Play Along and Capture New Sales
Summer’s Amazon Prime Day has become a recognized shopping holiday that sucks sales away from other retailers for more than only a day, but retailers can plan early to play along and capture new sales during midsummer doldrums.2018 blows out Amazon sales, Prime membership comps
Brands and retailers should plan early for this recognized shopping holiday.
The original focus of the warm-weather version of Black Friday was to boost Amazon Prime memberships, but recent research revealed 100 million items sold on Prime Day 2018, making it the largest shopping event in Amazon’s history. In recent McKinsey Group-commissioned research, the day saw a 6 percent increase in conversions over 2017 and a 121 percent increase in conversions compared with the prior week. Amazon captured more new memberships than on any other day in Amazon history, and the event expanded to 17 new countries, and likely will expand to more.
However, despite the Amazon dominance, McKinsey found other winners on Prime Day: those Amazon brand partners who bought space and invested in keyword search and those competitors that went head-to-head countering with their own offers and discounts. Walmart, Target, Best Buy, Lowe’s, and Costco mimicked Amazon’s strategy to present limited-time offers, steep discounts, and special member and loyalty promotions.
McKinsey noted that many Amazon deals did not offer steep discounts and that most of its best offers were Amazon’s private-label brands across multiple categories, including Pinzon bedroom linens and bath towels (sixfold conversion lift), and apparel in Amazon Essentials (fivefold lift) and Goodthreads (threefold lift). Amazon tech devices also were strong.
Brands did “spectacularly” on Prime Day and will again if they are prepared to pay for Amazon advertising to get spotlight treatment for deals and for pre-event keyword search. McKinsey suggests focusing on popular products and offering steeper discounts on only a few items to attract press coverage and maximize consumer attention.
Devise a Parallel Strategy
Brands, though, also may want a parallel strategy and invest in other retailers to achieve added sales. Brands should consider what Amazon is promoting and partner with retailers on categories and labels that Amazon is not boosting. That will still require strong-enough offers to attract media attention and trend social media.
McKinsey’s consulting group believes that other retailers, too, can substantially increase traffic and conversions by marketing “hero” deals that increase press coverage and devising a strategy for exclusive categories and products Amazon won’t have. The consultants also advise retailers to think through how also to deploy an ecosystem strategy by rewarding customers who reach spending thresholds with membership and loyalty deals, such as free shipping for six months, packaged offers, and other perks.
The biggest takeaway from this research is retailers who do nothing for Prime Day likely will see missed opportunity with less web and store traffic and flat or declining sales—this in an already down season cycle.
Prime Day has taken on a life of its own since its 2015 inception. Amazon is unlikely to scale back its strategy, rather continue and expand it. Prime Day 2019 is estimated to occur either Tuesday, July 11 or July 18. Prior to 2018, the day was on the second Tuesday in July, but changed this year, possibly because of the World Cup. Amazon analysts aren’t sure if the change was permanent or a temporary strategic shift for the soccer event.
What is known is that the big shopping day has expanded beyond Amazon-only as brands join the fray. Brands and retailers should prepare themselves to effectively participate in this new shopping phenomenon and be in the mix to capture their own Prime Day sales.