By Maghan McDowell
with contributions from Vicki M. Young
 on July 12, 2016

Amazon doubled down for its second annual “Prime Day” Tuesday, offering twice as many deals and stirring up the competition in the retail sector.

“Prime Day” — which launched last year and celebrated the company’s 20th anniversary — raked in sales of about $400 million in its first outing. Analysts from MKM projected that Amazon would double its Prime Day revenues this year, with others saying the company’s take could go as high as $1 billion.

There were some concerns among the investment set, though, which took a wait-and-see approach and traded shares of Amazon down 0.7 percent on Tuesday to $748.21. Still, that left the company with a market capitalization of $353 billion — $125 billion higher than Wal-Mart Stores Inc.’s $228 billion and a sign of just how much a competitor Amazon has become across the retail world. 

Amazon did not release any sales data for the day as of press time. The online shopping day started off on something of a sour note, with a glitch in the checkout process leaving some Prime members struggling to cash in on deals.

As the day wore on, the focus turned mainly to the discounts. While many of the Prime Day deals centered on electronics, there were plenty of price cuts in the fashion and beauty area, including up to 50 percent off electric shavers and hair tools, 30 percent off apparel, shoes jewelry and watches, and up to 60 percent off athletic shoes.

Fossil, for example, had a Fossil Q Founder Stainless Steel Touchscreen Smartwatch for 30 percent off its $295, making it $206.50. (WWD found that same watch on Fossil.com, also marked down from $295 to $205.99.) A BCBGeneration dress that was originally $148 on Amazon and at Lord & Taylor and Bloomingdale’s sites was 30 percent off, making it $103.60. Badgley Mischka heels that were originally $245 (the same as on Nordstrom’s and Lord & Taylor’s sites), were $171.50.

Amazon’s house brands in fashion and accessories were also seeing discounts. A pair of men’s Franklin & Freeman boots were $64.75, down from $92.50, and a lace Lark & Ro dress, positioned among the likes of Anne Klein and Calvin Klein, was $34.52, down from $49.31. 

“I give Amazon a lot of credit for giving people a reason to buy,” said Edward Yruma of Pacific Crest Securities. “When we look at how other retailers do promotions like Black Friday, they just want to drive traffic in. What’s so thoughtful about how they have architected Prime is that the things they give a discount on are ways to keep making money off of you. It’s a sale, but the intent is to drive focus on the things that they have been working on.”

Charlie O’Shea, lead retail analyst at Moody’s Investors Service, compared Prime Day with a “Ph.D. course in pricing and promoting in one day.” 

“Other retailers have to consider how long do we have to go and at what point do we walk away from a sale,” O’Shea said. “Retailers can’t be as good as Amazon’s ecosystem. It’s just not going to happen.”

The analyst also noted that Amazon is serving up deals and pointing customers to its broader assortment. 

“When you look at the ‘frequently bought together’ suggestions, the additive pieces are not on sale and that’s where Amazon gets it margins,” he said.

Shoppers keen on making a purchase likely head to Amazon first to check out prices and options, then check out other sites to compare pricing, O’Shea said.

“That checking creates a spillover to other sites….Most brick-and-mortars have upped their online sites, and mobile is better than they were three or four years ago,” he said. “If I’m a retailer, I want to be second in line. I want to be the site they go to after checking Amazon.” 

The shopping rush has started to spread across the industry, in the vein of Alibaba’s Singles Day or Hallmark’s Valentine’s Day. Retailers such as J.C. Penney Co. Inc., Bon-Ton, Wal-Mart Stores Inc. and Jet.com were offering discounts and free shipping to draw shoppers. Unlike Valentine’s Day, though, they don’t refer to the offers as “Prime Day.” Penney went with “Penney Palooza,” for example, and Wal-Mart has barely mentioned its free shopping and rollbacks on Twitter.

Amazon does not reveal the date of Prime Day until a month or less before the sales day, which makes it harder for other retailers to plan competing events in advance.

“Given the fact that Amazon controls not only the timing of Amazon Prime Day, but also the timing of when they announce it, retailers will have a tough time trying to compete on such short notice,” said James Prewitt, vice president of retail industry strategy, North America, at JDA Software. “The breadth of their mix on Prime through what they sell themselves and what they fulfill for others through their marketplace is far greater than what other major retailers can do on their own.”

HookLogic, which studied traffic and conversion data of the e-commerce sites of retailers such as Target Corp., Macy’s Inc. and Wal-Mart, said traffic was up “across the board” by midday Tuesday. 

Some sites saw three-times more traffic than average. Among the top categories were electronics, which lead with a 22 percent increase compared with an average Tuesday, and apparel and accessories, furniture and sporting goods. And HookLogic anticipated larger increases later in the day.

The budding shopping holiday is seen by some as the first major sales event happening primarily on mobile.

“Prime Day is the first mobile-first loyalty event ever, let alone one at such a massive scale,” said Demandware and NewStore founder Stephan Schambach. “It’s strikingly clear that Prime Day is built mobile-up, with deals, gadgets and content all focused on mobile consumers. Amazon is pushing its shopping app as the hub for Prime Day, which it continues to use as a fundamental tool to increase customer loyalty and therefore, revenue.

“Amazon has consistently demonstrated its ability to break through the noise, whether that’s using Prime to drastically alter consumer shopping behavior or using same-day delivery to offer instant gratification,” Schambach said. “Prime Day is the first mobile-up shopping event for a simple reason: The experience is as good, if not better, on mobile as it is on desktop.”

Amazon has also been actively touting the day on social media with a wink and a nod. When Matthew Ackerman @metalmmaniac tweeted, “Didn’t really expect to find an engagement ring on Prime Day, but here I am. Helluva deal, too,” Amazon tweeted back, “Yes. A million times, yes! We thought you’d never ask.”

Adobe Digital Insights studied more than four million engagements on social platforms on Prime Day this year and last year, and found that “sadness” was down this year while “joy” was up. It did note that the reason for sadness this year was due to people not being able to add items and checkout, compared with last year’s complaint of minimal deals.

Prime Day is still primarily a U.S. event, although mentions of the shopping day in the United Kingdom are up 44 percent from last year, according to Adobe.

Prime members pay $99 a year for benefits such as free two-day shipping and streaming of movies and TV episodes, and last year was the single biggest sales day for Amazon — including the holiday shopping season.

Analysts estimate Amazon has more than 45 million Prime members and designs to keep growing its base. “Amazon Prime Day does more than drive brand awareness and revenue for the company,” said Mike Elmgreen, chief marketing officer of B2B commerce platform Handshake. He said that it’s a reminder to the industry of the power of combining an easy online ordering experience with streamlined fulfillment.

Greg Greeley, vice president of Amazon Prime, said: “We are always working to make sure customers find incredibly low prices on Amazon. Prime Day is designed to go above and beyond for our Prime members. While the inventory behind our Prime Day deals this year is massive, at these prices, we expect many deals will still sell quickly.”

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