July 18, 2015    4 minute read

Amazon Prime Day: Success or Failure?

   July 18, 2015    4 minute read

Amazon Prime Day: Success or Failure?

To celebrate its 20th birthday, Amazon held its first ‘Prime Day’, a global shopping event, on July 15th. This is an exclusive event for members of its Prime service, with which consumers can enjoy many delivery, video, photo, books and sharing benefits at the cost of $99 a year.

To many people, the idea of Amazon Prime Day seems to be inherited from Alibaba Singles Day, which takes place annually on November 11th (‘Double 11’) posting $9.3 billion in revenue last year.

What are the possible aims of Amazon Prime Day?

Firstly, in the short term, a global shopping event can help Amazon boost its sales as well as the number of members on Prime, bringing

millions of shoppers to Amazon’s virtual doors all at once”

Secondly, in the longer term, if successful, the first Prime Day can lay the foundation for a possible summer sale event, an otherwise relatively quite period of the year.

Moreover, in the light of Alibaba Singles Day, this can be seen as an effort to raise Amazon’s profile and its dominance domestically and internationally, guarding the markets against Alibaba. According to TechInAsia, Alibaba has already begun to engage in the competition with Amazon in the US over cloud services, and invested in a number of US-based ecommerce companies.

Overview of the performance

Amazon viewed its first Prime Day as a grand success. The online retail giant recorded more units sold on Prime Day than on the biggest Black Friday ever, which was in 2014, along with the highest number of new members signing up for Prime in its history. 34.4 million items were ordered across eligible countries with 398 items ordered per second, surpassing the highest rate of ordering on Black Friday.

47,000 televisions, 51,000 Bose headphones, and 14,000 iRobot Roomba vacuum-cleaning robots were sold, compared with just one unit sold the previous Wednesday, according to Cnet.

Consumers also made solid savings with tens of thousands of media-streaming Fire TV Sticks, 35,000 Lord of the Rings Blu-ray sets and 1,200 TVs for $999 sold out in less than 10 minutes.

Nonetheless, not everyone was happy with Amazon Prime Day. With hashtag PrimeDayFail popularised on Twitter, many customers claimed that it did not live up to the hype due to the following reasons. First of all, there were fewer deals than expected despite Amazon’s claim of Prime Day having ‘more deals than Black Friday’. To make matters worse, amongst those offered, many considered as being ‘lame’. Some even went as far as jokingly considering Amazon Prime Day as a ‘garage sale’.

The second frustration expressed was the quick sellout of items.

The last complaint was due to the technical issues whilst purchasing on website.

 

Potential for future events

Overall, by all virtues, including sales, membership and publicity, Prime Day has been a successful global shopping event for Amazon. Indeed, it is possible that Amazon will make it an annual event, as Greg Greeley, Amazon Prime vice president, said:

“Going into this, we weren’t sure whether Prime Day would be a one-time thing or if it would become an annual event. After yesterday’s results, we’ll definitely be doing this again”

Despite the complaints and some sceptical comments regarding the possible mere spending shifts, this is arguably a sensible decision based on its potential.

Firstly, regarding sale volume and inventory, the success of the first Prime Day will certainly attract more vendors thus enabling Amazon to offer more deals and at greater discounts. This will increase choices for consumers, address some of the complaints and give Prime membership a better payoff.

Secondly, there is still a great gap for extending Prime membership both within the existing 9 countries offering Prime, US, UK, Spain, Japan, Italy, Germany, France, Canada and Austria, and to other countries around the world. By June 30th, Amazon Prime has 44 million members in the US, accounting for only 47% of its US shoppers. Increasing Prime membership is critical to Amazon as Prime clients tend to spend twice as much on Amazon as non-Prime ones per year.

Lastly, according to Cnet, with Walmart and other retailers retaliated against Amazon, it is possible that Prime Day will turn into ‘a regular annual summer salesday’. This would then boost Prime membership and Amazon’s sales further.

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