Amazon Prime Day 2020 Kicks Off an Early Holiday Season

Amazon Prime Day 2020 Kicks Off an Early Holiday Season

Amazon Prime Day this year will be unlike any other since its debut five years ago. Against the backdrop of a pandemic and recessionary headwinds, this year’s event promises significant changes that will shake up the entire retail landscape heading into the holidays.

Prime Day kicked off this week, nearly three months later than its typical mid-July timing. This will result in a different focus: de-emphasizing products for summer and back-to-school, and making the event an early lead-in to the holiday season. We forecast that it will generate $9.91 billion in worldwide sales for Amazon, up 43.0% from last year’s event.

A major force behind the anticipated success of Prime Day 2020 is this year’s growth in Amazon Prime members. Since Prime membership is required to take advantage of deals, the event—and the free media exposure leading up to it—function as a huge membership drive. Prime Day lowers Amazon’s customer acquisition costs and increases customer lifetime value. The company reported that last year’s Prime Day event delivered the highest-ever number of new Prime membership sign-ups over a two-day period. Earlier this year, CEO Jeff Bezos revealed that Prime membership had surpassed 150 million worldwide, just two years after reporting it had reached 100 million.

We forecast that the number of US Amazon Prime memberships will grow by 14.9% to 142.5 million US users in 2020, surpassing 50% of the US population for the first time. This is a sizable upward revision from our previous forecast of 7.4% growth to 133.1 million. Fast and free shipping remains the top reason for subscribing to Prime, but Prime Video has become an important benefit that attracts new members and keeps them around.

The pandemic only seems to have underscored Prime’s utility as membership appears to be climbing in recent months. According to our bimonthly Bizrate Insights ecommerce survey, Prime membership has grown across all age segments between February and June of this year—jumping from 69% to 81% among 18- to 34-year-olds, 63% to 68% among 35- to 54-year-olds, and 52% to 60% among adults 55 and older.

With Prime penetration already so high, recent gains have important long-term implications. Because of an unanticipated external event, Amazon is getting difficult-to-acquire Prime customers off the sidelines and habituating them to the benefits of membership.