Amazon Prime Day: Consumers expected to spend nearly $14 billion during e-commerce holiday
Essential goods and beauty products are expected to be top performers.
Amazon's (AMZN) most anticipated deal event of the year is here.
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 a Prime membership by offering deals and benefits for members.
"When it comes to Prime Day, Amazon still sets the agenda and takes the majority of sales," eMarketer analyst Sky Canaves told Yahoo Finance (video above). "We expect that US consumers will spend nearly $14 billion online during these two days."
Last year, Prime Day brought in $13 billion in sales, with 60% of those sales coming from Amazon, while the rest came 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 "biggest Prime Day event ever."
This year's Prime Day is expected to surpass that record, though the pace of revenue growth has slowed. Nearly 80% of online shoppers anticipate the best deals of the year, according to research conducted by marketing platform Skai.
Other retailers such as Target (TGT), Walmart (WMT), Best Buy (BBY), and Costco (COST) have followed Amazon by offering competing deals to boost sales. For instance, during Target's Circle Week, a seven-day sale that ran July 7-13, the retailer offered members of its loyalty rewards program up to 50% off clothing, skin care, fragrance, technology, and food items.
The shopping events come as consumer spending continues to hold up despite concerns over a slowing US economy. As Yahoo Finance's Josh Schafer reported Tuesday, retail sales were flat in June, coming in better than the expected 0.3% decline.
Beauty category expected to shine
Canaves expects essential goods and beauty to 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 been a very strong, resilient category, and one where brands are keen to get on Amazon because so many consumers are there looking for beauty products."
Amazon has been gaining share in health and beauty, one of its fastest-growing product categories. In addition to rivaling other retailers such as Ulta (ULTA) and Sephora (LVMUY), Morgan Stanley predicts Amazon will overtake Walmart as the US's top beauty retailer by 2025.
Part of Amazon's push into beauty has been expanding its offerings. Canaves pointed out that Amazon has recently attracted more premium brands, such as Clinique and Kiehl's.
According to a 2023 McKinsey & Company report, the "premiumization" trend in beauty and fragrance is expected to continue in the coming years. McKinsey estimates the prestige beauty category will grow 8% per year between 2022 and 2027 versus a 5% growth rate for mass beauty.
That's leading prestige brands who previously skipped over setting up an Amazon storefront to reconsider the marketplace.
"If the beauty brands aren't selling [products on Amazon], then third-party resellers will," she said.
