Amazon’s Prime Day Could Push eCommerce Margins Lower

In case you have been living under a rock here is some important news.  I’m simply going to add the news from internetretailer.com because I figure my readers might want to know a bit more.

The 20th anniversary event, which Amazon says will be bigger than Black Friday, holds promise as a sale but its long-term effects are unclear, analysts say.

Prime Day, Amazon.com Inc.’s newly announced sale for July 15, has been tagged as Christmas in July, bigger than Black Friday or a U.S. version of Singles Day, the blowout online shopping event in China that generates billions of dollars in sales. But whatever it turns out to be—besides a 20th birthday celebration for the online retail giant—it will make an impact on e-retailers, analysts say.

“If this works this could be the start of a many more days like this from Amazon,” said Sucharita Mulpuru, vice president and principal analyst at Forrester Research Inc. “Others will of course try to piggyback on it. I’m sure Amazon will handle the day well. They seem to be promoting doorbusters, and the good thing about the web is that you can quickly change what you promote and to whom.”

Amazon, No. 1 in the Internet Retailer 2015 Top 500 Guide, won’t say if Amazon Prime Day will become an annual event, only that “We don’t have future plans to share yet.”

On July 15, Prime customers, who pay $99 a year for free two-day shipping on 20 million items and other services such as free streaming video and e-books, will have access to special deals throughout the day. The event is exclusively for Prime customers in the United States, United Kingdom, Spain, Japan, Italy, Germany, France, Canada and Austria, starting at midnight Pacific time.

“We believe a new annual or periodic shopping ‘holiday’ for Prime could drive additional new memberships, and emulate the success seen with other manufactured shopping days, such as Cyber Monday and Alibaba’s Singles Day,” Colin Sebastian, an e-commerce analyst  with Robert W. Baird and Co., said in a research note.

Leslie Hahn Sr., commerce strategist with MarketLive, said Prime Day could squeeze smaller and midtier retailers. “Unfortunately, more deep discount periods undermine the channel,” Hahn says. “Our clients include a number of retailers who utilize the Amazon channel. It’s often a conversation of how the Amazon experience of cost and fulfillment-driven value proposition creates a dichotomy within their business. How can they keep their core customers loyal and margins healthy and not lose out to discounts and the loss of shipping margin? Those that have succeeded have gotten really clear and strategic on fostering deep loyalty that can’t be swayed by fire and flash sales.”

Keith Anderson, vice president of strategy & insights at Profitero, says the Prime Day promotion is a “carefully timed international effort to spike Prime awareness and membership leading into the critical back-to-school season. It may also be an effort to pre-emptively lock in new memberships in the face of increasing competition from players like Wal-Mart, which is launching a Shipping Pass, andJet.com,” he says.

Amazon Prime members convert at a rate of 74%, according to a recent study from website traffic measurement firm Millward Brown Digital on the online shopping behavior of Prime members. When Prime members shop with other online retailers, such as Wal-Mart Stores Inc., Target Inc. and Home Depot Inc., they convert on average 6% of the time, the study suggests.

 

If you want to read more there are some great articles on the web on what July 15th really means and how to prepare:

http://www.inquisitr.com/2244595/amazon-prime-day-is-july-15-how-to-prepare-to-get-the-best-deals/

http://www.thestreet.com/story/13213992/2/amazons-prime-day-wont-be-nearly-as-big-as-singles-day-for-alibaba.html

Also, if you just want to look the landing page and learn from the horse’s mouth:  Amazon Prime Day Event.

 

 

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