Amazon held its third annual Prime Day on July 11. The event actually began the evening of July 10 and offered 30 hours of deals instead of the 24 offered in the two prior years. Started in 2015 to celebrate Amazon’s 20th anniversary, the sales gala is now a way for Amazon to sign up more Prime members for a $99 annual fee and promote its own line of products. Only Prime members can shop the event.
While Amazon does not release sales figures, the company stated it had record revenue — 60 percent more than the same 30-hour period in 2016, and more than Black Friday and Cyber Monday 2016 combined.
Prime Day 2017, according to Amazon, was the biggest sales day in the company’s history with purchases clocking in at 6,000 items a minute in 13 countries. Analysts estimate the company garnered $500 to $600 million in sales. Without giving specific numbers, Amazon said it signed up more Prime members in the 30-hour window than ever before in that timeframe. The number of customers participating grew by more than 50 percent over last year.
How much Prime Day contributes to profit is more difficult to decipher. Amazon offers deep discounts on its own products, especially those it wants to promote for strategic reasons. For instance, Amazon cut the price of the Echo Dot smart home assistant by 30 percent, to $35, for the day. It was the highest-selling item on Amazon, while Echo sales overall were seven times higher than the 2016 Prime Day.
The company is aggressively marketing the Echo product line because it enables voice-activated purchases via the Alexa voice system. Amazon wants the devices in as many homes as possible because, reportedly, it believes the ease of voice ordering will encourage impulse purchases and increase sales.
Consumer Intelligence Research Partners, a market research firm, estimates that 10.7 million U.S. consumers have purchased an Amazon Echo device — the Echo, the Echo Dot, and the Amazon Tap portable Bluetooth speaker.
New Prime Members
Increasing the number of Prime subscribers is immensely important to Amazon. According to research firm Statista, on an annual basis Prime members spend almost twice as much at Amazon than non-Prime shoppers do — $1,300 versus $700. Morgan Stanley provides a more generous estimate, stating that Prime members spend 4.6 times as much as non-Prime customers, with 40 percent of subscribers spending over $1,000 per year at Amazon.
As of February 2017, Morgan Stanley estimated the number of Prime subscribers at 65 million. After Prime Day, this number is likely edging closer to 70 million.
Third-party sellers sold over 50 percent more items on the site by noon on July 11 than in the same time frame last year, according to Amazon. Overall, Prime Day sales by third-party merchants increased 30 percent compared with 2016, thanks to international demand.
Prime Day made its debut in both India and China this year. Amazon has high hopes for these two markets, especially India where Amazon has just received government approval to sell groceries. In that country, Amazon focused on well-known international brands, promising Prime members that they could be the first to buy “exclusive products” from international apparel brands. A Prime subscription in India costs only $8 annually. The Echo smart assistant will start selling in India later this year.
In China, Amazon faces stiffer competition, especially from Alibaba’s Tmall and from Beijing-based JD.com. China’s Prime Day offered 46 hours of sales and featured third-party international brands rather than Amazon-branded products. Amazon’s China home page featured an “Overseas Goods” shop that included footwear, watches, and accessories. Baby products also did well.
New Technology and New Products
Prime Day gives Amazon an opportunity to test new technology and work out any kinks well before the peak holiday shopping season begins. This year the company is testing its Prime Air cargo delivery service for its two-day delivery program. Prime Air allows for a later cut-off purchase time for two-day delivery. By flying direct point-to-point rather than using hubs, Amazon estimates it can decrease cross-country shipping time by 12 to 15 hours.
Free two-day shipping is the main reason customers subscribe to the Prime program, according to Business Insider.
Prime Day is also a means for Amazon to increase awareness of its private labels, which are growing in number. Its recently launched apparel brands — such as Buttoned Down (men’s shirts), Lark & Ro (women’s wear), and Mae (lingerie) — featured prominently in the offerings.
Groceries have not been big sellers in the last two Prime Days but Amazon’s announced purchase of Whole Foods did spur more browsing of grocery staples in 2017. Deals included up to a 50-percent discount for a small number of private-label food items, including snacks and spreads from Amazon’s Wickedly Prime line.
The Amazon Kindle and Kindle Fire were also good private label sellers for Prime Day. Overall for both Amazon and third-party sellers, toys and kids’ and babies’ items garnered 25 percent of all sales with electronics, computers, and office tools raking in 22 percent.
Amazon will likely continue to use Prime Day to tinker with new technology and product offerings. It will also attempt to expand cross-border sales, tailoring its offerings to the consumer demands in each country and trying to gain loyal customers with Prime subscriptions.