Online Shopping: Amazon and the Domino Effect
Now in its seventh year, Amazon Prime Day has become one of the biggest e-commerce sales events of the year. The total online spending in the U.S. now rivals the peaks of Black Friday which was 9 billion in 2020 and Cyber Monday of 10.7 billion from 2020 (CNBC 2020). The significance of Prime Day and Amazon as a whole is that Amazon is one of the biggest driving forces of consumer spending thus contributing vastly to the growth of the economy.
Amazon has a total of around 147 million Prime subscribers in the U.S. as of March 2021 (Consumer Intelligence Research Partners), which is a 25% growth from the previous year. Nearly 1 in three Americans have a Prime account which indicates that Amazon is taking over traditional brick and mortar categories. Especially during the pandemic, many consumers shifted from shopping at stores in-person to online shopping. Before the pandemic, Amazon went from $59.7 billion to $87.4 billion in 2019 and then skyrocketed from $75.45 billion to $125.56 billion in 2020 (Statistica Amazon Net Revenue). This tells us a lot about the shopping pattern for consumers in the pandemic when brick and mortar stores were closed. However, as stores started to reopen for in-person shopping, revenues dropped to $108.52 billion. Regardless, the pandemic still brought an influx of consumers to Amazon Prime, and those consumers are most likely to stick around despite the reopening of brick and mortar stores.
During Amazon’s 48-hour Prime Day, online retail for Amazon totaled 11 billion in the United States. To put this into perspective, each second, Amazon records $4,722, each minute, those sales amount to $283,000, and in an hour, that averages more than $17 million (Statistica 2021). The total was slightly higher than last year’s Cyber Monday, which was the largest digital sales day ever. The Prime Day celebration, however, lasted 48 hours, rather than the 24-hour Cyber Monday sales.
When Amazon promotes Prime Day, the company not only helps to build excitement for its own subscribers, but also for rival websites that compete with their deals and discounts. For example, Walmart, Target, and Kohls are retailers that also announced competing sales during the same time as Prime Day. Overall, Prime Day led to consumer purchases of $11.2 billion worth of goods on Amazon during Prime Day, which is a 7.7% increase from $10.4 billion in 2020 (Digital Commerce 360).
Due to Covid-19, many people were staying home significantly more than usual, resulting in changing shopping patterns and exceptional growth in worldwide e-commerce sales. While order size per customer dropped, the increase in sales indicates the growing enthusiasm for shopping online. Amazon continues to pave the way for other companies for e-commerce, but other companies must come up with rival strategies to stay competitive in the industry. Overall, the impact of Amazon on the growth of the online retail sector has helped tremendously the U.S. economy in its recovery from the pandemic.
