24/7 Insights

• Amazon.com Inc. (NASDAQ: AMZN) investors will benefit if Prime Day revenue jumps by a meaningful amount.
• The event drives a vital part of the company’s quarterly e-commerce revenue.

Amazon.com Inc. (NASDAQ: AMZN) Prime Day will be on July 16 and July 17 this year. The event drives a vital part of the company’s quarterly e-commerce revenue. Last year, revenue from it reached $13.5 billion. Amazon’s investors will benefit if revenue can jump by a meaningful amount. A 10% improvement would drive $15 billion in revenue

Prime is Amazon’s delivery and streaming video service, and it generated about $40 billion last year. Amazon’s North America’s e-commerce revenue for the year was $352 billion. Prime members are much more likely to shop on Amazon than non-Prime members, and Prime Day is a period when Amazon adds Prime members. That means a strong Prime Day is crucial.

One question about Prime Day is whether Amazon and its third-party sellers make good margins. That is because discounts are so large in many cases. The “early shop” feature, which gives Prime members discounts before Prime Day starts, has discounts on some items as high as 50%. These could be loss leaders meant to get Prime members to shop early. Once they are on Amazon.com, prices on other items are discounted less or not at all.

Finally, Amazon is unusually clever about adding Prime members on Prime Day. If people want deals, they can sign up to be Prime members for free. “Start your free 30-day trial,” the promotion says. After that, the price jumps to $14.99 a month, or $139 for those who pay annually.

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