
Why Amazon's Prime Day Could Still Be a Blowout
Updated to include new details on Prime Day.
Sales for Amazon's (AMZN) - Get ReportPrime Day shopping bonanza this year could trounce what was delivered in 2015, even if some people in the U.S. and U.K. are having trouble adding items to their digital shopping carts.
First, the Internet juggernaut plans to offer over 100,000 deals this Prime Day, according to JMP Securities analyst Ronald Josey's estimate, making it the company's largest event ever.
Second, Prime Day 2016 will be available in 10 countries, up from nine last year. Belgium was recently added.
Further, the number of third-party sellers participating in Prime Day is expected to surge 100% year over year, according to Josey.
Finally, Amazon began promotions related to the event earlier this year, with "Countdown Deals" beginning seven days ahead of Prime Day on July 12.
"We expect this year's Prime Day to be as successful, if not more so, than last year," said Josey, who rates Amazon shares at market perform with a $775 price target.
Not that the metrics from Prime Day 2015 were anything to sneeze at. Worldwide order growth skyrocketed 266% on last year's Prime Day, pulling in some $400 million in total revenue for Amazon. According to ChannelAdvisor, total Prime Day sales in the U.S. and Europe increased 93% and 53%, respectively, from the prior year. There were 34.4 million items sold on the day, equating to about 398 per second.
Some of the inevitable success for the second annual Prime Day may be tempered, however, due to technical difficulties. Many shoppers took to Twitter Tuesday to say they were struggling to use the checkout for their discounted Amazon swag.
Most notably, people complained that they are getting an "add to cart fail" message each time they attempted to check out.
The company tweeted that it was working to resolve the issue quickly this morning, and Reuters reported that Amazon had emailed them to say that customers were having trouble adding some Lighting Deals to their shopping carts, but that the issues have been fixed.
Nevertheless, Prime Day is still setup to be wildly successful for Amazon, which could bode well for the company's business -- and shareholders -- for the remainder of the year.
"Prime Day grows Amazon's Prime ecosystem," wrote JPMorgan Chase analyst Doug Anmuth in a Jul. 7 note.
He added, "Prime fuels the Amazon flywheel and is a major driver of growth, and Prime Day is becoming an increasingly important Prime customer acquisition event -- hundreds of thousands of new members trialed the service on Prime Day 2015, more than any prior day in history, and while some members will not convert to paying subscribers, many will, and Amazon captures them well before the holidays."
Anmuth estimates there are roughly 55 to 60 million Prime members globally, including 30 million in the U.S. Each of them plunks down $99 a year (or $10.99 a month) to gain access to free one- or two-day shipping on most items, along with other perks. The number of Prime members grew 51% last year, and Anmuth believes they spent three to six times as much as regular Amazon buyers.
Helped by excitement over deals like Prime Day and closer attention to profits from its growing operations, Amazon shares have risen about 70% over the past year, outperforming the Nasdaq Composite, which has remained essentially flat.









