Latest / Retail Media Breakfast Club / Prime Day 2025: Are Brands Scaling Back? (3 Reasons To Reconsider)
Transcript
- Prime Day participation 2025 === [00:00:00] Last week I ran a poll on LinkedIn asking brands how they plan to participate in Prime Day this year compared to previous years, and the results paint an interesting picture. So going kind of biggest to smallest in terms of their expected participation. Brands who say they're going bigger, 12 and a half percent. Brand saying about the same, 35.7% scaling back the biggest group, 37.5% and skipping it entirely 14.3%. So the major vast majority there are either keeping things about the same. Scaling back or skipping it entirely with over 88% of brands saying that, one of those answers. So that means, you know, pretty big shift from the all in, [00:01:00] getting out there, making the most of the summer sale that we've seen in the past. In this episode, I'm gonna talk a little bit about why brands are pulling back but also three cases for Prime Day participation that you might want to consider as well. Let's go. Good morning and welcome to the Retail Media Breakfast Club. I'm your host, Kerry Masters, and every weekday at 6:00 AM Eastern, I bring you candid and real discussions in the world of retail, media and marketplaces in just 10 minutes. So bring your own cup of coffee and we'll get smarter about retail media together. So first of all, as for why brands are pulling back from Prime Day this year, I don't need to spend a lot of time telling you why this is, it's a lot to do with tariffs and uncertain and uncertainty. Many three P sellers in particular say they're sitting out Prime day [00:02:00] this year because of new tariff costs. Um, we've seen some shifts in recent days, which just. Kind of, it compounds uncertainty, if anything, and so that makes discounting difficult to commit to. Now third party sellers are the ones that sell the vast majority of items on Amazon with about 60% of all items on Amazon being sold by third party sellers in the fourth quarter of last year. So this pullback really threatens to limit the selection of Prime day discounts available to members, and that's a bad position for Amazon to be in. Less discounts, less excitement over prime day. Less people signing up for Prime membership and they can't come out as they do every year and say it was their biggest prime day ever, which is what they've been able to say every single year since it started in 2015. Other reasons for the pullback. Advertising continues getting pricier. Sponsored product, [00:03:00] CPCs Rose 12% during Prime Day 2024. So a lot of brands and agencies and consultants look at those CPCs and say, is this really the best time to be spending? Another reason is Amazon's total fee structure, while it mostly remained unchanged for 2025, is still super high. And there's been a lot of, there's a lot of criticism. Last year about some changes to fulfillment fee structures, in particular for third party sellers. Not a lot. Lot has changed, but it certainly hasn't gotten any better since last year. And then finally, prime Day 2025 will be the first four day US event, plus eight weeks of early deals. And so that means for advertisers that the advertising budget and promotion. Promotional discounts that were once powering a 48 hour flash event now has to stretch across 10 plus weeks, so that [00:04:00] makes it even more challenging to figure out how to fund this, when to run your discounts and funding discounts and advertising overall longer timeframe. So it sounds a little doomy and gloomy, but I do want to share on the other side a few reasons why. Despite all of those challenges, you may still want to consider participating in Prime Day as a brand. So I've went back through the archives 2024, and some really smart commentary from other people out there, and I've got three points to share with you. Number one. Is the product review advantage. Jason Landro, the founder of the agency, nectar, points out an overlooked benefit, which is actually getting up your product review numbers, he says. In short, if you [00:05:00] 20 x or 50 x your unit sold in two days, you should be able to 20 or 50 x your review rate on each PDP accordingly. That is huge for a rankings boost, and I think that's a really good point. It's a residual benefit that can propel products forward long after prime day ends. So certainly something worth considering. Reason number two is the halo effect, and this is sort of related to what Jason said, but uh, there's some data from the agency in Vision Horizons in 2024, which showed that even brands that don't participate in Prime Day, so are 60% sales increase compared to average days. And despite the higher CPCs over Prime day, Their clients experienced a 45% increase in ROAS during Prime Day, despite the higher competition, despite the higher CPCs consumers are [00:06:00] out there. Ready to spend, ready to snatch up those deals that they have been saving to their wishlists, et cetera. Um, I actually topic for another day, but I'd really think that Rufuss and Alexa plus are gonna be the stars of Prime Day this year and help with surfacing deals that people want and surfacing personalized deals also. And then finally, this is one of my favorites. This is some advice from Catherine McKee on LinkedIn and she. Reminds people that the point of Prime Day from Amazon's perspective is to get people in the door and to sign up for Prime. It's not to dump units as in sell through, uh, a whole lot of inventory. They are in the data game. That is your goal too. Use Prime Day to scale, not to move old units. And Katie goes on to recommend a data-driven approach [00:07:00] focused specifically on. Uncovering insights for your medium demand products in your assortment. So she says, don't use prime day to dump aging stock. Run an off cycle deal yourself. Don't promote your heroes even though this is what your vendor manager told you to do, because that's what's best for Amazon. I think this is actually a really good point. If you think about what Amazon's goal is, is to drive prime member signups. And drive, uh, volume. That's why they want you to push your hero products, but that isn't necessarily long term the, the best strategy for your brand. But what she suggests is focusing on these middle tier products because this provides the perfect laboratory to answer some critical product questions about your mid demand products. So one, [00:08:00] do you know why it's a medium tier? Good. Two, do people not know it exists or does it not have product market fit? Number three is your pricing off. Number four, is your page set up poorly? Number five is awareness, your primary obstacle. And she goes on to say, if awareness was the primary obstacle, you'll find out by running deals for these products during prime day because you'll see demand continue to trend upwards. So I thought that was a hands down, brilliant take using Prime Day, like a product market fit laboratory for those products that you haven't had an, uh, an opportunity to do a really clean experiment. Great. Um, great insights from Katie there. And I'll link up to Katie's profile in the show notes too, so you can follow her on LinkedIn. So, Amazon's position here, you know, am with these challenges. Affecting third party sellers significantly. Amazon itself maintains [00:09:00] their usual optimistic stance, and Amazon spokesperson said the company is having a strong response from selling partners to Prime Day 2025. Of course they did so. The proof is really gonna be in the pudding with what Prime Day really looks like. But overall, 2025 represents a more complex calculation for vendors and sellers than ever before. The tariff impact is gonna make participation challenging. But if you have the levity to look at Prime day, like a. Data collection opportunity, as Katie suggests, that could be a really great win for your brand as well, and deliver some potential long-term value. Well, outside of the event. That is it for today. I hope you enjoyed this episode of the Retail Media Breakfast Club. We meet here every day at 6:00 AM Eastern, so be sure to subscribe and get your [00:10:00] daily dose of insights, trends, and hot takes in the world of retail, media and marketplaces.