(CNN) — Amazon Prime Day is back starting this Tuesday, July 11. But a couple of random days in July do, in fact, feel a little…random. Here’s why Amazon made the seemingly senseless decision to launch what could be one of its biggest sales days in the middle of summer.
Amazon celebrates Prime Day in July each year to boost sales numbers during what are typically slow summer months in the United States. It also helps Amazon promote an early start to the back-to-school and college shopping season, according to JPMorgan analyst Doug Anmuth.
Amazon tested its inaugural Prime Day in July 2015 to celebrate the company’s 20th anniversary. He designed the day to replicate Black Friday for Amazon, but it featured more deals than the traditional November shopping spree. “Move over, Black Friday, meet Prime Day,” Amazon said in a press release announcing the day.
Amazon posted $900 million in sales on its first Prime Day, according to Coresight Research. The company decided to bring it back for the second year with more offers. Sales reached $1.5 billion, according to Coresight’s estimate.
Since then, Amazon has added a second day to the promotion day. Bank of America predicts that Prime Day could generate about $12 billion in revenue this year, up 12% from a year ago.
Prime Day only accounts for about 1% to 2% of Amazon’s annual sales, analysts say, but Amazon uses the day to build loyalty with Prime subscribers and attract new buyers to the program.
Prime Day helps Amazon attract new members to Amazon Prime, its annual $139 free shipping program, and strengthens existing customer relationships with the company’s products and businesses, including Whole Foods. The vast majority of the company’s Prime Day deals in the past have been exclusive to Prime members.
This will be the first Prime Day with Amazon’s revamped delivery network.
Amazon has traditionally operated a national delivery network that distributed orders from warehouses spread across the country. If a local warehouse doesn’t have the product a customer ordered in, say, Detroit, Amazon ships it from another part of the country. But the company this year created eight regions in smaller geographic areas designed to ship products shorter distances.
The changes may affect what products consumers see when they search for products on Amazon’s website. Items that are closest to customers will appear higher on search results pages, according to Amazon.
Amazon also faces stiff competition this year from Target, Walmart, Best Buy and other retailers offering discounts that coincide with Prime Day.
The promotion day is also beginning as online prices fall.
Online prices in June fell 2.6% year-over-year, the most significant decline since May 2020, according to Adobe Analytics’ Adobe Digital Price Index.
June marks the 10th consecutive month of year-over-year price declines, with more than half of the categories tracked by Adobe seeing price declines.
Electronics, computers, and home appliances continued to experience significant price declines. Grocery prices increased, but at a slower rate.
