One of the most significant days in the Amazon calendar is fast approaching. Prime Day is an annual sales holiday exclusively for members of its Prime subscription service.
Initially launched on 15 July 2015, as a way of celebrating the company’s 20th birthday, it has now remained a yearly constant and pulls in huge numbers of consumers and large sums of money for the ecommerce titan.
Users can save on sales promotions spanning a large range of product categories from both Amazon and the thousands of small businesses using its marketplace.
Prime Day 2021 was the biggest two day period ever for the company’s third-party sellers, with members purchasing over 250 million items across the globe, more than any other Prime Day before. Consumers purchased $11.2 billion worth of goods during last year’s bonanza.
Will it live up to the hype this year?
The cost of living crisis means that no one, not even Amazon, knows just how much money consumers will be able to spend on this year’s Prime Day, which is due to run July 12-13.
From a consumer perspective, it may be a good opportunity to bag the goods they wouldn’t be able to afford at full price, however they may not have the capital to purchase the item, given that the average earner will be £1,000 worse off than they were the year before, according to the Resolution Foundation.
However, on the other side of the coin, merchants could be set to benefit according to Bidnamic CEO Liam Patterson.
“There are many strains on retailers now, so Amazon Prime Day is good as a short term hit for revenue as it offers immediate easy access to its massive customer base,” he tells Charged.
“However, it has a monopoly on choice and offers no long-term value, taking a large share from Google Shopping as an online alternative for retail brands.”
Recurly general manager Oscar Wall believes that there could be a knock on effect of the cost of living on consumers.
“Amazon Prime day reminds subscribers about the value of their subscription. Recurly and our recent consumer survey suggests that 90% of consumers are concerned by inflation and 24% are reconsidering their subscriptions as the cost of living continues to rise.
“Instead of using Dark Patterns – the process in making it difficult for subscribers to leave – it is important that subscription companies create a discount model to help consumers, and offer exclusive content to its subscriber to add value to the monthly fee. Delivering a great user experience will help to combat voluntary churn as consumers realign their priorities this year.”
Will consumers ignore the event this year or continue to splash their cash?
According to Justin Biddle, UK lead at Shopware, the pull of Prime Day will likely be “too hard to ignore”. With a diverse range of promotions being offered.
“Amazon Prime Day is a masterclass in attracting and retaining customer loyalty. Bundling delivery, discounts and streaming together makes it harder for consumers to cut ties and Prime Day is another exclusive value add for loyal customers,” he says.
Biddle also pointed to the fact that Amazon tears up the rulebook when it comes to consumer electronics.
“Summer tends to be a sales season for clothing and apparel, with consumer electronics sales generally taking place towards the end of the year. By running Prime Day in July, Amazon is creating a new tradition that other retailers have to adapt to so it’s vital they always maintain a flexible promotional strategy that goes against established norms.
“Retailers don’t need to launch a successful streaming service to create a compelling loyalty programme, but in a climate of increasing costs and inflation, they do need to find a way to build a connection with the customer and keep them coming back to avoid relying on price cuts to compete, because this is a race to the bottom and Amazon will win every time.”
How can smaller merchants benefit?
The two-day bonanza isn’t just for Amazon to increase profits on its own private label goods. Smaller merchants that use the sprawling marketplace can also benefit hugely from the event.
Amazon makes it easier for small and medium Enterprises (SMEs) by offering specific promotions to help them gain exposure of the course of the event.
Amazon will offer its marketplace users an opportunity to win amazing prizes in its all-new “Support Small Businesses to Win Big” sweepstakes.
The sweepstakes are free to enter and once registered, for every £1 a customer spends on eligible small business products, they will receive one additional entry in the sweepstakes.
Amazon fully funds the scheme to connect customers with local innovators, artisans and entrepreneurs.
Patterson adds that retailers “need to diversify channels to support revenue”.
He says: “Prioritising DTC channels is key to owning the customer journey and the data you get from Google Shopping is extremely valuable, particularly with the upcoming loss of third-party cookies.”
Why Amazon is launching two Prime Day events this year
For the first time ever, Amazon is offering two Prime Day events. One this month on 12-13th July and one in October. This could likely be an insurance move in case sales fall slightly short of expectations given the many socioeconomic factors that have started to hinder the sector.
Commenting on the move, ParcelHero head of consumer research David Jinks warns that this year could “see even higher spending, as Prime Day has made increasing profits every year since its launch in 2015.”
This is despite worldwide online sales falling throughout 2022, as the impact of Covid on our shopping habits begins to wane.
“It’s perhaps for this reason that Amazon appears to be planning a “Double Prime” event this year. A report in Business Insider revealed traders have been contacted by Amazon with details about an event it’s calling.Prime Fall could give Amazon a second bite at the cherry, should Prime Day this year prove less successful than previous events,” he concludes.