9 things to watch for on Prime Day 2018
The day has rocketed to the top shopping day of the third quarter, according to some data. And it's not just for Amazon customers anymore.
This year marks Amazon's fourth Prime Day. That's a ridiculously short time to move a deal blitz in the middle of July from artificial holiday to major summer retail event, but that's what the e-tailer has managed to accomplish since 2015.
Last year, Amazon said Prime Day sales increased 60% year over year. (The year before they had grown 60% as well.) And Amazon has been getting more and more help hyping the event every year, as other retailers — seeing both opportunities and risks in being left behind — chase after deal-hungry shoppers in cyberspace with their own discounts.
As Steve Barr, PwC's consumer markets leader, points out, the sudden explosion of Prime Day to some extent reflects the rapid growth in e-commerce. "While overall, many in retail expected digital to continue to grow … the velocity at which that is occurring is at a pace that far exceeds expectations," Barr told Retail Dive. "The way I like to think about it is — you think about its trajectory, think about how fast it's going, it's going far faster than anybody's estimates. As a result, brands are having to adapt very quickly."
Last year saw retailers broadly expanding their own discounts and marketing around the event. Some call it Black Friday in July. J.C. Penney has called it "Penney Palooza." But everyone knows why they're doing it.
After reportedly disclosing the dates by accident, Amazon last week officially released the dates of its sales holiday, along with a preview of the deals and bonuses it would offer. As we near the third week of July, here's a list of what we're watching for from the online event:
1. Prime Day is getting big, fast
Prime Day in 2017 became the biggest online shopping day in the third quarter across a host of retailers and categories, according to internal consumer data from digital coupon company RetailMeNot. The year before, Prime Day was No. 21 among Q3 shopping days.
E-commerce analytics firm Profitero found the company generated $2.9 billion in sales in all. RetailMeNot said that the event "is poised to become one of the top e-commerce shopping days of the year — potentially rivaling Black Friday and Cyber Monday in popularity — and not just for Amazon." Michelle Skupin, Senior Director of Global Communications at RetailMeNot, said when the company's team sat down and looked at the data around Prime Day, "We were just blown away."
The day has grown along with Amazon's explosive sales numbers and ever-expanding market share. According to survey data from deal sites BlackFriday.com and Offers.com, the number of consumers who never shop on Amazon, at 2%, is down 92% year over year. Everyone else — the other 98% of consumers — is buying stuff from the e-tailer's website. As for Prime Day, 18% of consumers surveyed were already planning on shopping Prime Day deals and another 47% were in wait-and-see mode. Some 43% of those surveyed planned to spend between $1 and $100, according to BlackFriday.com and Offers.com.
2. And other retailers can't ignore it
"Prime Day is no longer about Amazon, even though Amazon is a primary beneficiary of Prime Day," Barr said. "For retailers, you either pay to play or lose short-term sales and consumers and run the risk of further eroding their relationship with consumers as they get pulled more and more into the Amazon ecosystem."
The growth in Prime Day applies both to shoppers seeking deals on Amazon as well as other retailers, who have "piled on" to Prime Day with their own deals, in Skupin's words. The number of retailers offering deals through RetailMeNot increased 340% last year, from 27 in 2016 to 119 in 2017. The firm found that traffic to retailers' pages through its platform increased 30% for those offering their own deals during Prime Day. For those who didn't participate during the event, traffic decreased 4%. Skupin said the team expects retailers offering deals on Prime Day to increase yet more this year.
Online ad firm Criteo found that mass merchants' sales spiked by 124% on Prime Day, according to data emailed to Retail Dive this June. During the week of Prime Day, sales for brands and retailers, especially among those able to anticipate Amazon's timing on deals, rose by up to 30%, according to Criteo.
According to data from deal website LovetheSales.com, retailers were offering "unprecedented" discounts three weeks before Prime Day in "an attempt to stop Amazon taking customers." Among the retailers trying to get in on the action, Kohl's had discounts of 30% or more, Macy's offered up to 60% off and free shipping on some of its inventory, and Office Depot offered up to 70% off on items, as PwC pointed out in a recent report.
3. There will be six extra hours of retail pain
Amazon this year added another six hours to the 30 that encompassed its summer sales "day" last year. This year the e-tailer said the day and a half will be packed with more than one million deals worldwide for its Prime members, including 50% more Spotlight deals than last year. Moody's Lead Retail Analyst Charlie O'Shea said in emailed comments that the extra hours in this year's Prime Day "ratchets up the pressure on all of retail, with ‘counter measures' sure to negatively impact margins throughout the sector." Making matters worse, the Prime Day event last year also slowed down traffic at other retailers' stores, according to some data.
4. Whole Foods is in play this time
After what some saw as a lackluster showing in grocery for last year's Prime Day, Amazon is offering an additional 10% off sale items at Whole Foods stores. The e-tailer's Prime Rewards Visa card members also get double the rewards on Whole Foods purchases. According to a study by BlackFriday.com and Offers.com, 10% of consumers said they were most likely to purchase groceries on Prime Day this year.
"With Whole Foods now in the picture, we expect Prime Day promotions to extend deep into the food sector, pressuring food retailers for the first time," O'Shea said.
5. Alexa, can Prime Day teach people to love you?
Amazon mentioned "Alexa" nearly 20 times in its release announcing Prime Day's official dates. The company is prompting its customers to tune into deals via Alexa and track purchases by asking Alexa, "Where's my stuff?" Asking questions of Alexa even puts Prime Members in a sweepstakes for an Alexa-enabled Lexus. Amazon is also knocking $100 off its Echo Show video-enabled smart device that uses the Alexa platform, and the e-tailer also plans to offer deals on other Alexa devices like the Echo, Fire TV and Fire tablets. In addition, the company said it would debut new products on Prime Day, including the first "Alexa-enabled kitchen faucet," though Amazon did not explain why anyone might need or want such a device.
6. Amazon will be pushing private labels
Amazon said its lowest prices would be found on products exclusive to the e-tailer. That includes 25% off furniture and décor from Rivet and Stone & Beam, up to 20% off AmazonBasics and 30% off household and health products from Presto!, Mama Bear and Solimo. Amazon of late has moved beyond targeting niche products with its own labels to targeting key consumer product categories to boost traffic and loyalty among its shoppers, according to research from One Click Retail. "One of the key advantages of private brands for any retailer is their ability to drive customer loyalty — producing items that are exclusively available through Amazon will drive more traffic to the platform, which also benefits Amazon sellers by bringing more consumers in front of their products," One Click Retail's Ojastro Todd said in a June report. PwC listed Amazon's private labels among the "likely hot sellers" in this year's event.
7. Prime Day is the start of the back-to-school season
Consumers surveyed by RetailMeNot said they planned to spend an average of $70 on back-to-school items during Prime Day, out of $167 they plan to spend in total. Of those planning to shop Prime Day, 91% plan to make back-to-school purchases. "We feel it's the kick off to the back-to-school season," Supkin said. "It's become the biggest traffic day of the back-to-school season." She added, "Certainly we did not see that prior to 2015."
8. But customers also use Prime Day as an excuse to spoil themselves
Barr and his colleagues at PwC see Prime Day as the U.S. equivalent to Singles Day, a global shopping holiday in November that has become a bonanza for Alibaba, which made $2 billion in the first two hours last year and $25.3 billion in all during Singles Day. "Folks have factored in to their own spending expectations, their intention to participate in Prime Day," Barr said. "Everybody loves a great deal. It's at a period of time where consumers haven't typically had conflict or other opportunities [to spend]." Prime Day could also be an indicator of the American consumer in general. Barr said he will be watching to see if increasing gasoline and other commodity prices, as well as concerns about tariffs and other geopolitical risks, might have any kind of significant effect on consumer spending during the event.
9. Prime Day costs more this year
As its name indicates, Prime Day is not for everybody. Amazon set the day up to reward its Prime Members for spending $100 a year for Prime Memberships — make that $120 this year. BlackFriday.com and Offers.com asked Amazon customers how they felt about the recent price hike. They found that nearly half (48%) planned to keep their memberships while about a third (32%) planned to cancel. Another 20% are what you could call Prime Day opportunists — they planned to cancel their memberships and create free-trial accounts just for shopping during the event.
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