It’s Christmas in July! Well, at least to Amazon Prime members it is. This July marks the third year for Amazon Prime Day, another online shopping day for consumers to frantically find and get great deals.
As Internet Retailer’s 2017 #1 Top 500 company, Amazon continues to lead the way for other retailers with their self-created holiday. Check out what you can learn from this shopping day that’s becoming a dominant retail holiday.
What is Amazon Prime Day?
Amazon Prime Day is a one-day online sale where Amazon showcases limited-time “lightning deals” on select products. Amazon unveils low prices for hundreds of chosen products for a certain amount of time and while supplies last.
The catch is that the deals are exclusive to Amazon Prime members, their $99 customer loyalty program that offers free 2-day shipping on most items. However, they do offer a free 30-day trial allowing people to sign-up beforehand and take part in the deals.
History of Amazon Prime Day
Amazon Prime Day first occurred on July 15, 2015 to celebrate Amazon’s twentieth anniversary by offering Prime members an exclusive sale. The event successfully increased that year’s sales and new Prime memberships.
So, Amazon ran a second Prime Day in 2016 that was even bigger, adding hundreds of more items. It became Amazon’s biggest sales day ever at the time, bigger than Black Friday or Cyber Monday. Worldwide orders rose more than 60% compared to the first year. Prime members reportedly saved more than double than the year before, too.
However, Amazon Prime Day was not without its faults. Both years there were complaints of computer glitches like errors that prevented customers from adding items to their carts. Some consumers feel that the deals or the product selection aren’t that great.
For this year, Amazon upped its game again. Prime Day was set for July 11th, but began at 9 PM on July 10th. They slated new deals to arrive every 5 minutes over an increased time of 30 hours. They also expanded Prime Day to 13 more countries.
How Amazon Benefits from Prime Day
Over the past three years, Amazon turned the seemingly boring July into another crazed shopping event. See how the marketplace benefits from Prime Day and take notes for yourself:
Summertime is often a slower sales period for most retailers compared to the holiday season. However, Amazon turned Prime Day into their biggest sales day of the year. It really is Christmas in July!
Increase Prime Memberships
While increasing sales is great, it’s not the real goal of Amazon Prime Day. The event is exclusive to Amazon Prime members. So, to take part in the holiday, you must sign-up for a Prime membership if you don’t already have one.
Amazon itself won’t disclose how many Prime members they have. There’s reportedly around 85 million U.S. members, according to a report by the Consumer Intelligence Research Partners (CIRP). Memberships have doubled in the past two years.
The online sales event is a great incentive for someone to try out Amazon Prime for the first time, especially since they offer a free 30-day trial for sign-up. Another CIRP report estimates that 73% of first-time users elect to continue their membership, who then become loyal shoppers. So, if Amazon can get new members in the door during the event, they’ll most likely stay new members.
Prime members are more loyal shoppers than non-members. According to the first CIRP report, U.S. Prime members spend on average about $1,300 per year, compared to $700 per year for non-members. They also shop more often, 25 times per year compared to 14 times.
Showcase Own Products
While there are plenty of great deals on all types of products, some of Prime Day’s best are for Amazon’s own products. Shoppers find reduced prices on products such as the Amazon Echo, Kindle, Fire Tablet, Pantry, and Unlimited Music. This encourages consumers to try out more of their offerings.
Try Out New Strategies
Prime Day also gives Amazon the chance to try out new strategies. The big news of 2017 Prime Day was that Amazon could further test out their new Prime Air with large order volumes.
Prime Air, a new air cargo service, consists of 40 Boeing 767s focused on delivering for Amazon’s 2-day delivery network, the basis of Amazon Prime. Overall, the addition of Prime Air allows for the shipping cut-off time to become later and later and still deliver on time.
Besides Prime Air, Amazon is also able to test out any other new systems that they want to fix before the Holidays.
How Other Retailers are Responding
Amazon isn’t the only one benefiting from Prime Day. In 2016, other major eCommerce sites also saw overall better sales and conversions. Criteo reported to RetailDive last year that total number of shoppers visiting major eCommerce websites rose 15%, total number of add-to-basket events increased 40%, average conversion rate rose 27%, total number of transactions increased 45% and total order value increased 55%.
With such positive numbers, other retailers are trying their own strategies to take advantage of this new online shopping event.
Last year, Wal-mart was the most notable rival to try to take on Prime Day. They crafted a “Dare to Compare” campaign to match Amazon’s low prices and offered memberships for their free 2-day shipping program. Wal-mart never gave a clear answer on how successful the campaign was.
This year, many other retailers plan to take advantage of shoppers looking for online deals. These companies, along with others, promoted deals during Amazon Prime Day:
- Kohl’s offered 30% discount on summer clothes and accessories for 30 hours
- C. Penny held a “Penney Palooza” with 30% discounts
- Toys R Us offered an online 20% off sales for 36 hours
- Best Buy promoted a sale for Google Home – rival of the Amazon Echo – among other deals
Amazon Prime Day 2017 Results and How Retailers Can Compete Next Year
Amazon Prime Day 2017 just happened, so we don’t know the results yet. However, when we do, we will update the post and let you know how things went. Considering how well the past 2 years went, we can assume it’s probably going to go well.
As Prime Day becomes a more prominent online shopping day, I expect to see more retailers trying to join in somehow. As a retailer yourself, how can you take advantage, even compete against Prime Day next year?
There are a few things that make Prime Day stiff competition that you’ll have to consider. First, Amazon sets the date. We know it’s around the middle of July usually, but it’s nothing like it falls the day after Thanksgiving every year. It’s hard to plan for a big event if you don’t know the date right away.
This can lead to retailers planning broader sales that span over a whole week. Amazon Prime Day works so well because their “lightning deals” expire within hours and purchases must be made within 15 minutes of putting an item in your cart. This puts considerable pressure on the customer to buy right now!
Second, Prime Day focuses around creating and fostering Prime memberships. While it’s great to offer discounts to increase sales that day, that’s not the main goal. Not all retailers have a loyalty program structured like Amazon’s. As noted above, most of Amazon’s new member sign-ups stay members and therefore end up purchasing again. Prime Day is an easy way to encourage new shoppers to sign-up for Amazon Prime.
Sure, you can put together great deals, but how do you get those buyers to come back and buy again later?
It’s only the third year of Amazon Prime Day. It’s going to be interesting to see how this self-created holiday evolves over the next few years for both Amazon and other retailers.
Will retailers always just hang onto the coattails of Amazon or will they do something impactful?