Amazon Prime Day Sets the Stage for Holiday Shopping Surge

Amazon Prime Day 2024 has concluded with impressive figures worldwide: $14.2 billion in revenue in the US, an 11.2% increase year-over-year; and £1.3 billion in the UK, up 8.8% from last year. While Amazon celebrates this milestone, the real focus now shifts to Q4 and the holiday shopping season. What can retailers expect in the coming months based on Prime Day trends? Here’s what the event revealed about the upcoming holiday season.

Prime Day serves as a bellwether for the holiday shopping season, offering insights into future retail trends. According to Rob Garf, VP and GM of retail and consumer goods at Salesforce, “Prime Day provides a preview of the holiday season. Retailers should be optimistic. Online traffic and demand were up, with growth driven by increased purchases rather than just higher prices.”

As highlighted by Adobe Analytics, discounts have become a crucial strategy for retailers. Prime Day saw an average discount rate of 22%, a 10% increase from last year. Although the calculations were somewhat debated—Amazon’s discounts are based on MSRP rather than the regular selling price—expect discount levels to remain high throughout the holidays. Retailers will likely continue to emphasize percentage-based savings over flat dollar amounts.

The Buy Now Pay Later (BNPL) trend is on the rise, with 79% of US consumers expressing high satisfaction with these plans. BNPL was particularly favored by Gen Z. During Prime Day, BNPL accounted for 7.6% of US orders, a 16.4% increase from the previous year. In the UK, it represented 14.9% of online orders, up 6.5% from last year. BNPL is expected to be a significant factor throughout the holiday season.

Social media platforms are increasingly shaping shopping habits, especially among younger audiences. Emarketer reports that 74% of US Gen Z use TikTok for search, with 51% preferring it over Google. Amazon capitalized on social media for Prime Day through its Inspire platform and collaborations with influencers, particularly on TikTok. Social media contributed to an 11.1% increase in revenue for Prime Day, second only to display advertising’s 12.5% boost. Expect social media and social commerce to play an even larger role during the holidays.

In response to Prime Day, traditional retailers like Walmart and Target held their own events. However, Amazon’s main competitor was the Chinese discount marketplace, Temu, which launched its “biggest ever week” with discounts of up to 90%. TikTok also posed competition with its “Deals For You Days” just before Prime Day. Looking ahead, 63% of Western consumers plan to shop from Chinese applications like Aliexpress, Temu, and Shein. In response, Amazon is introducing a “discount store” featuring low-priced items from China, though these come with longer delivery times compared to Prime.

Mobile devices are increasingly preferred for shopping, accounting for 49.2% of online purchases during Prime Day, an 18.6% increase from last year. This trend is expected to persist, with over 55% of Black Friday traffic in the US last year coming from mobile devices. The significance of mobile shopping is likely to grow even more during the holiday season.

Amazon’s AI shopping assistant, Rufus, was reportedly used by millions of US shoppers during Prime Day. Designed to provide detailed product comparisons and reviews, Rufus represents a growing trend in AI-driven shopping aids. Despite mixed reviews on Rufus’s performance, AI is poised to play a larger role in holiday shopping. A Salesforce survey indicates that 53% of shoppers are interested in using generative AI to find the perfect gift.

Amazon Prime Day has effectively set the stage for the holiday shopping season, acting as a prelude to key events like Back-to-School in September, Amazon’s mid-October “Prime Big Deal Days,” and the major shopping days of Black Friday and Cyber Monday. Retailers are adjusting their strategies to accommodate the shifting landscape, with many consumers in the US and UK planning to start their holiday shopping as early as October. As Prime Day demonstrated, the holiday season will be characterized by aggressive discounting, increased use of BNPL, and heightened influence from social media and mobile shopping. Retailers must prepare their top-performing strategies to capitalize on these trends as the fourth quarter approaches.