We are 14 days from an election and supposedly 38 days until Black Friday. But do we believe that consumers are waiting until the Friday after Thanksgiving to shop in 2020? Amazon doesn’t and they just saw a 60% increase in 3rd Party Sales from last year during this most recent Prime Day.
Neither does Walmart’s US CEO, "The customer is looking for solutions that really start sooner than years past."
The industry has not named it yet, but Prime Day this year may have kicked off the first Cyber Quarter. Instead of just a Black Friday, Small Business Saturday, Cyber Weekend, Green Monday, Turkey Five, Cyber Week, etc - we are now seeing holiday sales start in October.
And October may be late. If we don’t go by the Gregorian calendar but rather the more official Starbuck’s calendar and their start to Fall - the Pumpkin Spice Latte launch date. In 2020, the PSL was launched at its earliest date ever of August 25th. A full 14 days sooner than the 2015 date!
But before we dive in, let us provide a bit of *history about Black Friday. It is important to understand why every season seems crazier for retailers than the previous.
The true story behind Black Friday, however, is not as sunny as retailers might have you believe. Back in the 1950s, police in the city of Philadelphia used the term to describe the chaos that ensued on the day after Thanksgiving, when hordes of suburban shoppers and tourists flooded into the city in advance of the big Army-Navy football game held on that Saturday every year. Not only would Philly cops not be able to take the day off, but they would have to work extra-long shifts dealing with the additional crowds and traffic. Shoplifters would also take advantage of the bedlam in stores to make off with merchandise, adding to the law enforcement headache.
If you work in eCommerce, retail, or a related industry you know that the roots of ‘bedlam’ and chaos have not left this all important sales holiday. In recent years, Black Friday craziness has just simply expanded into a longer sale period. And 2020 will be no different given that we are currently witnessing the broadest expansion, in the shortest period, ever.
Citing COVID, Amazon changed their pattern from Prime Day being a “Christmas in July” affair to the start of holiday sales and gift buying.
Amazon has yet to disclose sales figures or data to help analysts provide a more accurate estimate of Prime Day 2020 sales; however, “Amazon said the small and midsize businesses that sell on its marketplace made more than $3.5 billion during Prime Day, which is a 60% increase from last year’s sales.”
3rd Party Sellers equate to around 55% of total sales for Amazon. Let’s assume a very conservative and most likely wrong scenario that the rest of Amazon’s business had an anemic YoY growth of 0%. Applying a ~30% YoY growth overall due to the stated data on 3rd party sellers, we would have Prime Day sales at $7.5 BB in sales.
This is obviously an incredibly conservative estimate as MotleyFool published an article with an estimate of $10.6 Billion in sales!
Amazon, never one to miss an opportunity to make more money, then followed up Prime Day two days later with a holiday focused sale campaign of Holiday Door Dash Deals. Halloween hasn’t even occurred and Amazon is already pushing press releases with the word ‘Tis!
Not to be upstaged, Walmart, Target, Best Buy and other big box retailers are now scrambling to play catch up in their own unique ways.
Our favorite example is Walmart running three separate Black Fridays! Again citing COVID, and a need to keep customers more socially distant while shopping Black Friday deals, they will run a month of Black Friday sales instead of the one mad dash sprint. Or perhaps this brick-n-click business understands that 2020 is not a regular Q4. Sales should be quarter long, not pinned to a precise day.
Yes these companies can cite COVID but what specifically has COVID caused when it comes to eCommerce and retail? For starters, a 10 year increase in eCommerce penetration within 3 months!
“More than $1 in every $5 was spent online in Q2 2020–the highest eCommerce penetration of any quarter or year on record.” While total sales during this period remained more or less equivalent, the shift in consumer spending patterns is significant.
COVID has caused the displacement of consumer patterns. When this occurs, markets are in transition and you can bet that there will be big winners and losers made during tumultuous times.
A doubling of eCommerce penetration in Q2 could mean that 1 in 2 online shoppers this Q4 2020 will be brand new to buying online. This should and will cause differences in dramatic ways for businesses.
We would love to brag that Jeff Bezos reads The Weekly Dysrupt but we sadly have not seen Jeff@amazon.com on our mailing list (please forward to him if you have his address).
For the rest of us mere mortals, what moves can still be made to capitalize on this increase in consumer demand?
As Walmart’s CEO said, consumers are looking for moments that start sooner. Ensure you are set up to capitalize on when and how a very different consumer shows up to shop this holiday season. If done well, you can enjoy your Pumpkin Spice Latte with less, not zero, bedlam and chaos than your competitors.