Amazon Prime Day
Sales for this year’s Amazon Prime Day sales were up 60% and could top $3.5bn, but with discounts of 45% or more Amazon is conceding significant sums against its regular prices. Indeed, ParcelHero’s Head of Consumer Research, David Jinks, believes that Prime Day could cost Amazon $700m, but he added that it is “still the biggest sales hook of 2017”.
Jinks said that Amazon can “swallow” the steep discounts on many items because they are “bait” for shoppers to join its highly lucrative Prime service.
“If the Prime Day sales averaged a 20% discount on every item, and sales do reach $3.5bn, this would mean potential loss of $700 million for Amazon against its standard prices,” said Jinks.
“That’s a big pill to swallow. But it’s worth it for Amazon in the long run.”
The 30-hour shopping extravaganza is a great way of spurring online shoppers to take out Prime membership – and then encouraging them to get the best “value for money” from that membership by using Prime as their first port of call for future online purchases.
“Prime members who stump up £79 to join its Prime service ($99 in the US) spend an average double the amount as non-members do with the e-commerce giant,” said Jinks. “Members spend an average $1,300 with Amazon; and it could well be that Prime Day helped reel them in.”
Jinks added: “Even if the average discount was 20%, that $700 million hit is nothing against the £8.bn ($10.4bn) UK households alone will spend with Amazon during the course of a year! And no doubt Amazon will have shared some of the discounts’ impacts with its suppliers!’”
ParcelHero gives more perspectives on the online giant’s retail and distribution plans in its report: Amazon’s Prime Ambition .