Amazon Prime Day's top tech successes: Echo and mobile
Technology devices registered big wins on Amazon Prime Day as mobile use skyrocketed.
Amazon Prime Day has come and gone — mobile shoppers have stopped receiving push notifications about their favorite deals, online shoppers have logged out of the ecommerce site to pursue other interests, and Prime members around the globe await their free shipping orders.
Sales during the fabricated July holiday grew by more than 60% in 2017, up from $94.67 billion in e-commerce sales in 2016, according to a company press release and eMarketer data emailed to Retail Dive. Notably, mobile orders more than doubled as the company successfully drove shoppers to use apps and some of the key takeways this year include a big jump in sales of Amazon devices, specifically the Echo.
Amazon really pushed the mobile app this year, to great effect. Even before Prime Day, 76% of digital shoppers had the app, according to Millward Brown Digital, and U.S. consumers spent more time on the app than the website. This year, the Amazon app was set up as the go-to shopping hub for Prime members, who were encouraged to look for Prime Day deals through the app, mark deals they were interested in, receive push notifications when those deals started, and track their Prime Day orders, involving mobile in every step of the customer’s path to purchase.
In many ways, using the app was actually easier than using a desktop computer. Users of the mobile app were able to mark their favorite deals and receive notifications when they went live, rather than having to search through Amazon’s site at different intervals to check up on the products they were interested in.
As it turns out, the move was effective. Customer orders on the mobile app more than doubled compared to last year’s Prime Day, a year in which mobile orders had also doubled. Amazon’s success in the mobile sector, where so many other retailers have fallen short, is the result of several factors.
According to Jason Goldberg, senior vice president of content and commerce at SapientRazorfish, mobile orders on Prime Day were able to reach such heights because the app offered Amazon’s huge Prime membership base an easy and efficient way to make purchases.
“What do all Prime members have in common? They’ve all already recorded their payment information on Amazon. Once it’s stored... the mobile conversion rate is much higher.”
Senior Vice President, SapientRazorfish
“What do all Prime members have in common? They’ve all already recorded their payment information on Amazon,” Goldberg said, noting that one of the problems with ordering on an app is the effort it takes to enter credit card information. “Once it’s stored on Amazon, the mobile conversion rate is much higher.”
Goldberg notes that holidays, in general, send mobile conversion rates through the roof, as there are many more consumers visiting that day with the intent to buy, rather than to conduct a quick search or find a nearby store.
Matt Sargent, senior vice president of Frank N. Magid, believes that Amazon's success shows that the e-commerce giant, "is solidifying its position as the leader in mobile ecommerce," according to an email sent to Retail Dive.
Although mobile orders on the day were high, Profitero’s Vice President of Strategy and Insights Keith Anderson believes the numbers might not be indicative of wider mobile success.
“They’ve got what I consider to be a bit of a problem with app fragmentation,” Anderson explained. “They’ve got the Prime Now app, they had this whole Price Check by Amazon app, they had the Amazon app, and they had the Fresh app. They have a lot of different apps to choose from and I think that actually works against them.”
Fragmentation problems aside, Amazon was able to encourage customers to use apps on Prime Day for the simple reason that they made mobile more useful to the shopper. Amazon has always touted themselves as a customer-first business and their work to make the mobile app worthwhile to eager shoppers on their biggest day of the year reflects that.
Echo's big win for Amazon
In the context of Amazon’s pursuit of an entirely hassle-free customer experience, the Echo Dot cannot and should not be left out of the conversation. The voice assistant enabled speaker had a huge day, coming out as the best-selling product globally and raking in seven times the number of sales than Prime Day 2016, according to a company press release. Additionally, Prime members purchased more than 50,000 TP-Link Smart Plugs, which can be used with the Alexa to operate in-house lights and electronics.
This can only be good news for Amazon as Echo owners spend almost 10% more on the website in the six months following their Echo purchase than prior to it and purchases on Amazon's mobile Prime Now app — which boasts one-hour delivery on food and household essentials — soaring nearly 140% after an Echo purchase, according to NPD Group's Checkout Tracking.
The effects of Amazon’s Alexa go much further than Prime Day sales, though. The Echo allows customers to voice-order items, so shopping for frequently-replenished goods more easily becomes part of a customer’s home life and offers Amazon another way to cement loyalty. Indeed, a study emailed to Retail Dive by L2 found that 28% of items sold in the “household” category on Amazon are eligible for free two-day shipping with a Prime membership, “accounting for almost half of all eligible products across CPG verticals.”
A similar trend was found in personal care and baby products, where Amazon offered a higher percentage of Prime-eligible items for products that were frequently replenished, like diapers and loofahs.
“Amazon is using Prime’s free two-day shipping to tie loyalty to everyday items that require frequent replenishment, which hurts brick-and-mortar sales for other mass merchants,” L2’s study found.
Essentially, Amazon is pulling the rug out from under brick-and-mortar retailers who depend on the customer’s need for everyday items to generate foot traffic. After all, if Amazon Prime members can replenish their household goods with just a quick shout-out to Alexa, why would they make the trip into a big box retailer?
“It’s dangerous. Even with one-click ordering, there’s eight more steps involved. It’s much easier to stand up wherever you are in the room and just say, ‘Alexa, purchase more paper towels."
Vice President, Strategy, Profitero
“It’s dangerous,” Anderson says, discussing Amazon’s head start in the home assistant market. “It’s so much easier than pulling your phone out of your pocket, unlocking it, pulling up the app, making a product search, and ordering it. Even with one-click ordering, there’s eight more steps involved. It’s much easier to stand up wherever you are in the room and just say, ‘Alexa, purchase more paper towels.’”
Sell the device, lose the sale
It also poses a massive problem for other retailers, many of which are essentially at a crossroads, considering whether or not to create their own home assistant or piggyback off of a pre-existing speaker. According to Anderson, when it comes to creating a new home assistant, “for 99% of retailers, that answer is no.”
Currently companies are opting for the latter. Peapod launched its voice-activated grocery ordering through Amazon and electronics retailers like Best Buy showcase the home assistant speakers of competitors. For retailers trying to gain ground against Amazon, it’s a tricky situation that could ultimately lead to more profit for Amazon and less for those retailers selling the Echo.
“Retailers like Best Buy and Walmart sell products that have Alexa in it,” Goldberg explains. “So you go to Best Buy and you buy an Alexa, but when you say ‘hey Alexa, buy me more printer ink,’ she’s buying it from Amazon, not Best Buy.”
Combining Amazon Alexa promotions with Prime Day is no mistake on the part of the e-commerce retailer. Amazon Prime, which hit 85 million members just before Prime Day, is an incredibly lucrative consumer base for the company, with members spending an average of $1,300 per year — nearly double what non-member’s spend ($700), according to a report by Consumer Intelligence Research Partners.
How much more would those members spend if they began using Alexa to replenish frequently-ordered items? Or bought appliances with Alexa-controlled features? Retailers cannot afford to ignore Amazon’s advantages in the home assistant category, but it may be tough to catch up.
“[Alexa is] not a general knowledge base like Google, it’s not as good at making restaurant reservations, but it is very good at what it needs to be really good at,” Anderson says. “From a retail perspective, it is giving Amazon a meaningful advantage over essentially every other retailer."
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