The four-day strategy falls into the "promotion fatigue" dilemma! Amazon Prime Day event encounters a setback on its first day

The Zhitong Finance APP noted that Amazon (AMZN.US) made a big gamble this year by extending its annual Prime Day summer promotion from two days to four days, betting that a longer promotional period would give consumers more time to browse millions of discounted products in its vast online store. However, preliminary results indicate a less than optimistic situation, putting greater pressure on the performance of the remaining promotional days.

Momentum Commerce, which manages online sales for 50 brands across multiple categories and price points, reported that its sales on the Amazon platform plummeted 41% year-on-year on the first day of Prime Day (July 16).

The company's founder and CEO, John Shea, pointed out that the extended promotional period has led consumers to engage in "browsing shopping"—constantly looking at products and adding them to their carts but delaying purchases, hoping for potentially larger discounts later. In contrast, the previous two-day promotions created a sense of urgency, prompting consumers to worry about missing out on deals and make quicker purchases.

Shea stated that if the observers in the following days convert into actual buyers, the total sales during the four-day promotional period could still increase by 9.1% compared to last year's two-day event.

The company represents brands such as Crocs sandals, Beats headphones, and Therabody massagers, with annual sales on Amazon of about $7 billion, and its data can comprehensively reflect the current performance of Prime Day. "Success or failure hinges on this four-day strategy," Shea said, "Amazon paid a huge price on the first day, and this year's situation is very difficult to predict."

Wall Street seems to believe there is still time for Prime Day to turn around, pushing Amazon's stock price up 1.5% on the day, matching the gains of Microsoft and Alphabet.

"It’s hard to determine whether the activity's popularity has really declined after extending from two days to four," said D.A. Davidson analyst Jill Luria. "The specific performance will have to wait for the quarterly earnings report, but it’s currently difficult to assess the effectiveness of Prime Day."

An Amazon spokesperson initially declined to comment on Momentum's data but later issued a statement saying, "These numbers from third-party consulting firms that cannot access real data are extremely inaccurate." The company did not specify what was inaccurate.

Since President Trump's trade war cast a shadow over the economic outlook, Prime Day has become a barometer for consumer confidence. The threat of tariffs on imported goods reaching as high as 145% has been postponed to allow for negotiation time, but it has made price trends difficult to predict.

Media reports previously indicated that due to the uncertain outlook, some online merchants have reduced their discount levels or directly opted out of Prime Day.

Amazon Prime business head Jamil Ghani explained in an interview with Bloomberg Television on Wednesday that the extension of the promotional period was based on consumer feedback wanting more time to select deals. He noted that consumers prefer "everyday essentials" like teeth whitening strips (which is now Amazon's fastest-growing category) and stated that the company is "satisfied with the participation," emphasizing " "It's too early to draw conclusions now."

Data analysis company Numerator tracked over 7,000 orders from 3,855 households and found that on the first day of Prime Day, consumers focused on low-priced items, rushing to buy household essentials like dish soap and protein powder, rather than larger items like TVs and gaming consoles.

About 65% of purchased items were priced below $20, with only 3% exceeding $100. The best-selling products included Dawn dish soap, Premier protein powder, and Finish dishwasher cleaner. The average household spending dropped from $110 on the first day last year to $106 this year, while the average price per item decreased from $28 to $25.46.

"This year, consumers seem to prefer purchasing more low-priced items," noted Numerator analyst Amanda Shonbauer, "but with promotions extended to four days, Prime Day in 2025 could still break records."

Data from Adobe Inc. shows that on Tuesday, U.S. consumers spent $7.9 billion online across all retailers, a 9.9% increase compared to the first day of Prime Day last year (July 16, 2024), with total spending over the four-day period expected to reach $23.8 billion. Amazon's promotional activities coincided with multi-day promotions from Walmart and Target, sparking a shopping frenzy online.

"This year's Prime Day has a more significant ripple effect on other retailers," summarized Shay of Momentum Commerce