The dust is settling on the third-ever Prime Day at Amazon.com, and once again, blockbuster revenues for the eCommerce giants are predicted. While a slew of online merchants tried to ride the wave with limited-time special offers, in the long run merchants can benefit by making Amazon’s priorities – as revealed through its Prime Day discounting strategy – their own.
By all accounts, Prime Day, held Tuesday, July 11, was a success for Amazon. Amazon confirmed that the site was bringing in more revenue than it ever had in a single day; analysts estimate that worldwide sales this year could top $2.1 billion, up by 20% compared with last year’s Prime Day. The boost may be due in part to preview sales that kicked off July 5, and to an extended main Prime Day event that lasted a full 30 hours, with new deals released every five minutes around the clock exclusively for members of Amazon’s Prime subscription service.
Amazon’s big day makes such a wave in part because of its massive audience: a whopping 58% of U.S. consumers said they planned to shop Prime deals, according to marketing services firm Market Track. That wave is so huge that it lifts other retailers’ boats, too. On Prime Day last year, eCommerce sites of all stripes saw a 15% increase in visitor traffic, with conversion rates jumping 19% and orders increasing 38%, according to marketing services firm Bazaarvoice. Even Prime members get in on the action on other sites, Bazaarvoice found, with 76% reporting they check out deals from other sites on Prime Day as well as heading to Amazon.com.
For that reason, a number of sellers offered deals to coincide with Prime Day. Internet Retailer reports that 47 of its top 100 merchants offered Prime Day Deals. And in the six weeks leading up to Prime Day, merchants attempted to pre-empt the big event with stepped-up discounting. The average discount on leading eCommerce sites was close to 40% off, retail analytics firm EDITED found, while the number of products experiencing their first discount over the July 4 weekend increased 51% year over year.
But sellers who view Prime Day as nothing more than a Black Friday-style scramble to come out on top of a heap of discounts are missing the point. Indeed, analysis of Prime Day deals from 2016 found that most of Amazon’s Prime Day discounts are not as deep as the Black Friday and Cyber Monday offers later in the year.
While no one would dispute that bringing in record revenues on an otherwise humdrum July day is a significant feat, it’s worth analyzing Amazon’s Prime Day offerings for their longer-term implications – and, rather than trying to win a race to the bottom they can’t afford, merchants should tailor their strategies to pursue the larger opportunities Prime Day represents. The top three:
It’s easy to overlook the paramount fact of Prime Day: Its deals are exclusively for members of Amazon Prime, who pay $99 per year to receive free 2-day shipping on all purchases. So Prime Day is, at its most basic, an incentive to join its loyalty club.
With an estimated 85 million members, the value of the Prime subscription program goes far beyond the sales they generate on Prime Day: U.S. Prime members spend $1,300 per year on Amazon, compared with $700 per year for non-members, according to estimates from securities research firm Consumer Intelligence Research Partners (CIRP), and they also shop on Amazon more often than non-members, purchasing an average of 25 times per year, compared with 14 times per year for others. The Prime program also boasts an astonishingly low churn rate: 91% of first-year paid subscribers renew for a second year, and 96% of second-year paid subscribers renew for a third year, according to CIRP.
Merchants who want to compete with Amazon in the long-term should put a similar focus on retention efforts. Sellers across the spectrum report that returning customers are valuable, comprising 33% of eCommerce buyers while contributing 42% of total revenue, according to technology researcher Forrester Research, Inc. To cater to returning customers, merchants should consider ways to integrate loyalty club perks into all aspects of the shopping experience, from exclusive deals, shipping perks, priority service in stores, and mobile integration for redemption of points and offers.
Think Beyond the Keyboard
In the week leading up to July 11, preview deals were available exclusively to Prime members using Alexa, Fire, Echo music speakers, and Amazon’s mobile app – thereby spotlighting shopping touchpoints beyond the computer. Amazon further encouraged the shift to mobile and Internet-of-Things-style shopping with Prime Day deals on everything from Alexa devices to Dash buttons, which enable quick reorder of household items using physical buttons shoppers place in convenient locations around the house.
Clearly, Amazon is hoping to connect with consumers away from computer screens so they can reach shoppers with contextually-relevant offers. With shopping shifting inexorably to mobile devices, merchants would do well to double down on their own priorities for mobile commerce, including online-to-offline connectors for retailers with physical store outlets and apps that encourage loyal followers to engage frequently with store offerings. For retailers servicing cutting-edge audiences, experiment with voice-activated purchasing and other tools that streamline the purchase process.
The strategy of releasing new deals every five minutes was more than a stunt: with constant reasons to revisit the site throughout the day, shoppers engaged with Amazon’s content and fueled the merchant’s recommendation engines. Amazon is prioritizing collection of data, not just purchasing – a strategy other merchants would be wise to emulate, given that consumers increasingly expect merchants’ offers to be relevant to their immediate needs. Merchants should pursue deployment of real-time individualization tools and techniques to boost relevance, and give shoppers plenty of reasons to engage with the brand via value-added content as well as rich product information.
How did Prime Day fare for your business?