Prime Day got off to a strong start – and it’s not just big-ticket items anymore
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Prime Day got off to a strong start – and it’s not just big-ticket items anymore

Ecommerce giant Amazon’s annual Prime Day celebration, where the online giant offers deep discounts to members of its Prime scheme, has become one of the retail world’s standout events. The company has been able to turn what could have been ‘just another sale’ into a dramatic event that captures attention worldwide. Partly, that’s because of the company’s scope – the figures around Prime Day sales are always incredible. And partly, it’s because Prime Day is only half about shifting merchandise… it’s also about tempting Amazon users to take the plunge and become Prime members. When they do that, they become far more engaged with the company, and start spending at more money more often on Amazon’s platform.

Amazon’s share price has appreciated by 37% so far this year

Amazon July 16

Source: Yahoo Finance

Last October, a report from Consumer Intelligence Research Partners pointed out that Prime members spend, on average, $1,400 per year on Amazon. That compares to a figure of $600 for Amazon users that haven’t yet taken the plunge. In other words: as wonderful as the billions in sales that Amazon will undoubtedly pull in this Prime Day are, they’re not the most compelling thing about the holiday. The real money is in converting people to a higher tier engagement, effectively doubling the long-term profits reaped from their custom.

This year, Prime Day got off to a great start – but increasingly, the type of products consumers are buying from Amazon are diversifying. There was a time not too long ago when Prime Day sales were a shoe-in for big ticket electronic items and the like. This year, reports suggest early shoppers were stocking up on non-perishable grocery items like crisps (potato chips if you’re in the US), toilet paper, and crackers. This shows that Amazon’s making clear headway in its bid to move into a space occupied by names like Costco and Walmart, as consumers get used to the idea that some of their groceries can be ordered every month online.

As figures come out over the next few weeks, we’ll keep you updated on this year’s Prime Day and what it means for the company.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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