How Retailers Can Capitalize On Amazon’s Debut Prime Day Early Access Event

Deck the halls, folks. Amazon is ringing in this holiday season with a 2nd Prime Day event.

Prime Day Early Access – as the Seattle-based behemoth dubbed its latest festivities – happens on October 11th and 12th. And the 48-hour promotion will be open to all 200m+ Prime members.

Here’s what you (as an Amazon seller) need to know about the event.

(Please, hold all comments about how blasphemous holiday shopping before Halloween is until the end.)

Why Amazon is hosting Prime Day Early Access

Bloomberg reports that Prime Day Early Access intends “to boost sales among cost-conscious consumers who are expected to start their holiday shopping even earlier this year.”

This aligns with Salesforce’s findings that 37% of Americans will start Christmas shopping in October to space out their gifting expenses.

Needless to say, most retailers didn’t plan October Christmas promotions. So, Amazon is betting that Early Access will give its sellers 1st move advantage.

And if preceding Prime Days are any indicator, you can expect this event to be a big one. During July’s Prime Day, sales reached ~$12B (up 8.5% YoY).

Plus, Prime members saved $1.7B+ throughout the promotion. So, we’ll likely see consumers watering at the mouth as Amazon ramps up marketing for this event.

Inventory challenges could dampen the Prime Day

Not all Amazon sellers are as jolly over Prime Day Early Access. Namely, those feeling the impacts of:

• Rising operational costs on the Amazon platform (up 5%+ YoY)
• Precarious inventory levels (ranging from wildly overstocked to edging on stockouts)
• Consumers cutting back on holiday spending due to recession fears

Take brands that are currently understocked, for instance. “They want to maximize their sales output without running out of stock at any point during the holiday season,” Ryan Moffet, director of ecommerce at Pattern, told Modern Retail.

But from an inventory standpoint, lots of retailers are understocked. And the tough-love truth is, at this point, you likely can’t order more stock to arrive before Christmas. So, you’re stuck with what you’ve got (incoming purchase orders included).

And if you run the same campaign for Early Access as Black Friday and sell out? Well, you probably just accelerated your revenue by getting consumers to purchase sooner. The net effect is negligible.

With that in mind, how can you capitalize on Amazon’s Early Access event? Well, it depends on what inventory challenge you face.

Are you understocked?

If you’re pretty much guaranteed to stock out this holiday season, the name of the game is maximizing profits.

Sure, you could run your Black Friday deal during Early Access (like a soft launch). But you’ll not only accelerate your stockout but likely limit how much money you make.

Instead, try giving shallower discounts during Early Access. For instance, were you planning on offering 30% off for BFCM? Then, maybe drop your price tags by only 10% for the Amazon event.

Why? A few reasons:

• Customers determined to do their holiday shopping early will pay a higher price tag, especially if it ensures they’ll get that perfect gift. (After all, everyone remembers last year’s widespread holiday stockouts.)
• This is a great test to validate if you need the deeper Black Friday discount. You might find that only offering 10% off dramatically increases demand. So, maybe you pull back your BFCM deal to 20% to widen your margins.
• Say you only sell a few more units than usual with that 10% discount. Selling those units at that higher price still makes you more money than selling those same units at 30% off during your Cyber Monday event.

But what if you really don’t want to sell out too early in the holiday season? We don’t blame you – try prioritizing your inventory. Meaning, limit how many units are available for Early Access versus BFCM, depending on each channel’s profitability.

Not only will this keep you in stock longer, but the quota could add incentive if someone’s still on the fence.

To prioritize your holiday inventory, consider:

• How many units you have available (including safety stock) through the holidays. That way, you can compute all possible scenarios and pick the best one.
• All possible discount percentages (AKA, any offer that will still be profitable if all your units sell at that price).
• Channel-specific costs. You’ll want to offer the sexiest deal on whichever channel provides the highest gross profit margins.
• Any 2nd order effects that are unique to your business.

👉 Need help prioritizing your inventory? Reach out to the Cogsy team at team@cogsy.com. We’ll show you how to run these calculations before Early Access (even if you don’t use our ops platform). That way, you can capitalize on this sales opportunity.

Are you overstocked?

If you’re overstocked, the Early Access game changes slightly. While you’ll still work on maximizing profits (always), you’ll go about it by stopping your margins from bleeding out.

How? By using holiday promotions like Early Access to get back to optimal inventory levels.

You could, of course, still treat this holiday season like any other and move forward with your standard BFCM discount to increase demand. That will shed some of that excess.

But keep in mind: The longer inventory sits in storage, the more holding costs it racks up.

(Case-in-point: Big box stores like Target severely missed Wall Street expectations due to costs associated with excess inventory. And now, their profits are taking a hit.)

So, a better option is to offer slightly deeper discounts to preserve your long-term profitability. If items don’t sell in the next ~3 months, you’ll take them into the new year. There, they’ll likely turn to dead stock – at that point, you’ll be losing money even if that stock eventually sells.

To stop the bleeding, consider all the same factors as understocked brands (namely, available units, possible discounts, and channel-specific costs). Plus, the caveat of where your inventory levels should ideally be sitting.

🔥 Tip: Try Cogsy free for 14-days. With it, you can visualize how small changes to your Early Access and BFCM promotions will move your inventory. That way, you can run with the offer that best positions you to reach your revenue goal.

Then, use these figures to confirm that your planned BFCM promotion will be profitable. And calculate the maximum discount you could offer (with this maximum discount, you should be roughly breaking even).

Run your originally planned promotion during Early Access. If it does super well, feel free to run the same promotion on all your other channels later in the season.

But if the offer doesn’t move the needle, prepare to leverage that maximum discount during BFCM. Keep in mind that just because you’re breaking even on 1 SKU doesn’t mean you need to make nothing.

For instance, you could take a play out of Caraway’s playbook and bundle that item with more profitable products. Last Christmas, the home goods brands literally offered bundles on bundles to boost their inventory velocity.

You can alternatively set an optional minimum order quantity (MOQ). With this strategy, if customers spend, say, $50 or more, they can unlock a “free gift” (AKA, get some aged inventory tossed in).

Both strategies should absorb some of the losses incurred by your excess inventory by boosting your average order value (AOV) over the holiday season.