The Amazon Prime (Two) Day extravaganza that started at midnight might make Jeff Bezos the Santa Claus of July — but the success of his four-year old shopping holiday speaks to more than just the web giant’s sheer power.
Retailers have known forever that consumers like nothing more than a good sale — from President’s Day to Mother’s Day to Black Friday and every excuse in between. And when Amazon kicked off Prime Day, at first to celebrate its 20th anniversary, the rest of the industry jumped right in.
This year, Prime Day could come at the perfect time for retailers carrying more inventory than they’d like after a weak spring, especially since many merchants have also been stocking warehouses to the ceilings, taking early shipments in hopes of avoiding the U.S.-China trade war.
RetailMeNot predicted that 250 retailers would hold Prime Day-related promotions this year, a 30 percent increase. The strategic promotions company said 84 percent of retailers describe the week the sale is held as the most important time to drive online back-to-school sales.
Antony Karabus, chief executive officer of HRC Retail Advisory, said retail inventories are “a little heavy” right now and that industrywide sales events are the right time to try to really move goods.
“It’s a great opportunity to clear out excess by creating excitement over amazing prices,” Karabus said. “It’s the best opportunity you’re going to have to try to put up a little bit of an assault against Amazon. You’re creating noise and excitement and another reason to come to your site. Retailers are going to take every opportunity when customers are in the right mood to part with their money, and they want deals, what better time to have an online exclusive.”
Styles that are only available online and at sharp prices also help the stores themselves keep their composure and, as Karabus said, avoid that “flea market” look.
Whether or not companies need to clear inventory right now, retail is a contact sport and by and large the impulse is to hit back.
“You’ve got to do some level of promotions. With something like a Prime Day, just to leave it totally unanswered is potentially missing out on some of the sales,” said Andrea Morgan-Vandome, chief strategy and marketing officer at Celect, a predictive analytics platform.
While few, if any, retailers have the digital savvy of Amazon, there are more tools merchants can use to better compete.
Morgan-Vandome said artificial intelligence can help retailers be much savvier about their inventory, acting as a kind of GPS that helps goods course correct and get from warehouse to just the right store.
“There’s this big opportunity to get things out there and test and learn from it and then realigning what you [ship] into the stores,” she said. “Inventory is one of the top challenges that people have right now. If you can better align the inventory to the demand, the better off you’re going to be.”
But Prime Day is really about Amazon — as is the case with almost everything e-commerce — and the more than 100 million members of the Prime club will be keyed in on the holiday’s namesake.
NPD Group said more than two-thirds of Amazon Prime members plan to shop the site during Prime Day, but that only 15 percent of these consumers plan to shop both on Amazon and other retailers.
“Retailers are smart to develop competitive plans of their own, but Prime Day is still driven by Amazon,” said Marshal Cohen, chief industry adviser at NPD, which pegged apparel, consumer electronics and toys as the categories shoppers are targeting on Prime Day.
“Just as online shopping continues on its growth trajectory, Prime Day will continue to capture the attention of consumers,” Cohen said. “The multiple retailer halo effect at retail is unlikely to have an effect on Amazon’s success for the foreseeable future.”