Amazon Prime Day hits online sales

Online sales figures for July have suggested that while this year’s Amazon Prime Day (July 12) may have been good for the e-commerce giant, it may have taken its toll on revenue growth.

In the IMRG Capgemini e-Retail Sales Index for July, IMRG managing director Justin Opie said that discounting may have driven more buyers to complete their purchases that month.

Sales growth in electricals was down five per cent, following an even sharper fall of 13.9 per cent in June. IMRG said this fall could be related to shopper awareness around Amazon Prime Day and the promise of getting a deal on electrical products during that event.

Overall, UK online retail sales grew by 11 per cent year on year in July.

Growth for online sales so far in 2017 (January to July) is up by 12 per cent.

There was an increase in the number of visitors completing a purchase online, with conversation rates reaching 5.8 per cent, which is 21 per cent higher than a year ago.

IMRG suggested that the fact that the conversion rate rise wasn’t matched by a similar boost in online sales revenue growth could mean that discounting was heavy in July, with the summer sale period in full swing and retailers under pressure from Amazon Prime Day.

Average basket value (ABV) on smartphones increased 21 per cent and tablets up by 17 per cent in July.

Justin Opie, managing director of IMRG, said: “Eighty-seven per cent of respondents to a recent retailer survey we ran claimed that the event has not led them to adapt their summer sales strategies – it does after all already fall during one of retail’s major discounting periods. Yet, overall market growth of 11 per cent for July, while solid enough, is probably a bit below expectation – while Amazon reported growth of 60 per cent year-on-year for their 30-hour Prime Day period. Conversion rates being up sounds positive, but the fact that it didn’t deliver a similar boost to sales revenue growth suggests discounting was probably a factor in driving more visitors to complete a purchase. Prime Day is an established event in the calendar now and it may be exerting an impact judging by this month’s results, although other factors – such as rising inflation and consumer confidence – may also be at play.”

Bhavesh Unadkat, principal consultant in retail customer engagement design, Capgemini, commented: “We’re seeing the slowdown in purchasing continue across July as this trend of low consumer confidence lingers. With the pound almost running level with the euro luxury purchases and ‘nice-to-haves’ are hit hardest. While conversion rates are up broadly speaking, this is only with repeat buys or necessities. Even with enticing luxury offers made available to try and compete with Prime Day, more browsing choice lead to a further dip in conversion for these categories with consumers browsing more but buying proportionately less.”