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Amazon Prime Day

Amazons’ biggest sales day

Background

Once a year Amazon has a major sales promotion – ‘Prime Day’. Prime is a subscription-based service that offers members numerous benefits. Some benefits include free shipping for Amazon orders, free streaming of TV shows and videos and a free music streaming service.

Amazon had their first Prime Day in July 2015. 9 countries (US, UK, Spain, Japan, Italy, Germany, France, Canada, Austria) all participated in this global one-day shopping event. Due to customer feedback the event has now increased from 24 to 36 hours. In 2018 Prime Day was the biggest sales day ever for Amazon, outselling Black Friday and Cyber Monday. Prime members ordered over 100 million units during the event.

Amazon Prime Day

In 2018 McKinsey completed online consumer research into how shoppers behaved during ‘Prime Day’. The research was completed in the US, UK, France, Italy and Germany with 3,000 shoppers. Some initial findings include:

  • High brand awareness of the event. 80% awareness amongst all respondents
  • From 2015 to 2018 consumer participation grew fast. 4/500% increase in consumers participating in the event
  • Prime members bought more items and spent more in 2018 vs 2017

Drilling down into the numbers some other general observations include:

  • brand awareness of Prime Day is highest amongst people who mainly shop online (not age or gender biased)
  • brand awareness of Prime Day is highest amongst people who are loyal or frequent shoppers with Amazon
  • in the US participation in Prime Day has increased from 13% of respondents in 2015 to 41% of respondents in 2018
  • younger people (18 – 29, 30 – 39) are more likely to participate in Prime Day
  • many shoppers bought more products during Prime Day 2018 vs previous years. (US 46%, UK 58%, France 62%, Italy 54% and Germany 49% of respondents.)
  • many shoppers spent more money during Prime Day 2018 vs previous years. (US 44%, UK 59%, France 58%, Italy 51% and Germany 54% of respondents.)
  • categories with the most consumers buying were consumer electronics (48% shoppers), clothing and accessories (37% shoppers), books, movies and music (34% shoppers), toys (28% shoppers).
  • 62% of shoppers compared prices with other websites. The number was higher with younger people who regularly shop online.
  • only 4 – 7% of shoppers stated they would not have bought the product at all if it was not on special during Prime Day.

Amazon also reported it had more consumers join Amazon Prime on Prime Day 2018 than on any other day in history. Prime membership of respondents did vary by country.  % of respondents with Amazon Prime membership – US 61%, UK 53%, France 40%, Italy 58% and Germany 54%.

All these numbers highlight how successful Prime Day is for Amazon. In 4 short years it has grown into a major international promotion that rivals traditional store promotions like Boxing Day and Mid Year sales. The promotion appeals to current Amazon shoppers and also entices new customers to trial the Amazon experience.

Shoppers shopping online more

The McKinsey research highlighted consumers overseas increasingly shop online:

  • the majority shoppers now use online and offline shopping equally. US 56%, UK 62%, France 63%, Italy 63% and Germany 59% of shoppers.
  • a small minority only shop offline. US 10%, UK 4%, France 6%, Italy 3% and Germany 5% of shoppers.

Logically as shoppers shop more online their awareness of and participation in online promotion days, such as Prime Day, has increased. Respondents highlighted that ‘Cyber Monday’ was the major competitor to Prime Day. For example, 65% of US respondents said that participated in Cyber Monday. ’Mega Monday’ and ‘Free Shipping Day’ are other popular promotions.

Other research in Australia, e.g. Roy Morgan, has highlighted Australian consumers also shop online more now. Major retailers, such as Coles and Woolworths, are responding by offering omni-channel retailing. In 2018, even Bunnings has decided to start selling items online. The next step could be to offer an online only promotional day …

Amazon Shoppers

The McKinsey research highlighted that Amazon shoppers are becoming increasingly brand loyal and now frequently shop at Amazon. % of respondents who are a loyal Amazon shopper or frequently shop at Amazon – US 61%, UK 71%, France 55%, Italy 74% and Germany 68%. Logically these customers, that enjoy the Amazon experience, are more likely to participate in Prime Day and provide positive feedback about the event.

The 2 key reasons Amazon shoppers spent more, on Prime Day 2018, were pricing and ranging. Simply put the large number of items offered on promotion tempted shoppers to purchase more. For customers that purchased less the main issue was price. As noted earlier, savvy online shoppers are now visiting other sites to compare prices and unless the pricing is very aggressive some shoppers will not purchase.

When reviewing purchases made on Prime Day over 50% of shoppers stated they still would have bought the item on Amazon on another day. This statistic highlights that savvy shoppers are waiting for the online sale to make their planned purchase. Historically this type of behaviour was exhibited in store with shoppers waiting for Boxing Day and Mid Year sales.

Interestingly shoppers that were new to Amazon, normally bought offline, was less impressed by the event. This suggests that Prime Day may not be the best option to convert shoppers to the Amazon experience.

Summation

This, and other research, has highlighted that Amazon has been able to develop the right range / pricing / experience overseas to create brand loyal customers. Prime Day is a promotional tool that excites current customers to spend more and also entices new customers to trial shopping with Amazon.

Shopper behaviours are changing as more shoppers are shopping online now. Online shoppers are becoming more savvy in how to shop online, including when to buy items for the best price. Amazon is aware of these changing behaviours and by meeting these shoppers evolving expectations has been able to build a successful business.

Many people (including me) have been disappointed by the launch of Amazon in Australia. Research, by Hitwise, suggests Australian shoppers still preferred the American (.com) site vs the Australian (com.au) site during Prime Day 2018. This has created an opportunity for incumbents like Harvey Norman, DJs and Woolworths to review why Amazon is successful overseas and act now to defend their current sales / share before Amazon Australia replicates the success of their overseas sites.

 

The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation by completing a contact us form.

Thank you,

Tim Bowen