Amazon Prime Day Set For July 16 — What Does It Mean For Retail?
Despite Amazon’s own success with Prime Day, competing retailers and brands selling on Amazon are also finding ways to capitalize during this emerging shopping event and beyond, says eMarketer.
Amazon Prime Day, the e-tail giant’s third annual self-proclaimed “Black Friday” discount period, has been extended an extra six hours from July 16-17 this year, as membership in the shopping deals and streaming media club has surged past 50 million households in the U.S., eMarketer notes.
In addition to extending the deals period for Prime members from 30 hours to 36 hours, Amazon is also taking the opportunity to tout Whole Foods, which it acquired last year, and promote its screen-based smart device, the Echo Show.
“Prime members will enjoy a day (and a half) of our best deals, with 36 hours to shop more than one million deals worldwide,” said Jeff Wilke, Amazon CEO Worldwide Consumer. “New this year, members can shop exclusive Prime Day Launches from hundreds of brands worldwide, enjoy exclusive savings at Whole Foods Market and experience surprise entertainment events unboxed from giant Smile boxes in major cities. More than 100 million paid Prime members around the world will find our best Prime Day celebration yet.”
While Amazon tends not to reveal the specifics of Prime Day performance, aside from noting stats like 2017 seeing a 60 percent rise in sales, Cowen and Company and J.P. Morgan Chase & Co. estimated spending on Amazon during the period as amounting to $1 billion — roughly three times an average day of sales on Amazon.
After being caught off guard by Amazon’s first Prime Day in 2015, retailers have been working to find a way to counter the deals with their own online discounting, as foot traffic to their brick-and-mortar stores take a definite hit during the period.
As we noted last year, Walmart, JCPenney, Macy’s, Barnes & Noble, Home Depot, Lowes, Sears, Kohl’s, Target and Best Buy all saw an average 24 percent decrease in traffic on Prime Day, according to data from mobile data analytics provider Sense360.
Retail Categories In The Crosshairs
In mounting a defense against Amazon Prime Day, the available responses for retailers appear simple.
According to Cooper Smith, director of Amazon research at Gartner L2 (as cited by eMarketer’s report): “There are really only three things that consumers care about when it comes to shopping: low prices, massive product selection and a convenient experience. Amazon outperforms every other retailer in each of these three areas. Prime Day basically takes those three things that retailers compete on and puts them on steroids.”
In that sense, Amazon’s success has also forced retailers to reinvent their approach to sales promotions and omnichannel strategies that emphasize services such as curbside pickup, which satisfies an immediacy that Amazon can’t match — at least for the moment.
Furthermore, retail brands have revisited the notion of “experience” that a physical store can provide by offering a better sense of discovery — something borne out by Blis’ recent research that found one-third of consumers say that in-store browsing remains their main product discovery channel, followed by targeted online/mobile advertising.
In terms of which product categories that will represent a challenge to retailers on Prime Day, eMarketer cites InfoScout analysis of top-sellers from 2017, which showed Electronics by far the as leader, accounting for 35 percent of spending on Amazon. After that, Home and Garden held the No. 2 position at 17 percent, with Health and beauty came in third at 10 percent, but nearly doubled its percentage from 2016, highlighting the growth in this segment.
The Power Of Amazon’s Voice
Amazon’s push of its voice-activated Echo smart speaker products also show the way for retailers and other brands to experiment with intelligent services.
As eMarketer notes, Amazon’s use of heavy discounting on Echo devices has helped introduce them into millions of Americans’ homes. In April, comScore data pointed to monthly U.S. household penetration of smart speakers rising in July 2017 in part due to Prime Day promotions as well as in December 2017 due to the holiday season.
Whether these devices drive meaningful sales for Amazon is less consequential than their significance as a primary access point and command center for the Smart Home, eMarketer notes. And Amazon has been carefully guiding consumers to use these devices beyond being a ready source for news, weather, and music playing to being the ultimate shopping assistant.
“I’m interested in seeing if Amazon uses discounts to incentivize more consumers to make purchases through Alexa,” eMarketer quotes Gartner L2’s Smith as saying. “They started to hint at this last year when they gave Alexa users early access to deals. Clearly there’s some experimentation going on there to see how Amazon can leverage Alexa and drive adoption of different use cases for these devices, and commerce is the use case that Amazon has the most interest in.”