Amazon Prime Day mania will crush dying retailers: Strategist
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A bad year for struggling retailers such as Macy’s and JCPenney because of the COVID-19 pandemic could get much worse thanks to e-commerce monster Amazon’s Prime Day being held in October.
“The real losers are these companies that don’t have a vibrant online retail sales business. These kind of old-line bricks-and-mortar retailers with clunky websites haven’t done well in COVID. This [Prime Day] could be kind of another nail in their coffin because it’s really going to vacuum out a lot of these dollars from the marketplace,” argued retail expert and Amplify ETFs CEO Christian Magoon on Yahoo Finance’s The First Trade.
Prime Day “vacuuming out” sales from long-lagging retailers when it kicks off on Tuesday may be an understatement. How about siphoning out sales, judging by early sales estimates: Amazon Prime Day - which typically happens in mid-July but was pushed out to Oct. 13-Oct. 14 due to the pandemic — is expected to register some $10 billion in worldwide sales this year, according to new data from eMarketer. That would mark an impressive 43% year over year increase.
eMarketer also forecast that on the back of a strong Prime Day, U.S. Prime members will hit 142.5 million in 2020, up 14.9% from a year ago. As Yahoo Finance’s Julia La Roche points out, that would mean more than 50% of the U.S. population is a Prime member.
All of those Prime Day predictions likely has most retail execs cringing for at least two reasons. First, many people are effectively going to finish their holiday shopping season on Prime Day as they seek to avoid holiday crowds in stores during the pandemic and shipping delays. And second, strong growth in Prime members will only contain people in the Amazon ecosystem to buy clothes, food and whatever else their hearts desire later this year and into 2021.
Summing it all up, that equates to far fewer sales opportunities for retailers like Macy’s, JCPenney, and Gap that badly need business right now.
Warns Magoon, “This is going to accelerate some of the problems that bricks-and-mortar retailers are in.”
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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