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Amazon Prime Day Could Touch $1 Billion In Daily Sales

Amazon Prime Day Could Touch $1 Billion In Daily Sales - Amazon.com, Inc. NASDAQ:AMZN

On Tuesday, Amazon.com, Inc. AMZN will hold its second annual Prime Day, representing a global shopping event that is exclusively for its Prime members. Citi’s Mark May commented that Prime Day could touch $1 billion in daily sales this year. He maintained a Buy rating on the company, with a price target of $780.

Prime Day yielded impressive results in 2015, raking in $400 million in incremental sales in 3Q15, with order growth soaring 266 percent year-over-year for 34 million items. The main success of the event was in getting “hundreds of thousands of new shoppers/subscribers to Amazon Prime,” May noted.

Once shoppers are included in the Prime program, they exhibit greater purchase frequency and conversion rates. Moreover, Amazon experiences retention rates above 70 percent for Prime members who sign up for 30-day free trials, May pointed out.

“As a result, this not only gives Amazon a sales boost at the scale of Black Friday in the middle of July, it also acts as a customer acquisition vehicle ahead of back to school shopping,” the analyst wrote.

Expected Contribution of Prime Day

Prime Day 2015 recorded $630-660 million in sales. If order growth reaches close to the seller deals in 2016, Prime Day could reach as much as $1 billion in daily sales.

“Such a lofty figure in mid-July highlights the dominance Amazon is achieving online, though we expect any immediate P&L impact will be felt more on the revenue line given the heavy discounting and 3rd-party dynamics,” May added.

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DateFirmActionFromTo
Jun 2016Maxim GroupInitiates Coverage onBuy
Jun 2016KeyBancMaintainsOverweight
Jun 2016William BlairInitiates Coverage onOutperform

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