Why Prime Day is a retail tipping point

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Why Prime Day is a retail tipping point

By Gina Acosta - 07/16/2018
Signage for Prime Day at a Tampa, Fla., Whole Foods Market on July 15.

As Prime Day 2018 gets underway, Amazon is poised to reach a new milestone in conversational commerce.

By the time Prime Day is over and done with on July 18, close to half of all Amazon shoppers will own a voice-controlled smart speaker, according to InfoScout. That's because before Prime Day, about 39% of Amazon shoppers owned an Alexa device, and about 10% of shoppers who didn't own one planned to buy it on Prime Day, according to InfoScout. 

This means that voice shopping on Amazon will be reaching a tipping point this week. This has huge implications for Amazon and the retail industry in general, which is grappling with voice commerce.

Voice shopping is expected to jump to $40 billion in 2022, up from $2 billion right now, suggesting the new channel may well be the next major disruptive force in retail, according to data from OC&C Strategy Consultants.

The growth in the voice segment will be driven by a surge in the number of homes using smart speakers, rising to 55% from 13% percent today. Meanwhile, Amazon is poised to dominate the new channel with the largest market share, currently more than twice that of its nearest competitor. Amazon's Echo/Alexa has 10% penetration of U.S. homes; Google's Home, 4%, and Microsoft's Cortana, 2%. And this year's Prime Day features many deals on  Amazon's smart speakers.

In fact, Prime Day kicked off at 3 p.m. on Monday, with 36 hours of shopping in at least 17 countries and, with more than 1 million deals worldwide. 

Amazon's Prime Day, arguably the third biggest shopping day of the year after Black Friday and Cyber Monday, will offer deals that for the first time will push into food and consumables.

New this year will be heavy promotions and deep discounts at Whole Foods Market, which Amazon acquired last year in June.

“Prime Day is the perfect setting for Amazon to drive more trial and adoption of Whole Foods among their loyal Prime base,” Ryne Misso, director of marketing at Market Track, told The Wall Street Journal. “Amazon has already rolled out extremely competitive promotions at Whole Foods—like half-off baby back ribs last week—to drive new shoppers through the door. Add 10% off eligible items with your Prime membership, and Amazon has already removed some of the cost barriers that have kept shoppers away from Whole Foods in the past.”

The Whole Foods Market promotion for Prime Day includes a 10% discount for Prime members.

Other retailers, such as Target, Walmart, Macy's and others, are offering Black Friday in July sales to compete with Amazon's Prime Day.

"Other retailers are increasingly jumping on the Amazon Prime Day bandwagon with competing sales of their own. Large and niche retailers will see substantial spikes in online sales during Prime Day due to increased conversion rates. In 2017, large retailers saw a 35% increase in sales on Prime Day, and we anticipate new records this year. Prime Day approaches on the heels of record online sales growth for the second quarter. We expect strong online sales to continue throughout the year with a record back to school season surpassing $50B in online sales for the first time, driving over 16.1% year-over-year growth in Q3 2018 and a substantial increase in online shopping YoY for the holidays,” said Taylor Schreiner, Director, Adobe Digital Insights.

Amazon today has more than 100 million paid Prime members around the world.

With Monday's stock rally ahead of the kickoff of Prime Day, Amazon founder Jeff Bezos has officially become the richest person in modern history, in inflation-adjusted terms. 

According to USA Today, the Amazon founder and CEO had already been the richest person in the world in today’s dollars, according to the Bloomberg Billionaires Index, ahead of the No. 2 richest person in the world, Bill Gates. 

Gates, who co-founded Microsoft Corp., at his richest peak was briefly worth $100 billion in 1999. That’s about $149 billion in inflation-adjusted terms, according to Bloomberg.

On Monday, Bezos’s net worth topped $150 billion. 

 

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