3 Takeaways from Amazon Prime Day 2018
Christmas in July has taken on a completely new meaning over the past few years thanks entirely to the growing success of Prime Day. Amazon’s annual extravaganza lands smack in the middle of the month and has ballooned every single year since its launch in 2015, effectively becoming the “Black Friday” of summer.
The event was established to celebrate the anniversary of Jeff Bezos founding the company (July 15), but rather than buying gifts for the world’s richest man, consumers simply continue to feed the machine, forking their money over to Amazon. Prime Day leverages all kinds of basic retail tactics, from flash sales that create a sense of urgency in the shopping experience, to their Prime loyalty program that makes the event exclusive to the 100 million-plus members. As a result, Amazon has achieved single-day sales records on Prime Day in each of the past three years.
And 2018 was no different. In a statement the day after Prime Day, Amazon announced that more than 100 million products were purchased during the 36-hour event, and more new Prime members were welcomed on July 16 than any other day in Amazon’s history. All estimates point to Amazon exceeding some $3.5 billion in sales on Prime Day 2018, up from $2.4 billion last year.
But there’s more to learn about Amazon and the current state of retail from Prime Day than meets the eye. Here are three major takeaways uncovered during the event.
1. No one—not even Amazon—is perfect.
Though it was the single best performing day in the history of Amazon, Prime Day 2018 got off to a pretty hellish start for Amazon. Portions of both the website and app crashed, leaving customers frustrated and Amazon’s IT team scrambling. It’s hard to believe that the world’s largest ecommerce platform and one of the largest web services providers would be underprepared for their own major web-based event, but it happened.
Amazon had everything back up and running like normal after a few hours, but it’s safe to assume the company missed out on potentially millions of dollars in sales because of the glitches.
"Online shopping is all about instant gratification," Mary Lou Barney, VP of Client Success at Fuel Cycle, said in a statement to Dealerscope about the glitches. "And when that gratification is no longer instant due to technical issues, shoppers will simply click over to another ecommerce site. While heavy traffic is apparently the reason for Amazon’s slowdowns and crashes on Prime Day, the issues definitely represent lost sales opportunities for Amazon and, conversely, found sales opportunities for competitive sites holding their own sales."
Amazon did publish a brief statement on its social channels while the issues were still occurring, but it was otherwise glossed over—a move that is understandable from a PR perspective, but rather frustrating from a customer service side of things.
2. Prime Day is so much more than a major sales event.
Yes, Prime Day 2018 drove billions of dollars of sales for Amazon and its third-party marketplace sellers who participated. But the day-and-a-half event is about far more than driving consumers to take advantage of those mostly-underwhelming flash deals.
Prime Day is a member recruitment tool for Amazon. The only way consumers can access those deals and sales is if they are an Amazon Prime member. And, as Amazon mentioned in its statement, they were incredibly successful in driving new memberships ahead of Prime Day as consumers looked to cash in on those deals.
While Prime Day itself was a major success for Amazon, the real benefit is welcoming all of those new members into the fold and what that means for the company moving forward. Every bit of data ever recorded about Amazon shows how important Prime members are to their continued growth. As the research firm Consumer Intelligence Research Partners points out, Amazon Prime members spend $1,300 per year, or nearly double the $700 non-Prime members spend. Add on top of that the fact that those 100 million-plus members are forking over $120 annually for access to those deals (and a wealth of other benefits) and you can start to understand why Prime Day’s success is about more than just sales data.
3. Other retailers are learning to capitalize on Prime Day.
It took a few years, but the rest of the retail industry is finally learning how to leverage Prime Day in order to boost their own sales during the event.
Sure, there are a few examples of other major retailers that have launched their own limited-time sales events throughout other portions of the calendar year. But why not just leverage one of the biggest online shopping days of the year? Consumers already plan to spend hours on end shopping online on Prime Day. They’re a captive audience just waiting to open their digital wallets for the perfect deal. When it happens that they can’t find that deal on Amazon or they’re underwhelmed by a particular sale, other retailers have an opportunity to swoop in and steal those dollars from Bezos and company.
And that’s just what they did this year. More retailers than ever promoted their own one-day deals and limited time flash sales during Prime Day 2018. And those efforts paid off. According to Adobe Analytics data, larger retailers (meaning those with over $1 billion in annual revenue) saw their online sales increase 54 percent on Prime Day compared to an average Tuesday.
What’s more, other retailers are finding ways to outfox Amazon at its own game. Stores like Target, for example, were able to leverage click-to-brick in order to get online shoppers into their stores to get their orders quicker—and to increase the likelihood that they’d spend some time in their stores and drop a few extra bucks. Amazon did extend Prime Day deals to their Whole Foods locations, but the grocery-specific chain has some very clear disadvantages compared to the Walmarts, Targets, and Best Buys of the retail world—with no membership required…