Amazon Hits Home Run With ‘Second Christmas’

Amazon Stock Hits A Home Run

Doug McIntyre and Lee Jackson discuss Amazon’s (NASDAQ: AMZN) | AMZN Price Prediction impressive performance on Prime Day, hitting a record $14.2 billion in sales. They explore the reasons behind this success, including consumers’ hunt for bargains and the strategic timing of Prime Day in July. They suggest that Amazon may have effectively created a “second Christmas” with this event. They also touch on the impact of Prime memberships and the broader effect on other retailers who try to match Amazon’s discounts. The conversation concludes with plans to review Amazon’s earnings report that includes Prime Day.

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Transcript:

Hey, Doug, I don’t know how much shopping you do on the internet, but I know that you’re probably familiar with Amazon Prime Day.

And boy, they hit the home run this time.

And I don’t know if it’s because people are bargain shopping or looking for bargains, but they did a record $14.2 billion of business.

So I guess retail is still good in addition to cloud services.

Well, I think there are two things about Prime Day.

The first one is, is that they’re obviously incredibly good at trying to figure out what the sales should be with themselves and their third-party people.

But if you think about what percentage this is of their North American e-commerce sales, this is like six or seven percent of their sales in a day.

So, you know, the guys at Amazon must be pinching themselves and say, well, how do we do this?

Can’t we do this more often right now?

But it’s a very important part of the earnings picture that this goes well.

Well, and I think the other thing that’s interesting, because they always have it in July, it’s like, is some of this purchase seasonal purchasing for the holidays?

Is it people grabbing gift items now?

I think that’s a possibility.

Well, there are two schools of thought.

One is that people think about Christmas, right?

They’re going to buy one.

It used to be Black Friday.

Then it was whatever, whatever people started to buy in October.

The other idea here that could be true is that Amazon has created a second Christmas.

So if you want to think about the best case, it’s they do really well at Christmas, but they take the day that’s like furthest from Christmas on the calendar and say, we’re going to create a second Christmas.

That means that as a company, we get two pops, one in July and one in December.

So that’s my theory.

Yeah, to go along with Digital Monday or whatever the day is after Black Friday for holiday sales.

I think you’re exactly right.

Cyber Monday.

The other thing I noticed in the analysis on this is that many other retailers get surges and e-commerce dollars for this period because they try to match Amazon’s discounts.

Right.

If you’re shopping for discounts this time of year, you don’t just go to Amazon.

You say, well, I might as well check a whole bunch of people because there could be sales everywhere.

Especially somebody huge like Walmart.

Right.

So it ends up being a rising tide that lifts at least many, many ships.

The other thing that Amazon knows way better than we do is a Prime membership is worth a lot to them.

It’s about $140 for a year.

But beyond that, if you look at the research, people who have Prime are two and a half times more likely to buy from Amazon than non-Primes.

Yeah, well, it’s like justifying the cost of it.

And again, like we’ve said, a lot of the reason people keep Prime is they’re football fans.

And now that Amazon has made a statement like we’re going to be in that game, literally and figuratively, I think that adds to the value of having Prime as well.

Well, it also tells you, to me, it’s the internet version of Costco.

Costco, people are willing to pay money to shop at Costco, right?

They write a check before they go through the door.

Prime to me is very similar to that.

It is people pay money to get something that they couldn’t get otherwise because they believe that Amazon is a great place to shop the same way that they believe that about Costco.

Yeah, absolutely.

It’s like the online Costco.

And I’m sure Costco does a fair amount of business online as well, but it’s just not structured like Amazon is to fill that many orders.

So let’s do this.

Let’s wait until their next earnings that include this day.

It doesn’t necessarily mean their next earnings, but their next earnings.

It includes Prime Day.

And let’s see what they look like.

Well, you and I will catch up the day after earnings.

Yeah.