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Tech Bytes: Three Lessons from Amazon Prime Day

7/20/2015

Now that the dust is clearing from the Amazon Prime Day sales “holiday,” we can take a look back at this unique retail event, which livened up the typical lull of mid-summer. Let’s review three initial lessons the retail industry can learn from what some observers called the “summer Black Friday.”



Every Day can be a Holiday

Creating a major new holiday sales event may be unprecedented in the U.S., but it has happened elsewhere. Most notably, Chinese e-commerce giant Alibaba formally created the November 11 Singles’ Day holiday in 2009, based on informal college student celebrations from the 1990s. Singles’ Day is now the biggest sales event in China, dwarfing the traditional end-of-year holidays.



Social media allows retailers to instantly promote special events and deals to millions or even billions of consumers, and also enables viral promotions by consumers themselves. Thus retailers can digitally create a “holiday” to boost short-term sales beyond what might be produced by a more conventional promotional event.



In Amazon’s case, Channel Advisor reports that Prime Day sales in the U.S. rose 93% compared to the same day of the week a year earlier, and reached 97% of the sales total for Black Friday 2014. And Amazon reported selling 34.4 million items across all participating countries at an order rate of 398 units per second, breaking all previous Black Friday deal velocity records. Amazon has already said it will celebrate Prime Day next year.



Smaller retailers may not be able to drive such a dramatic sales increase with a digitally promoted holiday, but could certainly bump up volumes as part of the celebration.



Plan Your Party

Not all of the news coming out of Amazon Prime Day was positive. Reports abounded of items like high-priced Kate Spade designer handbags selling out within seconds, as well as gluts of offers on less desirable items like socks and Adam Sandler DVDs. This suggests that despite success in boosting sales and enrollment in Amazon Prime (at least on a 30-day trial basis). Amazon may not have done as much research on consumer demand as it could have.



And the same social media which helped spread the news of Amazon Prime Day also spread the news of customer frustration. According to data from Adobe, 50% of social sentiment surrounding the event in the U.S. expressed sadness, with only 23% expressing joy. Better advance planning on inventory and merchandising might have created a more joyous holiday in the social media sphere.



Prepare for Crashers

In a complete non-coincidence, Wal-Mart kicked off an indefinite-length online “sales holiday” of its own Monday, July 13, offering thousands of deep discounts on its e-commerce site and a lower minimum purchase to qualify for free shipping.



Just in case anyone thought the timing was innocuous, promotional messaging included references to not having to pay any money or join any programs to receive the special offers (Amazon Prime normally has an annual $99 membership fee). Wal-Mart even promised hourly price adjustments to ensure its online prices would meet or beat any discount on Amazon.



In a hyperconnected world, your competitors can quickly decide to crash your new sales holiday party and spread the word if they so desire. And automated competitive pricing tools and online merchandising systems allow promotional gimmicks like Wal-Mart’s hourly price guarantee.



Wal-Mart so far hasn’t commented on how much its sales have increased, but social media buzz reportedly rose for the mass merchant by about the same amount as it did for Amazon. So if you decide to celebrate a new holiday, be prepared for crashers.


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