Amazon Prime Day Promotion Boosts Sales as Consumers Squawk

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Amazon.com Inc.’s inaugural Prime Day event offering reduced prices on television sets, lawnmowers and other goods helped the online retailer increase sales even as the promotion was skewered by customers on social media.

Amazon’s daily sales in the U.S. were up around 80 percent as of noon Wednesday in New York, compared with a year earlier, according to ChannelAdvisor Corp. Sales in Europe rose about 40 percent, according to the firm, which helps merchants sell on marketplaces including Amazon. The data reflect transactions for ChannelAdvisor’s 2,800 customers and don’t include purchases from Amazon’s own inventory.

Amazon held the event to coincide with the company’s 20th anniversary and lead into the back-to-school shopping season. It featured deals exclusively for Amazon Prime members, who pay $99 a year for delivery discounts, video and movie streaming and other benefits. Nonmembers could sign up for a free 30-day trial to participate in the promotion.

The promotion was successful in the U.S. because it tripled Amazon’s normal growth rate of about 25 percent, said Scot Wingo, chairman of ChannelAdvisor.

“We are seeing some negative social media comments as the deals are selling out very quickly, and that can leave buyers frustrated when a lightening deal they are excited about goes out of stock,” Wingo said.

Peak Order Rates

The Seattle-based retailer said on its Facebook page that “peak order rates” surpassed those of Black Friday last year, as the company ripped through 1,200 televisions priced at $999 in less than 10 minutes. Customers purchased “tens of thousands” of Fire TV sticks, 35,000 Lord of the Rings Blu-Ray sets, 28,0000 Rubbermaid kitchenware sets and 4,000 Echo devices, the company said.

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Amazon will release more information on Prime Day as soon as next week, said Julie Law, a spokeswoman.

Comments on social media generally weighed toward describing Prime Day as a bust, with Twitter posts such as “Happy Prime Day? More like #crappyprimeday.” On Amazon’s Facebook page, people criticized lackluster deals, shifting prices and technical glitches.

Some shoppers were likely turned off by Amazon featuring items like vitamins and cleaning products rather than top-selling televisions, said Traci Gregorski, vice president of Market Track, which monitors data on advertising, pricing and promotions. The risk is that future promotions may fall flat.

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Raising Expectations

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“When you make statements like deals better than Black Friday, people’s expectations are they will be seeing things similar to the types of items featured on Black Friday,” Gregorski said.

The event is targeted at Prime members, who spend substantially more than other consumers on the site, as Amazon seeks to build that customer base in the face of increased competition. Wal-Mart Stores Inc. is developing a delivery subscription service that will cost $50 a year. The retailer responded to Prime Day with its own sale and noted that its promotion is available without paying for membership. Jet.com Inc., a startup, is scheduled to begin an online delivery service next week and is offering a free, introductory six-month membership.

Prime Challenges

“Amazon is facing a lot of challenges not just to its business model as a whole, but to Prime membership as well, and they want to get in front of it,” said Yoram Wurmser, a retail analyst at EMarketer.

Amazon had 44 million Prime members in the U.S. at the end of June, up 57 percent from a year earlier, according to an estimate from Consumer Intelligence Research Partners. Prime members spend an average of $1,200 a year, 71 percent more than nonmembers, according to the research firm. Amazon doesn’t disclose how many households have Prime memberships.

Online purchases in the U.S. will reach $56.4 billion in July and August, up 14 percent from a year earlier, according to EMarketer.

Prime Day’s success will be measured less in back-to-school purchases than through winning new and loyal Prime members, said Keith Anderson, vice president of strategy and insights at Profitero Inc., an e-commerce research firm.

“The lifetime value of a Prime member is profound,” he said. “There is a massive annuity value in the average new household.”

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