3 reasons retailers can be optimistic on Amazon Prime Day
The sales event can work in everyone’s favor
Click, click, tap, tap. If you hear a lot more of that than usual over the next few days, don’t be alarmed. It’s not Santa and his reindeer, but more likely Jeff Bezos and deal-hunters around the globe hovered over their devices. They’ll (let’s be honest, we’ll) probably be participating in an alternative “most wonderful time of the year”, at least as far as online shopping is concerned.
That’s right, Amazon Prime Day has arrived once again. Starting today, July 15th (that’s 12 AM PT / 3 AM ET / 9 AM in Madrid) and going for a full and exact 48 hours, Prime “Day” sales will be available to subscribers in 18 countries — more than ever before.
Yes, the e-commerce giant, loved and hated in equal measure depending on who you ask, has single-handedly branded its own major sales “holiday” which started in 2015. Unlike other sales like Black Friday or Cyber Monday, which are more equal-opportunity retail events, Amazon has managed to turn the spotlight on itself.
Prime Day, while a mere fraction of the size, is being compared to Alibaba’s Singles’ Day (a.k.a. Double 11), held every November for the last decade. In fact, this year’s Prime Day lead-up (concert, flash sales, etc.) and extended 48-hour format seem to have come straight from the Alibaba sales event playbook. Not a bad example to follow, considering that Singles’ Day 2018 raked in $30.7bn in sales (more than Black Friday and Cyber Monday online sales combined).
Singles’ Day success is likely due to the fact that Alibaba aims to integrate other retailers into its event, it isn’t subscription-based, and monthly active mobile users last November hit around 666m (ahem, that’s double the US population). By spring, that number had reached 721m. If your jaw dropped in shock at those figures, you’re not alone.
If you listen closely, you can hear the collective sigh from basically all retailers who are not Amazon or Alibaba. “How, how are we supposed to compete with that?!?” we ask ourselves. Well, luckily, it looks like many retailers are cracking the code.
Here are three reasons retailers can be optimistic on one of the one biggest online shopping days of the year. Besides, the key word here is “shopping”, and not necessarily just on Amazon.
More retailers than ever are getting in on the action
Regardless of whether it’s been an optimistic or an “if you can’t beat ’em, join ‘em” attitude, more retailers than ever are hoping to capitalize on Prime Day-generated collective shopping attention. Internet Retailer reports that 250 retailers are holding adjacent, overlapping, or competing sales events. Compare that with just the 27 that did so just two years ago! This is similar to the strategy of many of Alibaba’s competitors, such as JD.com that reported earnings of $23b thanks to an 11-day campaign it ran for the days leading up to Singles’ Day.
Simultaneous campaigns around Prime Day could expect positive results as well. Business of Fashion, says “Retailers that capitalise on Prime Day with their own discounts and promotions see a bump in sales and web traffic. They may not be able to beat Amazon, but they can at least share the spotlight.” And there are numbers to prove it.
According to Criteo, businesses that offer discounts and other sales events that coincide with Prime Day can bask in the light of its halo effect, seeing a sales increase of about 40% (in fashion and luxury, that’s 41%). Key to success, according to the internet advertising company, is starting digital marketing strategies around these sales up to a month in advance.
In the US, many major retailers have sales events that have just begun or will take place this week as well, such as Target’s “Deal Days”, Kohl’s (more on them later) two-day summer deals event, Macy’s “Black Friday in July”, and Nordstrom’s “Anniversary Sale”. And that’s just to name a few.
In Europe, Prime Day also strikes right as many countries are in their second of two sales periods, the first starting right after Christmas. At this point, many retailers there are in their second and third waves of markdowns, some lowering prices by 50 or even 70% both online and off. This means that many shoppers, especially with reduced summer working hours or even Friday off (!!), have more time to shop and may find better offers elsewhere.
If you’ve seen examples of other retailers around the world hoping to cash in on the Prime Day windfall, we’d love to hear about them in the comments below.
Fashion retailers may have an upper hand in luring back-to-school shoppers
Whether it was intentional or just a happy coincidence, Prime Day falls in mid-July, making it the first of three peak dates for back-to-school (B2S) shopping. B2S, more of a season than an event, spans nearly three months. The other two peaks occur the first weekend of August and Labor Day in the US, according to RetailMeNot. Deloitte estimates that this year, total B2S spending will reach $27.8bn in the US, or about $519 per student in the US.
But let’s not forget, B2S shopping includes the whole gamut: schools supplies (pencils, pens, etc.), backpacks, gadgets, and of course fashion. And that last category is possibly the sweet spot for competing against, or latching on to, the Prime Day phenomenon.
Hear me out. Both studies found that fashion is still the majority spend for B2S purchases, with price being the most influential consideration for making purchases. Add that to the fact that Deloitte says in-store shopping continues to dominate for B2S in all categories except for electronic gadgets. If this is truly the case, fashion retailers (especially brick and mortar) who jump on the Prime Day bandwagon may have a leg up on other verticals trying to swoop up consumer attention right now.
Something else to consider is that as dominant as Amazon is in many categories, fashion is not where it thrives. That’s because clothing is simply hard to judge online. Will it fit? What’s the feel and quality?
Amazon’s lack of success in fashion may also have to do with how the e-tailer categorizes and allows for discovery in general. Joaquín Villalba, CEO and co-Founder of Nextail and former Head of European Logistics for Zara-Inditex, said “One factor that has undermined Amazon’s apparel sales are inconsistencies in color, sizing, and apparel attributes which make for a difficult and frustrating search and discovery process.”
Further becrying the Amazon apparel experience in Bloomberg, Sara Halzack and Shira Ovide said, “For certain kinds of purchases, it feels like shopping on Amazon has been shaped too much by technologists with outdated ideas, and not enough by merchants or anyone else in possession of a soul. Sometimes, the site doesn’t seem to reflect the way actual human beings want to browse, discover, and make buying decisions.”
Online shopping for fashion continues to grow overall, but consumers may feel more assured doing so from brands they’re familiar with in terms of sizing and quality. This may be especially true in the case of luxury goods — either purchasing online directly from the trusted brand or from a well-reputed site for luxe fashion such as Farfetch.
So, let’s do the math. A general preference for doing B2S shopping in-store, plus the attractiveness of deals during Prime Day week, plus a less than stellar experience shopping for clothing on Amazon, may equal a good opportunity for fashion retailers to benefit from early B2S shoppers.
Teaming up can have mutually-beneficial results
Sales, the ultimate psychological trigger for impulse buys. It’s hard not to get hyped up around Prime Day. But buyer’s remorse is also a thing, equivalent to an unnecessary-but-on-sale or doesn’t-fit-quite-right hangover. Let’s face it, not every purchase is a winner.
But instead of having to trudge your way over to the post office, repackage items, etc. Amazon and major mass merchant, Kohl’s, have teamed up so that customers can make Amazon returns at Kohl’s locations.
Genius! Why? Because Amazon constantly ups its promises for speed and convenience, making harder to make good on them logistically, especially when it comes to returns. It’s old news that this speed also punishes retailers who can’t keep up, which was Kohl’s case.
Amazon and Kohl’s joined forces to help solve each other’s opposite problems and each get to see literal and figurative returns. Amazon eases the customer pain point of returns by streamlining the process, while Kohl’s hopes for increased “well, since we’re already here” foot traffic and sales.
Amazon and Kohl’s initially rolled out returns in three markets in 2017 among initial concerns about the effect on Kohl’s staff productivity in terms of Kohl’s-related work, or that customers would be more inclined to return items than before. But it seems worries have mostly been unwarranted, or at least smaller than the returns. Proof? The initiative was rolled out at all Kohl’s (now self-described as an “omnichannel retailer”) locations just in time for Prime Day.
Forbes says the partnership allows for mutually complementing strengths and weaknesses, reaching new markets, and keeping pace with innovation. Let’s see what the returns look like for both companies after this week’s shopping frenzy. Will partnering up with the “enemy” prove to work in favor of the retailer and inspire others to look for similar collaborations? Only time will tell, but the hopes and expectations are high.
Prime Day, and similar mega sales like Singles’ Day, are starting to look less and less like the big, bad wolf, and more like an opportunity to benefit from the attention these events draw.
On the other hand, customers also have plenty of reasons to browse the sales of other retailers both online and off: fewer glitches (usually) and no memberships. Oh yeah, and no planned worker’s strike.
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