pressures. On the other hand, Amazon’s use of AI during the event could be considered an effort by the e-commerce giant to set an industry standard for the future, which may force other retailers to aggressively invest in innovative technologies to remain relevant. The strong consumer confidence seen during the Prime Day event suggests there is hope among consumers for a strong economic recovery in the coming months, which may be stemming from expectations for rate cuts.

Dilantha DeSilva does not have positions in Amazon. Stocks.News does have positions in Amazon.