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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Amazon Prime Day retail effect set to be felt well beyond its own website

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The Prime Day effect is set to be felt by retailers well beyond Amazon
The Prime Day effect is set to be felt by retailers well beyond Amazon

It’s not just Amazon that is set to feel the benefit of its Prime Day event when it kicks off on Monday. Retailers from eBay to Currys PC World and well beyond have been hoping to catch shoppers in a spending mood. Analysis from LovetheSales.com suggests there are more discounts on electricals now than there were on Black Friday.

 

Amazon Prime Day launches at midday on Monday July 16 and runs until midnight of the following day. The 36-hour sale is exclusive to members of the Amazon Prime membership scheme in 17 countries. Last year UK shoppers alone bought five million items. This year’s total is likely to exceed that, with a million deals set to be on offer. Early insights show discounts of up to 55% on branded luggage, ahead of the summer holiday season, 40% on garden furniture, and 30% on technology and fashion brands. Shoppers will also be able to get Amazon own-brand Kindle and Fire Tablets for less.

 

The lead up to what is effectively Amazon’s summer sale starts the day before in markets around the world. In London, Take That is set to headline an Unbox Prime Day event that also features a family screening of Paddington 2. Amazon Prime Day was the sixth biggest shopping day in the UK in 2015, according to SimilarWeb analysis, and it’s only got bigger since then.

 

The Prime Day opportunity for other retailers

But it seems the day doesn’t just spark shopping on Amazon: other retailers benefit too. The event appears to put shoppers in a buying mindset that extends to other retailers as well, especially when they are not members of Amazon Prime. It’s easy for customers to buy from alternative websites when many other retailers also have summer clearance events. eBay will launch its Sale Day in direct competition with Amazon on Tuesday July 17. The ongoing sale at Currys.co.uk is slated to end that day, while clearance events are also in full swing at retailers from John Lewis to Marks & Spencer.

 

Discount aggregator LovetheSales.com says retailers are fighting back, with an “unprecedented” rise in the overall volume of discounted products that are now available to consumers. It says there are 30% more products available to consumer sthan usual at this time of year. “Data from July 2018 is showing a significant shift from the norm as retailers look to take the fight to Amazon,” says Stuart McClure, LovetheSales.com founder and chief marketing officer. The fact that there are more discounts on electricals now than there were during the last Black Friday is staggering. Although Prime Day is still in its infancy, it’s quickly gathering pace and becoming one of the biggest shopping events of the year. Unlike Black Friday, though, where retailers took time to catch up and see Amazon’s game, retailers are now on the front foot and are trying to beat Amazon to the punch.”

 

Figures from across the CJ Affiliate network suggest that between 2016 and 2017, retailers saw their revenue grow by 64% year-on-year, over the two days of Prime Day, while retail sales grew by 38%. That’s well ahead of the 15% sales rise seen on a non-Prime Day July day.

 

“We’ve seen the effects of Black Friday and Cyber Monday but now retailers and marketers should also be marking Prime Day in their calendars, preparing deals to take advantage of the Amazon-inspired shopping phenomenon,” says Jules Bazley, regional vice president, CJ Affiliate.

 

“Throughout July, many brands will hold their summer sales, but these figures show that it’s on Prime Day that they’re seeing the biggest returns, and if 2018 follows the growth of 2016 and 2017 this is only set to increase.”

 

CJ Affiliate says that its figures show home and garden products tend to be the most popular along with products for pets.

 

Narvar chief executive Amit Sharma suggests voice commerce will be big for Amazon this year, while it will also looking to boost sign-ups to its grocery delivery service. “Amazon continues to raise the bar for customer experience and meeting consumer expectations,” he said. “As a result, retailers today must be focused on building long-term customer loyalty, but that doesn’t necessarily mean offering discounts and points programmes. Inspiring loyalty involves communicating proactively and transparently, for instance about delivery updates and the status of returns, and investing in interactive and personalised experiences that customers find valuable.” He says that while Amazon communicates delivery well, it is harder for it to compete on personalisation.

 

Delivering the promise

 

One of Amazon’s main points of differentiation is its delivery operation. It stands out for its ability to deliver items fast, via its Prime Now service that enables delivery within an hour, or at a specified time, and in a convenient way, through collection, and a range of delivery options that include free next-day delivery for Prime members.

 

Matthew Robertson, co-chief executive of delivery software company NetDespatch, says Prime Day is an exercise in building brand awareness, and that means everything has to be right. “Prime’s USP is its superior delivery offering and Amazon needs to secure its territory,” he says adding that the more it sells, the greater the risk of failed deliveries.

 

“Even without the added pressure of Prime Day, delivery is facing serious capacity issues,” adds Robertson. “A shortage of delivery drivers is causing major problems in the final mile, the most difficult and costly element of the parcel journey. Job postings for delivery drivers on indeed.com are up 200% since 2015 and the transport industry cites driver shortages as its leading concern in 2018. With so much demand for drivers, experienced workers can afford to be choosy and opt for higher salaried roles, leaving many positions going unfilled.

 

“With a shortage of skilled drivers, delivery networks regularly depend on gig economy workers to pick up excess demand. Amazon’s Flex scheme, which enables anyone with a vehicle to carry out deliveries for a set hourly rate, is an example of this. However, by definition these workers want to pick and choose when and how much they work and this doesn’t always coincide with peak delivery periods.”

 

Amazon is an Elite retailer in IRUK Top500 research.

 

Image courtesy of Amazon

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