Prime Day: 4 Things to Learn From the New Shopping Holiday

July 27, 2016/ David Lampe /

Prime Day Sales Up 60% Over 2015—What Lessons Can Merchants Learn?

Amazon returned for a second year with their Prime Day event on Tuesday, July 12. Originally introduced in 2015 to celebrate the company’s 20^th anniversary, Prime Day 2016 saw considerable gains over the previous year’s sales figures.

What kind of impact will Prime Day have on the eCommerce environment, and what can retailers learn from the success of this new consumer holiday?

Prime Day Success

Prime Day offers shoppers an extensive list of one-day-only bargains, as well as “lightning deals,” with deep discounts on hot-button items in limited quantities and for a limited time. However, the sales are only available to Amazon Prime subscribers.

In all, Prime Day 2016 was Amazon’s biggest sales day ever. More than one million shoppers used the Amazon app for the first time to participate in the festivities, and orders were up 60% over the previous year’s event.

The company also sold more than one million of its own branded devices such as the Echo, Fire TV Stick and the Kindle line of tablets and e-readers.

Analysis: What Can Other Retailers Learn

When analyzing the outcome of Prime Day 2016, experts are most interested in what caused the noticeable spike in sales from the 2015 event.

Following the 2015 event, customers complained that most of the sales were for less-desirable items, while the items people actually wanted to buy sold-out too quickly. Amazon took these critiques seriously and used customer feedback to drastically redesign the shopping holiday.

The sales gains demonstrated by Prime Day 2016 are the result of a number of different factors, including availability of items, more deals introduced more often, and the overall quality of the deals. However, their formula is far from secret. Based on Amazon’s example, we can see that there are four key concepts for retailers to retain: shipping, timing, encouraging loyalty, and reducing friction.

Shipping Options Matter

Free two-day shipping was the main selling point when Amazon first rolled out their Prime service in 2005. Now, the company offers free same-day shipping in a number of metropolitan areas around the world, as well as Prime Now, providing free two-hour shipping in select cities.

By constantly pushing for faster and cheaper shipping, Amazon set a new standard for eCommerce, and a new customer expectation to go along with it. A decade ago, five days might have been considered “rush shipping,” and merchants were able to charge a premium for that level of service. Now, consumer expectations have changed, and merchants must adjust.

Smaller merchants don’t possess the same level of resources that larger merchants control. However, because mega retailers have set consumer expectations so high, shipping becomes a major challenge for small- to medium-sized retailers. Therefore, in order to compete, the average merchants will need to be extra-focused on efficiency and customer satisfaction in the shipping process.

Time Sales to Have a Greater Effect

Prime Day isn’t simply intended to observe Amazon’s birthday. The manufactured holiday also conveniently places a massive sales opportunity right in the middle of one of the year’s slowest shopping seasons.

Plenty of retailers cash-in using that same formula. Chinese eCommerce giant, Alibaba, capitalizes on the manufactured Chinese consumer holiday known as “Singles Day.” Other sellers like Wal-Mart, Best Buy and Petco focused on competing directly with Amazon this year using Black Friday-styled events around the same time as Prime Day.

Major sales events during slower months can boost revenue while also keeping the brand fresh in the consumers’ minds so they remain loyal.

Encouraging Customer Loyalty

Of course, these sales aren’t for just anyone. Prime Day is an exclusive event, limited only to Amazon Prime subscribers.

Prime subscribers are proven, loyal shoppers; therefore, it pays for Amazon to offer them special sales in order to keep them friendly to the brand. This same tactic is also widely used, as in the case of Best Buy’s “Black Friday in July” event, which offered early access to Best Buy members.

Offering rewards and perks for loyal customers both encourages shoppers to keep coming back, and also builds stronger affinity for the merchant.

Studies show it is six times more expensive to acquire a new customer than it is to retain a current customer. So, while earning new customers is important, keeping them coming back is also vital to a business’s longevity.

Friction-Free Experiences

One of the best ways to encourage customer loyalty is by reducing friction as much as possible.

Amazon allows users to make purchases quickly and easily with one-click ordering. The feature automatically places the customer’s order, charges whichever payment method is associated with the account and ships to the customer’s main address.

Reducing transaction friction means merchants reduce the likelihood that the customer will abandon their shopping cart, a problem which costs more than $4 trillion annually. Techniques like saving customer information for future purchases and using auto-populated fields can greatly increase the likelihood of a completed transaction.

Meeting the Mega-Retailer Standard

Disruptive forces, such as mega-retailers with more expansive resources, set consumers’ expectations for eCommerce. To stay competitive, merchants must recognize and respond to these consumer-driven standards.

Merchants need to be constantly on the lookout for new, emerging trends, and exercise the necessary agility to adapt to consumer expectations. With a proactive approach, small- and medium-sized merchants will have better success meeting the high standards set by disruptive industry leaders.

Last Update: July 27, 2016