Global supply chain issues threaten to derail this year's Prime Day discounts, but Amazon says there are more deals than last year
- Amazon sellers say increased costs of shipping and inventory make it more difficult to offer deals.
- The company says Prime Day 2021 will have more deals than last year.
- Amazon Prime Day takes place on June 21 and 22 this year.
Amazon's annual Prime Day sale is back, but sellers say this year's deals will not be as impressive.
Prime Day spans two days, with deals from major brands like Apple and Nintendo across different sections of Amazon's massive online storefront. Merchants who sell products through Amazon's platform say that rising shipping costs and inventory issues mean they will keep deals smaller this year, Bloomberg reported.
"Prime Day is going to be less exciting than it has been in the past," PA Consulting partner Shanton Wilcox told Bloomberg. "You don't want to scare away demand, but you have to manage profitability."
The day of discounts isn't necessarily good for merchants. Sellers say that they can't afford to offer the steep discounts required to woo customers on Prime Day as shipping prices and low inventory drive up costs. "I don't have enough profit margin to do it," seller Ivan Ong told CNN.
"We continue to innovate and grow Prime Day to ensure our Prime members and selling partners find incredible value," an Amazon spokesperson told Insider. "Prime Day 2021 will offer members more deals than Prime Day 2020, with more than one million deals from small and medium-sized businesses around the world and more than two million deals total over the two-day event on June 21 and 22."
The global supply chain still hasn't recovered from shocks caused by COVID-19 in 2020. Shortages and price hikes are affecting the entire retail sector of the global economy. Bikes, cars, meat, cheese, and even ketchup are all becoming more expensive, in part thanks to disruptions to the global supply chain from COVID-19, plus a shipping container shortage and port congestion. These factors created what experts called a "perfect storm" in global transportation.
A worldwide shipping container shortage has only made things worse. Ong told CNN that he's paying twice the price to ship products from China that he paid a year ago. Massive congestion at US ports has essentially put many shipping containers out of commission as they wait to be unloaded and reused.
Amazon is better positioned to offer huge discounts than the smaller third-party sellers that popular the online marketplace. In 2020, despite delaying Prime Day to October, it was the biggest sales day in company history. Sales continued to soar over the last year as COVID-19 pushed more shoppers online, and Amazon posted over $8 billion in profits in the first quarter of 2021, an increase of 220% over the same period in 2020.
The pandemic wasn't so profitable for many smaller sellers, who struggled to keep inventory stocked and handle shipping delays.
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