{"id":716,"date":"2019-10-23T11:59:36","date_gmt":"2019-10-23T10:59:36","guid":{"rendered":"https:\/\/www.westcoastcapital.co.uk\/?p=716"},"modified":"2019-10-23T12:02:48","modified_gmt":"2019-10-23T11:02:48","slug":"thanks-to-amazon-data-points-to-return-of-the-retail-vortex","status":"publish","type":"post","link":"https:\/\/www.westcoastcapital.co.uk\/thanks-to-amazon-data-points-to-return-of-the-retail-vortex\/","title":{"rendered":"Thanks to Amazon, Data Points to Return of the \u2018Retail Vortex\u2019"},"content":{"rendered":"\n

DynamicAction’s report reveals the lasting impact of Amazon Prime Day on holiday sales.<\/strong><\/p>\n\n\n\n

If the retail<\/a> data is correct, last year\u2019s pattern of depressed margins following the post-holiday season is set to make a comeback. Known as the \u201cRetail<\/a> Vortex,\u201d the phenomenon\u2019s genesis starts in July at the kickoff of Amazon<\/a> Prime Day.<\/p>\n\n\n\n

According to DynamicAction\u2019s \u201cRetail Index: Early Fall 2019\u201d report, \u201cThe \u2018Retail Vortex\u2019 is a strengthening yearly pattern identified by the DynamicAction Data Science team, which occurs between Christmas Day and mid-January,\u201d authors of the report noted. \u201cThe post-holiday consumer phenomenon is facilitated by increased costs, soaring returns and inventory concerns in Q1. The trend impacts important seasonal profits and creates logistical issues, such as stock misallocation after the busy holiday period, yet it is often overlooked when planning Q4 strategies.\u201d<\/p>\n\n\n\n

According to Statista, Amazon<\/a> Prime Day generated more than $7.1 billion in sales this year with consumers buying 175 million products.<\/p>\n\n\n\n

John Squire, chief executive officer and cofounder of DynamicAction, said Prime Day allows Amazon to \u201ctest its systems and industry-disruptive strategies ahead of the holiday frenzy and, more importantly, acquire new Prime customers.\u201d<\/p>\n\n\n\n

See Also: Top Brands on Amazon Look to Micro-Influencers<\/a><\/strong><\/p>\n\n\n\n

Squire said for other retailers and brands, the sales event \u201cseemingly sets into motion the key elements feeding into the perfect storm of profit depression that is the Retail Vortex.\u201d The ceo said the \u201cknock-on effect of Prime Day, combined with the confluence of increased marketing spend per order over the festive period, prolific discounting and post-holiday returns\u201d has a detrimental impact on a retailer\u2019s profit margins.<\/p>\n\n\n\n

\u201cRetailers are trying to navigate the perfect storm of shifting consumer behavior, intense competition along with the rising cost of retailing,\u201d Squire explained. \u201cWith Amazon conditioning consumers to purchase \u2018single items at will\u2019 based on immediate need and encouraged by a lower threshold for discounted and expedited shipping, it leaves digital margins eerily thinner each year.\u201d<\/p>\n\n\n\n

\"retail<\/figure>\n\n\n\n

In its report, DynamicAction crunched the numbers on $11.6 billion worth of online global consumer transactions between Jan. 1 and Sept. 7. Some of the key takeaways include the orders using promotions increased 18 percent year-over-year while average discount off of full-priced items skyrocketed 71 percent.<\/p>\n\n\n\n

But markdown mania to move goods online isn\u2019t the only troublesome revelation. The report also found that marketing costs rose 16 percent this year and returns jumped a stunning 19 percent. Customer profitability fell 12 percent year-over-year.<\/p>\n\n\n\n

But the report had some bright spots. \u201cLooking at the year-to-date, the analysis uncovered positive trends for North American retailers, who have seemingly addressed many margin eroding factors as the vital holiday season approaches,\u201d authors of the report said. \u201cAlthough holding more inventory in 2019 [20 percent boost in inventory value year-to-date], retailers are making the right stocking decisions, with both inventory \u2018not sold\u2019 and inventory \u2018not viewed\u2019 down an average of 20 percent each.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

DynamicAction’s report reveals the lasting impact of Amazon Prime Day on holiday sales. 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