The meaning of Prime Day

Mike Troy
Editorial Director
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Amazon’s 5th annual Prime Day kicked off at 3 a.m. ET July 15 and for the next 48 hours the company promises more than a millions deals. Many of those deals can be had on Amazon’s expanding portfolio of Echo devices such as the Dot, Plus, Show and Look. That devices enable users to interact with the Amazon assistant Alexa and those who already have one of the devices were able to access Prime Day deals at 3 p.m. ET on Sunday July 14 by saying, “Alexa, what are my deals?”

Amazon and the third-party sells who account for more than half of Amazons’ overall volume will sell billions and billions of dollars of merchandise and some of its competitors will benefit from the consumer feeding frenzy Amazon has created. However, selling lots of stuff is really the byproduct of Amazon’s ultimate goal which is to bring millions more households into the Prime world. It’s why deals are promoted as exclusively for Prime members but a free 30-day Prime membership is offered so no one is excluded. The free trial period has proven to be an effective tactic for Amazon since the advent of Prime Day and this year for the first time the number of U.S. households who are Prime members will surpass 50%, according to eMarketer data and projections.

This trend and the volume of Alexa-enabled devices Amazon will sell during the next two days should be more concerning to other retailers than the volume of merchandise the company sells. Prime is the ultimate sticky program in that it’s hard to quit once people get accustomed to the simplicity of products arriving quickly at their home, the range of Alexa’s functionality and breadth of Amazon’s content offering. Prime Day is the ultimate gateway drug to get Americans hooked on the Amazon value proposition.

How retailers are countering Amazon

No membership required is the retail industry’s collective responsive to counter Amazon’s Prime Day promotional blitz. Walmart declared its deals are “exclusive to everyone.” The Home Depot also touted that no membership was required and took to Twitter and Facebook to let shoppers know it had everyday low prices on thousands of their favorite products. A link on Twitter and Facebook directed traffic to a page on the retailer’s web site listing 11,422 products.

Target countered Amazon with Target Deal Days to coincide with the two-day Prime Day event and said it would be its biggest sale of the summer. Ace Hardware took a similar approach with its first-ever Ace Rewards Day. The company also borrowed a page from Amazon and is made the deals exclusive to Ace Rewards members on July 15. On July 16, all customer will receive a 15% discount on qualifying orders.

Macy’s launched a Black Friday in July promotion and Kohl’s offered a two-day Summer Deals promotion. And Costco email members a promotional offer called Member Appreciation Savings Event and encouraged members to shop while supplies last.

Select insights into Amazon’s Prime Day performance are likely to be shared on July 25 when Amazon is scheduled to report second quarter results at 5:30 p.m. ET.