Amazon Prime Day Spending To Top $11B, Adobe Estimates

Yahoo Finance's Dan Howley joins the Yahoo Finance Live panel to discuss what to expect from Amazon Prime Day 2021.

Video transcript

AKIKO FUJITA: Let's turn our attention to one stock that sort of bucking the trend. Amazon trading in the green, although it is trading pretty flat right now. The company just days away from one of the biggest shopping events of the year. Amazon's Prime Day is expected to rake in $11 billion this year, according to Adobe. But other big name retailers also looking to cash in on the two-day event.

Let's bring in Yahoo Finance's Dan Howley, who is walking through or watching all of the knock-on effects, I guess we could say, Dan. I mean, we talk about this as an Amazon. But it's really become something much bigger than that.

DAN HOWLEY: That's right, Akiko. There's sales that are going to be happening across the board for competitors of Amazon. We're talking about the Walmarts. We're talking about the Targets and any online retailer that really wants to compete in that space as well as the brick-and-mortar retailers. We're going to have plenty of sales across the board.

And really, I think one of the big things that people look at when they see Prime Day is the sales that the company does on its own products. We're talking about the likes of the Fire TV or the Echo, the Echo Show, that little box that you can talk to and shows you video chats with people. I think one of the things that people don't realize is the reason why those are front and center and the reason why they're so cheap is because, once you sign up for that or purchase one of those, you're more likely to spend more than other Prime customers who don't have those devices.

So really, it's part of making sure that you are a Prime member and you stay with Prime. Obviously, they have plenty of retention. Churn is very low for Prime. But once you're signed up and you have these products that are being offered for such low costs, you're going to spend more than other non-Prime members.

And I think one of the other things that we have to talk about is the third party sellers. And obviously, those have been a big issue of discussion for some time now, especially with the antitrust issues going on at Amazon. But when it comes to third party sellers on Prime Day, you have to wonder how they manage to do well when they're discounting their products so much to try and keep up with the competitors.

And really, some of the experts that I spoke to had said that, look, if you're going to be a third party seller and you're going to work through Prime, you have to have a bulletproof strategy. If you don't, you go in there with Prime Day, you're going to end up losing.

But the ones that have fully fleshed out e-commerce strategies on Prime Day, they really do make a killing and do incredibly well and, as a result, get people to come back to their brand over time. So it really is kind of this incredible machine of consumerism on both sides, Amazon's as well as the third party sellers and then the other retailers who are out there trying to get the attention that Prime Day gets as well.

ZACK GUZMAN: And Howley, as we've been discussing too, I mean, it sounds like Amazon moved Prime Day up a little bit to maybe help with their year over year comps, as we've been talking about kind of that surge in e-commerce here. I'm not sure if that changes maybe what we're expecting when it comes to what's traditionally been popular on Prime Day.

I know you look into electronics and some of the deals around televisions and otherwise. I mean, does that change at all this time around?

DAN HOWLEY: I don't think it does. I think it really is still what people look for. Look, it's the same thing like Black Friday or Cyber Monday. It really is one of the biggest events for them. In fact, Prime Day does better than both of those days. So it really is a massive kind of sales extravaganza to a degree.

They're going to have concerts with Kid Cudi and Billy Eilish and H.E.R. So they did this last year or the year prior with Taylor Swift. And so they really try to get people in and draw them in to hold them on as Prime members. And it is interesting to see how the kind of machinations work of Amazon, where they draw you in with the promise of a concert. Maybe you sign up for one month. But once you're signed up for that one month, if you purchase those Amazon products, you're going to stay for quite a while.

And I do think that people will still make Amazon's products number one. Last year, the number one selling globally on Prime Day was the Echo Dot. And you can imagine that plenty more people retained their prime memberships as a result of that because occasionally, it'll prompt you and tell you things like, you can listen ad-free on Amazon Music if you have a Prime subscription or you can get special sales using the Echo Dot with a Prime subscription.

So I do think that we'll continue to see the same kind of shopping trends, where Amazon's products are the top sellers. And then we'll see TVs and things along those lines, as you mentioned. But just remember, as you're purchasing, it's really about Amazon holding onto you for life as a customer.

AKIKO FUJITA: Yeah, Dan. It's interesting. As you talk about some of these other festivities, if you want to call it that around this event, there's another global retailer who's watching this thing. It's starting to look a lot like Oz. And that's, of course, Alibaba and Singles Day and how they've handled the event.

Let's talk about the knock-on effect on other retailers. Adobe had this really interesting chart that points to the biggest retailers seeing a significant bump on the back of Prime Day, 24% bump for some of the biggest names. And you sort of alluded to that, those like Target as well as Walmart. What are we anticipating on that front?

DAN HOWLEY: Yeah. They're going to also offer sales to compete right alongside Prime Day. And they've kind of used this. It's almost like a cyclical effect or, as you said, a knock-on effect, where everybody wants to go to Prime, to Amazon because they offer that sale. And so because of that, the other retailers say, look, we've got to try to pull people away from Amazon to get them to come to us via Walmart or something along those lines.

So I do think that that's something that we will continue to see. And it will be something that a lot of people will be paying attention to.

ZACK GUZMAN: All right, Dan Howley, appreciate you bringing us the updates there. Big times, Prime Day approaching.

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