Prime Day 2018 is upon us. In less than a week from this writing, we’ll be enjoying one of the largest shopping days in history in the states. For shoppers, it will be a free-for-all whirlwind of discounts, deals and sales. For sellers, we’ll ideally be profiting from a massive surge in volume and unprecedented sales velocity.

Some sellers will report upwards of two, three, maybe even five times normal sales volume. Others will hit record numbers in the hundreds of thousands of dollars (in a single day). In essence, Prime Day is no joke.

The fascination with ecommerce, with Amazon and with retail in general got me thinking about what days like Prime Day mean for entrepreneurs. And what the potential might be for the future.

Then, as I was watching a training video on how to prepare for Prime Day as an Amazon seller, I heard the statement made “Prime Day is the biggest shopping day of the year…EVER!”
In the US, this is likely true, and it is easy to see why anything outside of the states would remain unknown. We sort of live in a bubble when it comes to ecommerce. However, I wanted to set the record straight, and in doing so, point out some interesting facts and figures that paint a picture of what is in store for us in the years to come.

According to the numbers, ecommerce is basically still in its infancy here in the US. Even though America has 80% internet use penetration (compared to only 50% in China), ecommerce still isn’t anywhere near as popular as other forms of retail.

Prime Day vs. Singles Day

For those of you unaware of ecommerce states around the world, Prime Day is NOT the biggest shopping day ever. That title actually belongs to “Singles Day” which takes place in China every year on 11/11. While we are typically celebrating the Federal holiday Veteran’s Day in the US, the Chinese are racking up unimaginable shopping numbers online.

For perspective, Prime Day in 2017 generated $2.4 BILLION in sales. WOW! However, Singles Day the same year generated $25.3 Billion. Talk about a staggering difference.

Ok, China’s population is considerably larger than the US, so this is understandable. More of them shopping equals significantly more money transacted on a special shopping day like Singles Day.

But if you dig deeper (which I did) you’ll see that while the population is definitely larger, there are a tremendous amount of opportunities the industry of ecommerce still has yet to take advantage of in the states. Basically, there’s a TON of money still being left on the table. However, for the sake of getting all the facts in order, let’s continue with our comparison.

Amazon vs. Alibaba

Where Amazon is the powerhouse ecommerce platform in the states, Alibaba is the same in China. Alibaba Group runs Taobao, the largest ecommerce marketplace in China, and arguably the world. Looking at an ecommerce comparison with regards to GMV (gross merchandise volume) in 2016/2017, Amazon did $177.87 Billion in sales in 2017. However, Alibaba did a whopping $547 Billion in 2016!

In terms of raw merchandise movement, Alibaba is the clear winner. And again, it is understandable considering the disparity between the US’s population and China’s. The thing is, there are other factors to look at:

  • Internet penetration
  • Household income
  • Ecommerce adoption

As well as a few other things. The point is, if you want to get a real apples-to-apples comparison, it is important to look at all the factors involved.

America vs. China

Now let’s get into the nitty gritty when it comes to really comparing the US and the power of Amazon versus China and the power of Alibaba. According to the most recent data compiled in 2017, the median household income in America is $59,039. However, in China, the average yearly household income (which is HIGHER than the median) in US dollars is $11,227.

if you are in ecommerce, you are in the right industry, because it isn’t going to do anything but grow from here.

Now, we see that on average, the US makes a significantly larger amount of money each year. But how much of it do they keep?

Well, according to research dug up by NerdWallet, the average American only saves about 5% of their income. However, the Chinese as a culture simply adhere to a more disciplined approach to money. They save an average of 46%!

It is important to unpack that. This means that, not only do households in the US make much more money, they SPEND more of it as well.

We can confirm this by looking at overall retail spending. In the US, in 2017 total retail sales reached $5.7 TRILLION (yes…that’s a “T”). However, that same year in China, total retail sales were $5.69 Trillion. That means that overall, Americans spent just as much as the Chinese did on retail goods, even though the population of the United States is only 325 million, compared to China’s 1.3 billion (that’s almost five times as much).

So if this is the case, why are big online shopping days in China so much larger than in the US?

The answer may lay in ecommerce adoption. In China, ecommerce accounts for 23.8% of total retail sales, whereas in the US, ecommerce only accounts for 9%.

According to the numbers, ecommerce is basically still in its infancy here in the US. Even though America has 80% internet use penetration (compared to only 50% in China), ecommerce still isn’t anywhere near as popular as other forms of retail.

What the Future Holds

We see the writing on the wall though. With retail shops going out of business left and right, making way for ecommerce giants to fill the need. It started with the bookstores, and moved into clothing and toys (Sears and Toys R Us).

All this means is that, if you are in ecommerce, you are in the right industry, because it isn’t going to do anything but grow from here.

Whether Amazon remains the leader, or some other player moves in, remains to be seen. But as long as ecommerce marketplaces exist, the business model will be a viable one.