Get ready for some big Prime numbers!
The e-commerce world is gearing up for Amazon Prime Day, which is expected to have more deals than Black Friday. The special offers are only available to those Amazon customers who use the Prime service – but around 45% of all Amazon’s US customers already do. What’s more, Amazon is also inviting people who are tempted by the deals on offer to sign up for Prime on the day, so the numbers can only get bigger.
As Kathleen Brooks, research director at www.cityindex.co.uk, points out, this is both a sales and a marketing event.
“The goals of Prime Day are not just to rack up sales on the 15th July, but also to actively market the benefits of Amazon’s Prime service to those customers who have not used it yet,” said Brooks.
Migrating customers to Prime is clearly a winning proposition for Amazon.
“The profitability of Prime is staggering – on average Amazon Prime customers in the US spend $1,500 per year, compared with $600 for non-members,” continued Brooks. “This stat suggests that if people know that their post and packaging is already paid for, they will spend significantly more on goods and services available on Amazon.”
While most industry pundits agree that a tremendous amount of business will be done on the Amazon site tomorrow, it is difficult to say just how big those Prime numbers will be.
However, Brooks believes there is one pointer we can use.
“Although this is the first such event in Amazon’s history,” said Brooks, “we can try to predict its profitability by looking towards Alibaba’s Single’s Day, held in November each year, which sold nearly $10 bn of products in 2014. Although Singles Day in Alibaba is open to everyone and thus is not an apples-to-apples comparison to Prime Day, it highlights the power of marketing tools and discounts in online shopping wars.”
Tomorrow may be Amazon’s big day, but it will not be having everything its own way. The US retail giant Walmart will also be offering thousands of exclusive discounts for online purchases and it has claimed that its sale is all about “standing up for our customers and everyone else who sees no rhyme or reason for paying a premium to save” (which is probably a dig at the Prime membership fee).
Brooks said that while it would be interesting to see if Walmart does manage to eat into Amazon’s profits, it is likely that “if Prime Day is considered a success for Amazon then we could see it turned into an annual event”.