Amazon plans to crush Black Friday with ‘Prime Day’
How many people are Amazon Prime subscribers? While Amazon.com does not make the figure public, outside estimates have it at upwards of 40 million. Whatever the actual count, it clearly is not high enough to satisfy the company as Amazon has announced an exclusive, single-day shopping event for existing Prime members as well as those taking advantage of a free 30-day trial of the service.
In a press release to announce Prime Day (July 15) — which is intended to celebrate Amazon’s 20 years in business — the e-tailing giant makes clear that it is looking to supplant Black Friday as the most popular shopping day of the year.
Prime Day, according to Amazon, will offer “more deals than Black Friday” and cover dozens of product categories including apparel, electronics, movies, lawn and garden, patio, sports and outdoors, and more.
Members will enjoy deals on items perfect for summer adventures, their to-do list, family road trips, back to school supplies, and everyday essentials. Prime members can shop on any device, including smartphones and tablets and find deals anytime, anywhere.
Amazon will kick off the sale at midnight and new deals will go live every 10 minutes through-out Prime Day. Amazon will also offer thousands of Lightning Deals and seven Deals of the Day. Since sale items will be Prime eligible, orders will include free two-day shipping.
Discussion Questions
Will Prime Day bring large numbers of new subscribers to Amazon’s Prime program? If you’re a competitor to Amazon.com, how would you respond to Prime Day?
Poll
BrainTrust
Anne Howe
Principal, Anne Howe Associates
Ben Ball
Senior Vice President, Dechert-Hampe (retired)
With Amazon aggressively promoting Prime Day, I expect traffic to its site to soar and sales of Prime memberships to increase. Whether consumers who sign up for Prime’s trial membership stick around after 30 days is a question mark. I expect a number of retailers to offer back-to-school sales, but doubt that Prime Day will cause across-the-board sales, a la Black Friday. It will be interesting to see if retailers that offer every day price matching, like Best Buy, suspend the practice on July 15.
The obvious: this is a great way for Amazon to reach and recruit new Prime members. It’s also a great way to retain and reinforce Prime with existing members. Amazon is also betting on “spill over” shopping beyond the deals.
The less obvious: this could be a dress rehearsal for what is to be a killer event that can also be deployed for Black Friday or other peak periods like back-to-school or the holiday selling season.
It’s going to be tough for competitors to compete directly with Amazon on Prime Day since this is an Amazon-named event with a lot of buzz right now. Best strategy might be to watch this one unfold and learn.
If you are a direct competitor of Amazon the most important response to Prime Day is to develop your own version of Prime, and for any online member program there has to be a consumer value add beyond free shipping.
I’m not sure how you respond to it. Soon we are going to start the holiday season at Easter.
As to whether Prime Day will build large numbers of new subscribers, I think the jury is out here. It seems to me that lots of the messaging is more likely to be seen by existing Prime members.
That said, it’s bound to help boost Prime’s numbers a bit this year and — if it works — watch out in 2016. It’s not fair to fully judge a program like this in its inaugural year, but if it keeps on getting good press, year two should be a killer.
Max makes the most salient point for the retail industry: will “match price” retailers (like Best Buy) suspend the practice on July 15th?
I give credit to Amazon for disrupting the retail scene once again with a “mega-shop” day. And I believe they’ll pick up more Prime customers too.
I wonder how this will affect Walmart? Can they mobilize in time to compete? Amazon is aggressively taking consumers out of the back-to-school and holiday markets. In past years, during the holiday season, Amazon has made inroads into grabbing more Walmart shoppers and counts on their repeat business to pick up the overall share of wallet.
If specific good deals are advertised ahead of time and are attractive to non-Prime members, I would expect enrollment to increase. If those people like other Prime services they will stay. Competitors are likely to respond with their own special deal days — oh, right, we already have special sales days. Since the Prime event is in July it is not going to replace Black Friday.
Planning the biggest shopping event at the height of vacation season is aggressive to say the least. If you are a direct competitor of Amazon price slashing the company’s best sellers and margin leaders would be something to consider, keeping shipping costs in place. While many seem to feel that Amazon Prime is in trouble I think this is a way to leverage for higher market share in the real buying months ahead. Whatever the case may be, sitting idle and waiting to see how the other guy does is never a good decision. Competitors must engage with equal force to protect their own market shares in order to remain on course for the financial plans in place.
A Millward Brown Digital study cited in an article on Payments.com today says that conversion rates for Prime members hit 73 percent — while non-Prime members average 13 percent.
Whether Amazon brings in new Prime users or not (and I think this will, based simply on the press it gets if it even approaches what Alibaba got for Singles Day) it has to be a big payout event.
I love this concept. Amazon.com has the critical mass of consumers that can make this work. Furthermore, it will introduce new members to the Prime concept. They will experience a savings and service level that should convert them to spending the money for an annual membership to Prime.
If I’m a competitor to Amazon.com, I would be concerned about everything Amazon does, not just Prime Day.
Sign me up for the 30-day trial. Then let’s see what happens after Prime Day to make it stick.
The proverb, “Imitation is the sincerest form of flattery,” is applied once again. Alibaba created Singles Day (November 11 — 1111) as a marketing concept about 9 years ago. The concept of Singles Day goes back to the mid-90’s in Mainland China, started by the university crowd.
Last November, Alibaba generated nearly $10 billion in sales for the day.
Amazon’s focus of creating Prime Day will gain traction if they let other marketers in on the game. Everybody loves the action. Let ’em play.
Prime Day will likely draw membership, however I question doing something like this in the middle of summer. Back to school spend is not nearly that of the holiday season. Despite great deals, consumers are just not in the mindset of big spending right after taking a summer vacation etc.
Jury is still out for my 2 cents.
The timing of this feels like it is a dress rehearsal for the holidays. The Black Friday connection is just a quick way to define it, but I think there is a disconnect between the long-term, behavioral value of using Prime and the quick-hit one-time deal mentality of Black Friday.
Black Friday buyers are looking for deals; they are not loyal to a brand. I might have this wrong, but if they are just trying to get their Prime user numbers up, this will work, but if they want to build that base to be long-time, frequent buyers, I wonder.
It will bring more subscribers for sure, as Amazon knows how to promote. As the 800-pound online beast, they can and will continue to grow, as it is there way to make a profit with every new subscriber they get. Their hard core shoppers will be poised to jump on any crazy deal they want that day, and probably end up spending more than they wanted, which is exactly the point.
As mentioned earlier, next year will be a benchmark to see how this event grows even more.
This is a great move for Amazon. Most of the summer sales occur in early June, so the timing is perfect. Also, it’s something new for shoppers to experience. They’re used to Black Friday and summer/winter sales, but this one came out of nowhere.
I don’t think that competitors will respond to Prime Day just yet. (The likelihood of price matching probably depends on how deep the discounts are.) It might be a better idea to see how effective it is for Amazon before scrambling to create their own version.
Two things are certain about Prime Day:
I am not sure that Prime Day will drive large quantities of new members to Amazon’s Prime program. Most consumers are aware of the program and its benefits, and have signed up if the program fits their needs.
I do think that this program will drive significant incremental volume for Amazon and its suppliers, since Prime members are so engaged.