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Bank of America: Strong Prime Day sales could boost Amazon
Bank of America expects Prime Day to drive meaningful sales for Amazon
Bank of America has reiterated its buy rating on Amazon ahead of the highly anticipated Prime Day, which will take place from July 11 to July 12. The bank expects this year's shopping event to be stronger than the previous year, helping Amazon continue to capture a larger share of the online retail market. Analyst Justin Post predicts a 10% growth in gross merchandise value during the second and third quarters, with Amazon still gaining market share within the online retail industry, which is estimated to be growing in the mid-single digit range. Post also notes that this year's Prime Day will be the first since Amazon's transition to a regionalized logistics network, allowing for even faster deliveries.
Amazon's push to meet consumer demands for more bargains
In an effort to meet the demands of consumers searching for better deals, Amazon aims to increase gross merchandise value in the third quarter. With consumers actively seeking out discounts and merchants participating in Prime Day, the event is expected to be relatively strong. This could result in upside potential to the 12% growth estimate compared to Prime Day last July. Additionally, a successful Prime Day could set up Amazon for modest GMV acceleration in the third quarter.
Rise in Amazon's stock and price target
Amazon's shares have risen by 54% this year, and Bank of America's price objective of $154 implies a potential 18% increase from the previous close. The anticipation of a strong Prime Day and its potential impact on Amazon's sales performance has contributed to the positive sentiment surrounding the company's stock.
With Bank of America reiterating its buy rating on Amazon and predicting a successful Prime Day, investors and consumers alike are eagerly awaiting the start of this highly anticipated shopping event. The combination of increased merchant participation, faster deliveries, and steep discounts is expected to drive meaningful sales and further solidify Amazon's dominant position in the e-commerce market.
Hot Take: Prime Day's Impact on New Businesses
Prime Day's strong sales potential and its significant impact on boosting Amazon's market share in the e-commerce industry have wide-ranging implications for new businesses trying to establish themselves in the market.
1. Increased Competition: With Amazon's dominance and the massive sales volume it generates on Prime Day, new businesses face intensified competition. Standing out amidst the flurry of deals and discounts becomes even more challenging, making it crucial for new businesses to develop unique value propositions and compelling marketing strategies to attract consumers away from the Amazon platform.
2. Market Insights: Prime Day provides valuable market insights, particularly in terms of consumer behavior and preferences. New businesses can analyze the product categories that perform well during the event and tailor their own offerings accordingly. By understanding consumer demands and trends, they can better position themselves to compete effectively.
3. Logistics and Fulfillment Expectations: Amazon's use of its regionalized logistics network for faster deliveries during Prime Day highlights the importance of efficient and timely fulfillment. New businesses must invest in robust logistics systems to meet customer expectations and provide seamless shipping experiences. Additionally, exploring partnerships with fulfillment services or leveraging emerging technologies like drone deliveries can help level the playing field.
4. Pricing Strategy Adaptation: Prime Day's emphasis on discounts and bargains reinforces consumers' desire for competitive pricing. New businesses need to carefully analyze their pricing strategies to remain competitive and ensure their pricing aligns with consumers' expectations. Building customer loyalty through loyalty programs, personalized experiences, or value-added services can also help offset the attraction of Amazon's deeply discounted products.
5. Leveraging Alternative Platforms: As Prime Day is exclusive to Amazon, new businesses may find it beneficial to explore alternative platforms to showcase their products. Diversifying sales channels across e-commerce platforms, social media marketplaces, or even brick-and-mortar stores can help expand reach and mitigate the risk of being overly dependent on Amazon's platform.
In conclusion, while Amazon's Prime Day represents a significant opportunity for existing businesses, it also presents challenges for new entrants. By understanding the competitive landscape, analyzing market trends, optimizing logistics, adjusting pricing strategies, and exploring multiple sales channels, new businesses can position themselves for success and compete effectively against the Amazon behemoth.
Article First Published at: https://www.cnbc.com/2023/07/10/how-amazons-prime-day-will-go-and-the-possible-stock-reaction-.html
