Consumers expected to spend nearly $14 billion during e-commerce holidays

The most anticipated opportunity of the year for Amazon (AMZN) is approaching.

On Tuesday, the e-commerce giant kicked off Prime Day, its annual two-day promotional event. Prime Day began nine years ago as a way to highlight the value of Prime membership by offering deals and benefits to members.

“When it comes to Prime Day, Amazon continues to set the schedule and take the majority of the sales,” eMarketer analyst Sky Canaves told Yahoo Finance (video above). “We expect U.S. consumers to spend nearly $14 billion online over those two days.”

Last year, Prime Day brought in $13 billion in sales, 60% of which came from Amazon and the rest from third-party sellers, according to eMarketer. Prime members purchased more than 375 million items during the event last year, Amazon said, making it “the largest Prime Day event ever.”

This year’s Prime Day is expected to surpass that record, even though revenue growth has slowed. Nearly 80% of online shoppers are anticipating the best deals of the year, according to research from marketing platform Skai.

Other retailers like Target (TGT), Walmart (WMT), Best Buy (BBY) and Costco (COST) have followed Amazon’s lead by offering competitive deals to boost sales. For example, during Target’s seven-day Circle Week sale, which ran from July 7 to 13, the retailer offered members of its loyalty program up to 50% off clothing, skincare, fragrance, technology and groceries.

The shopping events come as consumer spending holds up despite concerns about a slowdown in the U.S. economy. Retail sales were flat in June, a better-than-expected 0.3% decline, Yahoo Finance’s Josh Schafer reported Tuesday.

The beauty category is expected to shine

Canaves predicts that consumer staples and cosmetics will outperform other categories.

“Beauty is a category where Amazon’s online sales continue to outpace overall e-commerce growth for the category,” Canaves said. “And it’s a very strong, resilient category where brands want to get on Amazon because so many consumers are looking for beauty products there.”

Amazon is gaining share in health and beauty, one of the fastest-growing product categories. In addition to competing with other retailers like Ulta (ULTA) and Sephora (LVMUY), Morgan Stanley predicts Amazon will overtake Walmart to become the largest beauty retailer in the U.S. by 2025.

Part of Amazon’s expansion into the beauty market has been to broaden its offerings. Canaves noted that Amazon has recently attracted more premium brands like Clinique and Kiehl’s.

The story continues

According to a 2023 McKinsey & Company report, the “premiumization” trend in cosmetics and fragrances is set to continue in the coming years. McKinsey estimates that the prestige cosmetics category will grow by 8% annually between 2022 and 2027, compared with 5% growth for mass cosmetics.

These are leading prestige brands that previously decided not to set up a store on Amazon in order to change their approach to the market.

“If beauty brands don’t sell (products on Amazon), third-party sellers will,” she added.

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