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Amazon Devices, Grocery Perks Drive Prime Day 2018 Customer Retention Strategy Featured

  • Written by  Glenn Taylor
Amazon Devices, Grocery Perks Drive Prime Day 2018 Customer Retention Strategy

As Prime Day concluded at 12 midnight PT on July 17, Amazon revealed that it generated more sign-ups for Prime on July 16 than any previous day in Amazon history, with shoppers purchasing more than 100 million products during the 36-hour shopping event. In addition to the influx of new Prime sign-ups, Amazon also focused on its existing Prime members, with 12-hour early access to deals on its Echo and Fire devices, as well as unique offers to Whole Foods shoppers.

The e-Commerce giant did not report Prime Day sales numbers, which were anticipated to reach a record $3.4 billion, but dubbed it “the biggest shopping event in Amazon’s history,” with its own devices positioned as the event’s centerpiece. Even with site outages dispersed throughout the first day, Amazon still managed to boost sales 89% during the first 12 hours, according to Feedvisor.

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“What was a little different this time, by design for Amazon, is that the goal was to recruit people into the Prime ecosystem, rather than into Prime membership,” said Bryan Gildenberg, Chief Knowledge Officer, Retail at Kantar Consulting in an interview with Retail TouchPoints. “Originally Prime Day was a recruiting tool for Prime, but with 45% of American households and 100 million people around the world already signed up as members,” the strategy was adjusted.

To improve the relationship with Prime members, Amazon is pushing to accelerate user adoption of its Alexa-powered smart home devices, and the strategy appears to be working. Amazon reported that its best worldwide sellers included the Fire TV Stick with Alexa Voice Remote and the Echo Dot, both of which were discounted. The Echo Look was discounted by 50% during Prime Day, while the Echo Dot had a 40% discount and the company’s flagship Echo was discounted 30%.

“As we expected, proprietary devices were heavily discounted, which will ultimately result in an increase in Prime membership due to the vast content ecosystem that these devices ‘unlock’, which given the roughly 2X spending patterns exhibited by Prime members, is an almost immediate benefit to Amazon’s top-line,” said Charlie O’Shea, Lead Retail Analyst at Moody’s.

Beyond technology, Amazon clearly sought to push grocery as part of its plan to extend the deliver more value proposition to consumers. Amazon’s first Prime Day after the Whole Foods acquisition touted the grocer’s deals throughout the week and offered shoppers $10 to spend on Amazon if they spent $10 on groceries. 

“The fresh market is tough to crack,” said Jess Hilton, VP of Client Partnerships at Ansira in an interview with Retail TouchPoints. “You have to have it at a local level, and if you think back to five years ago, grocery was all fulfillment center type deliveries. Fresh wasn’t even an option. As they tackled this market and have been able to get frozen foods or dairy or anything that has to be freshly delivered, it’s welcoming that they’re doing it with a store that thrives on local and organic. It really helps cement Amazon’s presence in local markets, and in a way it makes them feel like a small-town company despite their size.”

Target, Other Large Retailers Increase Sales 54% On Prime Day, But BTS Is The Next Challenge

While Amazon powered its Prime Day through with promotions and sales, competing retailers held their own sales to attract the online spender. Target, which promoted a “One-Day Sale” on July 17, generated its highest single day of web site traffic and sales in 2018, according to a company statement. Target reported that 90% of the orders placed online during Prime Day will be fulfilled from its stores, as the company has been working to bolster its supply chain and ship items to customers faster.

In total, large retailers with more than $1 billion in annual revenue saw a 54% increase in sales versus an average Tuesday, while niche retailers with less than $5 million in sales saw an 18% decrease in online sales, according to Adobe Digital Insights. But while the major retailers experienced a revenue boom from Prime Day sales, Prime Day’s mid-July positioning could potentially affect their sales during the back-to-school (BTS) season in August, particularly if consumers started buying BTS supplies during the event.

“This is the first year that the retail community felt like they had to have a strategy for Prime Day,” Gildenberg said. “For retailers where BTS is a big deal, if I’m Best Buy or even Staples, they should keep themselves involved in this conversation. If Amazon takes too much of the BTS wallet in the middle of July, that will hurt them down the road. Imagine I’m Kohl’s and a potential customer spends $500 on Prime Day on a bunch electronics for their kids, unless they’re wealthy, that’s going to cut into what they’re going to buy at Kohl’s for BTS. This war for wallet share is important as Prime becomes a staple part of the American family’s shopping experience.”

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