Amazon’s Prime Day Ups eCommerce Ante, WalMart Responds
Millions of consumers are buzzing about this week’s shopping holiday – it’s the most wonderful time of the year! Wait, what!? Yes, we know it’s July, not November.
Amazon Prime Day – July 15, 2015
Amazon surprised just about everyone with the announcement of Prime Day, a one-day shopping event on Wednesday, July 15, 2015. Prime Day is Amazon’s take on a Black Friday-style shopping extravaganza. Greg Greeley, Vice President at Amazon, has boasts, “More deals than Black Friday”, and that the event will be, “One of the biggest deal extravaganzas in the world.”
There is one catch. Prime Day is exclusively for members of the company’s premium service, and it represents a clear strategic campaign to add new Prime users. Amazon may lose money offering up major bargains Wednesday, but the retail giant hopes to gain long-term benefits from a greatly expanded Prime user base. On average, Amazon Prime users spend two times more than non-members.
Wal-Mart Enters the Fray
Not to be outdone, mega-retailer Wal-Mart quickly countered and announced it’s own behemoth online sales event. Wal-Mart plans to unveil more than 2,000 new online “rollbacks” across an array of consumer products. Unlike Prime Day, the sales will last 90 days and are open to all online shoppers (no membership required), a point Wal-Mart has made very obvious. Moreover, the company will reduce the minumum order threshold for free shipping from $50 to $35.
Is this the future of eCommerce?
The global eCommerce market is growing at a rapid pace and total sales are expected to hit $1.5 trillion this year. Competition for online shoppers between competitors is fiercer than ever. This week’s developments reveal that both Amazon and Wal-Mart are willing and able to launch dramatic campaigns to grab marketshare, often at short notice (in Wal-Mart’s case).
There are also strategic long-term element at play. Prime Day is a campaign to funnel excited bargain shoppers towards annual membership subscriptions. Amazon understands that a larger Prime user base is key to drive long-term eCommerce sales. Wal-Mart’s approach quick response demonstrates an impressive flexibility to mitigate the impact of Prime Day on short notice, and they are able to extend the deal offerings for a longer period.
Everyday is Black Friday
It is probably safe to say that we will see these large scale online sale events with more frequency. The online retail calendar is no longer be dominated Black Friday alone. In fact, Black Friday and Cyber Monday have become stretched out to include week after week of holiday sale specials. Total sales on Black Friday and Cyber Monday actually flattened out in 2014, however, numbers for the greater holiday period increased.
In the current eCommerce environment, everyday has the potential to be a ‘Black Friday’. Preparation for Black Friday previously took months to properly handle content, distribution, scalability (traffic) and cybersecurity concerns. It has to be a year long focus now. Holiday-level traffic surges can occur at anytime and retailers must be prepared, and the best retailers fail to properly bake scalability into their platforms. Target’s Lily Pulitzer disaster this spring is the perfect example. The major lesson for eCommerce professionals? Be ready at all times – things are heating up in the eCommerce world.