Will Amazon Prime Day boom or bust this year?

By Marc Hummel

July 11, 2016

Amazon PrimeCall it a gimmick. Call it a let down. Call it a brilliant marketing coup.

Whatever you call it, the second-annual Amazon Prime Day (tomorrow, July 12) is definitely something we in the world of ecommerce should pay attention to. This post will highlight a few of our questions, theories, and recommendations about Amazon Prime Day.

1. Steal the Prime Day thunder or look the other way?

Retailers must face the question: Do I join in with Amazon and slash prices on a few products and offer my own free shipping promotion? Or does this just help Amazon in the long-run? After all, it’s in the interest of Amazon to establish Prime Day as a “thing” that happens every year, even if people ultimately buy from Target and not Amazon on that day. It’s Amazon that sets the terms (date of the event, the name of the event)—not the other retailers who decide to join in.

The following retailers have announced their own July 12 events of their own (via Retail Dive):

  • Walmart
  • J.C. Penny
  • Kohl’s
  • Newegg

2. Does hopping on the Prime Day bandwagon really help other retailers?

It seems like the answer might be “yes,” at least in the short-term.

When other retailers (like Zara, Macy’s, Nordstrom, and Neiman Marcus) joined in on Alibaba’s Singles Day, they benefitted from the extra buzz, according to Retail Dive.

Internet Retailer is a little more bullish. Citing a report from last year, they claim that:

[The] inaugural Prime Day, held last July to celebrate Amazon’s 20th anniversary, triggered an avalanche of e-retailing activity that benefited the entire ecommerce industry and created the fourth-busiest online shopping day of the year from a traffic perspective. SimilarWeb analyzed traffic to 25 of the largest online retailers in the U.S., including the likes of Wal-Mart Stores Inc., No. 4 in the Internet Retailer 2016 Top 500 Guide, Macy’s Inc. (No. 6), Best Buy Co. Inc. (No. 12) and Newegg Inc. (No. 17).

But the above study is limited to traffic, not conversions. We don’t think there’s enough data available to form a conclusive answer.

3. Is Amazon Prime Day good for resellers?

According to one retailer, Prime Day can be very good for business. From Internet Retailer:

Web-only jewelry retailer Bling Jewelry is banking on a big sales day Tuesday, and it has been preparing for Amazon Prime Day for months now, hoping to build on its success from last year.
“We’re definitely betting big on Prime Day,” Bling Jewelry founder Elena Castaneda says. “Last year we had an exceptional day and sold four times as much as a regular day. This year’s we’re much more prepared.”

Even though Bling Jewelry is an enthusiastic participant in Prime Day, they’re not in it for the sales: “It will be a break-even proposition, or we could make a little money,” said Ms. Castaneda. She hopes the shopping event will bring in new customers and traffic to her standalone ecommerce store.

4. Is Prime Day good for Amazon?

This one’s kind of a trick question. Of course Prime Day is good for Amazon. They take a few bucks off a few hundred items, get new members to their $99/year Prime service, and get people to write about them.

But there are also some more subtle ways Prime Day benefits Amazon, which Business Insider lays out. Here’s a taste:

Prime Day is a “critical peak-day test: Prime Day is a good way to gauge customer demand for the rest of the year. It also lets Amazon test its fulfillment and shipping capabilities ahead of the holiday period to make sure it doesn’t face the same type of shipping delays it experienced in previous years.

We’ll add another one to the mix: Just how brick-and-mortar retailers would sell items at a loss in order to get people in the door, Prime Day is a great way to get people shopping on Amazon, whether or not they purchase one of the featured deals or not.

5. Is Prime Day good for consumers?

This one is up for debate. Here’s a particularly colorful anecdote from Forbes:

Last year’s Prime Day assortment was questionable, and most people I knew were unable to find anything they liked. This included one friend who was on 24 hour bed rest due to her pregnancy. As she said “If I can’t find something I like, no one can. I have absolutely nothing else to do.”

We’ll let you decide this one.

Marc Hummel is a former Content Marketing Associate for Monetate. He's also a part-time grad student at the University of Pennsylvania. He enjoys biking to work, reading, listening to podcasts/music, and eating ice cream. Usually not all at once. For more about Marc, go here.

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