Three Keys to Prime Day’s Runaway Success
SMITH BRAIN TRUST – Summer used to be a relative shopping dead zone. Sure, there’d be the odd “Christmas in July” major appliance sale or car dealership clearance event. But until the August back-to-school sales launched, summer was a retail doldrum.
Then came Amazon.com.
Just a few years ago, the e-commerce trailblazer disrupted the consumer calendar, with a widely hyped sale that would launch a sort of mid-summer Black Friday.
This year at least 250 retailers are expected to participate in Amazon’s fifth annual Prime Day event with discounts of their own, according to RetailMeNot. That’s up from 119 just two years ago – and up from 27 just three years ago.
Maryland Smith experts explain how the Seattle-based Amazon created a summer shopping phenom.
Key to the initial hype was the notion of exclusivity, says Henry C. Boyd III, clinical professor of marketing at the University of Maryland’s Robert H. Smith School of Business.
“Amazon Prime changed the game,” he says. “Being a member of Amazon Prime is like belonging to a club. And who doesn’t want to join a club? You get in, and you get these perks, these deals.”
And those perks keep expanding, as Amazon seeks to attract new members to the $119-a-year Prime club. Prime Day deals are available only to members.
The two-day Prime Day sale is in large part a membership drive for Prime, which already has more than 100 million members in the United States, says Amna Kirmani, the Ralph J. Tyser Professor of Marketing at Maryland Smith and editor of the Journal of Consumer Research. “It's a great way for Amazon to attract new customers and make current customers buy more.”
Prime members spend an average $1,400 a year on Amazon.com, according to a 2018 study from research firm Consumer Intelligence Research Partners. That compares to an average $600 from non-member Amazon shoppers.
Among the newest Prime Day membership perks was last week’s members-only live-streamed concert with Taylor Swift, SZA, Dua Lipa and Becky G, aimed at building enthusiasm for Amazon’s Prime Day.
“Think about that. You’ve got Taylor Swift doing a live concert. And you can only watch by being a Prime member during Prime Week,” Boyd says.
Consumers “always love scale and scope and size,” he adds. They want to be part of the next big thing. “That FOMO we keep talking about – that Fear Of Missing Out – it’s real.”
“Amazon knows you’re going to watch, and you’re going to talk about it, and you’re going to post about it, and you’re going to build a community around that particular aspect of the brand. You gotta give Amazon kudos for that.”
This year, Amazon Prime Day becomes a two-day event. The retailer will be pushing laptops and tablets, but is also launching its new “Off-to-College Store,” specifically targeting students and their parents, says Jie Zhang, Professor of Marketing and the Harvey Sanders Fellow of Retail Management at Maryland Smith.
U.S. shoppers plan to spend $507 on back-to-school stuff this year, up from $465 last year, according to RetailMeNot.
“It will give Amazon a huge head start in the competition for back-to-school purchases,” Zhang says, and will further intensify competition in the “already fiercely fought-over” back-to-school retail season.
Target is among the retailers in that fight. It’s going head-to-head against Amazon, with its first ever “Target Deal Days,” to coincide with the July 15-16 Prime Day. Unlike with the Amazon event, no membership will be required to shop the Target sale. Last year, Target hosted a one-day sale to coincide with Prime Day, in what the retailer said was one of its biggest online shopping days of the year.
Amazon is also likely to use its big sale days to discount its line of Alexa smart speaker devices, says Roland Rust, Distinguished University Professor and David Bruce Smith Chair in Marketing at Maryland Smith. The tech giant’s business growth is “in information services,” Rust says, “not goods.”
“Prime Day deals on their Alexa devices will help Amazon put AI into more people’s homes,” he says, “and improve its data reach.”
Last year, consumers spent an estimated $4.2 billion on Prime Day, according to Wedbush Securities. “That’s just staggering,” says Boyd. It’s roughly a one-third increase over the year-earlier Prime Day.
“It’s intriguing. It used to be, when it’s mid-July, you’re thinking, ‘It’s summertime.’ You’re thinking, ‘Let’s go to the beach, let’s take time off, let’s chill, let’s unwind.’” says Boyd. “It wasn’t Black Friday. It wasn’t a time for shopping. Now that’s shifting.”
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