This One Prime Day Stat Says Everything You Need to Know About Consumers Right Now
Amazon kicked off Prime Day with a bang on Tuesday, generating the most single-day sales in the company’s nearly 30-year history. But the amount saved might say more about the current state of the consumer than the amount of goods purchased.
Prime members saved $2.5 billion by springing for deals, Amazon said, and bought more than 375 million items on the first half of the two-day shopping extravaganza.
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Many consumers are worried about their budgets these days, even after the June Consumer Price Index (CPI) rose just 3 percent—the weakest 12-month increase since March 2021.
Total U.S. credit card debt increased 12 percent year-over-year to $992.9 billion as of June 28, according to the Federal Reserve, and has shot up nearly 35 percent since April 2021, when debt hit a low point during the Covid-19 pandemic after the national distribution of stimulus checks.
On top of that, those who were hoping for student loan forgiveness are out of luck after the Supreme Court voted down the Biden administration’s plan to forgive $430 billion in debt people rack up to pay for college.
Although Amazon doesn’t break out individual sales numbers, Adobe calculated online spending across U.S. retailers on Tuesday at $6.4 billion, nearly 6 percent higher than last year. On Wednesday, spending totaled $6.3 billion, up 6.4 percent year-over-year.
Both days, despite Amazon’s record sales Tuesday, reflect smaller year-over-year spending increases than those in 2022, when total online sales rose 7.8 percent, and then 9.2 percent.
The Adobe Analytics data suggests that consumers are not just seeking out deals, but also making their budget stretch
Buy now, pay later (BNPL) accounted for 6.5 percent of online orders on July 11-12, driving $927 million in revenue, and growing 20 percent compared to year prior. Usage of BNPL platforms continues to be driven by discretionary categories including apparel, furniture/home and electronics.
“For months, consumers have felt the effects of persistent inflation and an uncertain economic environment, and it has pushed shoppers to embrace more flexible ways to manage their spending around the Prime Day event,” said Vivek Pandya, lead analyst, Adobe Digital Insights, in a statement. “The revenue growth attributed to BNPL is a preview of what we can expect in the months ahead, especially as we near the holiday shopping season.”
BNPL users typically put off spending elsewhere.
According to a March report from the U.S. Consumer Financial Protection Bureau (CFPB), BNPL borrowers are more likely to use other loan products than non-borrowers, such as personal loans (32 percent compared to 13 percent), and student loans (33 percent compared to 17 percent). Eighteen percent of BNPL borrowers had at least one reported delinquency in another account, compared to 7 percent of non-borrowers.
Of the discounts provided across major retailers analyzed by Adobe, electronics led the way at 16 percent off the listed price on Tuesday and 14 percent off on Wednesday. Toys (15 percent discount) and apparel (13 percent) came in second and third on day one of Prime Day, while they tied for second at 12 percent each the next day.
Adobe analyzed over 1 trillion visits to retail sites in the U.S. involving 100 million products across 18 major categories.
While the Prime Day numbers are strong, uncertainties related to consumer spending appear to show a disconnect regarding expectations for the back-to-school season.
The National Retail Federation (NRF) and Prosper Insights & Analytics forecast the season to reach $41.5 billion, a 12.5 percent jump over the $36.9 billion generated in 2022. Families with children in elementary through high school plan to spend an average of $890.07 on back-to-school items this year, approximately $25 more than last year’s record of $864.35 and a new high.
“Even though consumers plan to spend more on school- and college-related items this year, they are still looking to find the best value and deals,” Phil Rist, executive vice president of strategy, Prosper, said in a statement. “Consumers are stretching their dollars by comparing prices, considering off-brand or store-brand items, and are more likely to shop at discount stores than last year.”
The NRF/Prosper projections came a day after Deloitte shared a more bearish outlook, projecting a back-to-school spending decline for the first time in nine years. Inflation is likely to blame, it said.
Consumers are expected to spend 10 percent less in the 2023 back-to-school season, with average spend per child falling to $597, while the overall back-to-school market is projected to shrink to $31.2 billion, compared with $34.4 billion in 2022, the report said.
