Amazon (Nasdaq: AMZN) is moving its Prime Day to October 13 and 14. Usually, it's scheduled for July 15, however this year, Prime Day was moved as Amazon was already handling an enormous load due to the coronavirus which resulted in increased loads for its warehouses and delivery network. In handling these higher volumes, Amazon chose to prioritize essential products rather than discretionary items.
Now that this initial surge has subsided and Amazon has scaled up to meet this increase in volume, it's feeling confident about its ability to handle Prime Day. It informed its warehouse workers that they won't be able to take vacations from October 13 to 20. Amazon also reached out to its suppliers and sellers to prepare its deals and inventory for the expected surge in business and submit them by October 11.
Prime Day Sales
Prime Day started in 2015 and was modeled after Alibaba's (NYSE: BABA) Singles Day. Typically, the summer season is slow for retailers. So, Prime Day was an opportunity for Amazon to promote itself and its products as well as increase sales during a seasonally slow period.
The October timing allows Amazon to take advantage of the promotion while leaving enough breathing room to handle the rush from increased sales during the holiday shopping season.
Stock Price Outlook
From 2015 to 2019, sales on Prime Day have increased from $900 million to $7.2 billion. Analysts are mixed about how this year will fare given its timing so close to the holiday season.
However, overall Amazon is in a great position. Its major problems are that its warehouses and delivery networks are stressed due to unprecedented and unanticipated demand. Like a lot of e-commerce companies, it had to handle years of growth in a couple of quarters.
By all measures, Amazon seems to have handled this well, although there have been some hiccups in terms of items being out of stock or slower delivery times. In response, the company increased investments in these areas to handle increased volumes.
Another catalyst for Amazon has been the strength in the digital economy due to the "stay at home" economy which will likely persist through the winter. Amazon Web Service (AWS) is the cloud provider for many Internet, so it's also experienced an uptick in growth.
These positives are reflected in Amazon's stock price which is up almost 100% since the March bottom. It remains about 10% lower from its early-September highs, but the stock seems to be setting up for a breakout. It's offering an attractive entry point with a stop-loss around $2,900. It seems hard to imagine what will disrupt its momentum given that it's a leading player in two of the fastest-growing parts of the economy - e-commerce and cloud computing.