RANCHO CUCAMONGA, Calif. – During Amazon’s annual Prime Day shopping holiday, total sales surpassed $11 billion, an all-time high for the massive e-commerce event, and debit cards were “far and away” the preferred spending tool for CU members, according to transaction data analyzed by CO-OP Financial Services’ SmartGrowth.
Debit cards accounted for a full 90% of all Amazon credit and debit transactions processed by CO-OP on Amazon Prime Day, which is actually two days, this year being June 19 and 20.
Trends At Play
“A couple of payment market and consumer behavior trends are at play here,” said Beth Phillips, director, Strategic Portfolio Growth for CO-OP. “On the one hand, credit spending has been down overall since the start of the COVID-19 pandemic. Also at work, however, are the bandwagon deals and specials from other large retailers that may have been successful at attracting heavy credit users away from Amazon during this promotional period.”
CO-OP pointed to data from Adobe showing the so-called halo effect of Prime Day resulted in large bumps for America’s largest non-Amazon retailers. Merchants with more than $1 billion in annual sales reported a 29% increase in e-commerce sales during Amazon Prime Day, Adobe reported.
According to CO-OPO, lower average spend may also be related to credit union members’ choice to use debit over credit for Amazon purchases. This year’s average Prime Day credit transaction was $52.23 as compared to the average debit transaction of $46.62.
A Consumer ‘Ceiling’
“Consumers typically have an ‘amount ceiling’ when buying,” said John Patton, senior payments advisor for CO-OP. “If the price hits that ceiling, they gravitate to credit.”
CO-OP said its data analysis showed total credit and debit transactions on Amazon increased by just 2.8% between the 2020 and 2021 Amazon Prime Day events. Total transaction amount was up just 7.6%.
Those numbers are not surprising, according to Phillips, given the two “annual” events were separated by only half a year. Amazon delayed 2020’s event due to COVID-19, hosting it Oct. 13-14, 2020, instead of during the summer months as has been typical since the inaugural event on July 15, 2015.
Two ‘Standout’ Trends
CO-OP reported that in terms of what credit union members were buying during Prime Day, two “standouts seemed reflective of pandemic behaviors.”
As compared to the 2020 fall event, the number of automotive parts and accessories purchases were up 25% on credit and 42% on debit.
“This may reflect the global shortage of new-car inventory and record-high prices for used cars, inspiring car owners to fix up instead of replace their existing vehicles,” CO-OP said.
“Pet supplies, too, were up 67% on credit and holding steady on debit. A July 2020 survey showed 20% of respondents adopted one or more dogs or cats between March and June 2020, a 5% year-over-year increase, according to Nielsen,” CO-OP said.
A ‘Dry Run’
“Amazon Prime Day is a dry run for the e-commerce giant’s holiday season, helping the company anticipate demand and ready infrastructure and operations,” said Phillips. “Credit unions can leverage the event in much the same way, using the data insights to better understand the lifestyle moments around online shopping. Strategies for rewarding, incentivizing and enabling e-commerce across both card portfolios, but especially debit, should be high priorities for credit unions now.”
For additional info, especially on preparing for the upcoming 2021 holiday season, CO-OP is pointing credit unions to its SmartGrowth Consultation.