Retailers are fighting back this year on Prime Day

July 14, 2017  | By Ketner Group


This blog was written by our intern, Madeleine Hatley.

Amazon launched their third annual Prime Day starting Monday, July 10. Prime Day 2017 was the biggest sales day in history for Amazon, surpassing both Black Friday and Cyber Monday according to the Amazon press release highlighting the outcome of Prime Day this year. Despite popular opinion, this ‘micro’ holiday is not about boosting sales. It is simply a marketing tactic to advertise their “Prime” membership that guarantees customers fast shipping for an annual fee. And, boy, does it work.

Prime Day sales grew by more than 60 percent from last year, with a “record number” of Prime members shopping across 13 countries, Amazon said. It added that “tens of millions of Prime members” made purchases during Prime Day, up more than 50 percent from Prime Day in 2016.

According to a recent Consumer Intelligence Research Partners report, from June of 2016 to June of 2017, Amazon gained around 44 million subscribers. Although Amazon refuses to disclose an exact number, estimates show that Prime currently has around 85 million subscribers.

With 30 hours to shop, Prime members flocked especially to Amazon devices like the Echo, Fire tablets and Kindle devices, with the most popular device sold being the Amazon Echo Dot. Other top sellers include DNA tests for health and ancestry, gaming consoles such as the Nintendo Switch and PlayStation Plus memberships. The sales event also slashed prices on a number of fashion items and beauty products, including marked down fashion brands such as Calvin Klein, Gant and Tommy Hilfiger, with prices going down by as much as 40%, according to The Telegraph.

An Opportunity for Retailers
Although Amazon has seen major success from its annual holiday, it doesn’t mean that competing retailers need to fret. Research suggests that Prime Day could, in fact, be helpful to other online retailers. According to an analysis from Criteo, Prime Day creates a “halo effect” for other retailers, with online traffic increasing for major ecommerce sites around 15% on Prime Day 2016 and the day after, compared with weeks earlier.

 This means that Amazon Prime Day is the perfect opportunity for retailers to cash in on the consumption culture that the online giant created, a similar effect from Black Friday or Cyber Monday. Shoppers are on the hunt for well-timed promotions within this time frame, and it’s up to retailers to lure them in beyond Amazon’s borders. For example, Claus Commerce-powered Freeshipping.com boosted profits last year when they saw an uptick in their number of orders and the average order value, when they offered a 20% discount last Prime Day according to Bezinga, indicating that positive outcomes can come out of Prime Day, even for competitors.

Time to Get Creative
Retailers are trying harder this year to grab customers’ attention and drive sales around Amazon Prime Day. Kohl’s offered 30% discounts on summer clothes and accessories for 30 hours.  Other stores like Toys R Us and Best Buy were also ahead of the game and featuring sales lasting six hours longer than Prime Day, featuring sales on Google Home.

Retailers should learn that in order to compete with Amazon, they have to be creative in the way they advertise around this holiday fueled by capitalism. They will have to market products consumers want at a reasonable price, advance technology on mobile platforms and get innovative to grab customers’ attention.

Retailers that stepped up to the plate on Prime Day in terms of competition were Wal-Mart and its digital company, Jet.com, as well as Macy’s. Wal-Mart matched many of Amazon’s discounts on various items. Market Track compared prices and determined Wal-Mart’s efforts to compete stood out the most among many companies. Similarly, Macy’s hosted their annual “Black Friday in July” sale that offered 25% off site-wide and offered free shipping exclusively on Prime Day.

With sales expected to top $1 billion this year, Amazon has seen major success in its Prime Day efforts. Now, it’s up to competing retailers to strategize their game for next year so that e-commerce customers can focus their attention on deals outside of Prime Day.