Amazon's 'Prime Day' Is Looking Like a Win for WalMart
Amazon, a brand traditionally built on convenience and trust, opted to wade into the discount deep end of the pool, attempting to tread water with discount whale Wal-Mart, which vowed to match Amazon’s discounts with “rollbacks” of their own.
Amazon teased savings on products ranging from appliances to electronics, opting to stagger deals to “make sure the fun will last through tonight,” according to the ecommerce giant.
Despite claiming that Prime Day had quickly surpassed 2014’s Black Friday by “peak order rates,” a measurement of consumer browse-to-checkout time, the event certainly had widespread downsides for many consumers.
Sound surface strategy.
On the surface, Amazon’s strategy was sound, giving the site center stage in an otherwise quiet retail period. They weren’t competing with holidays or traditional sales events, allowing them to receive focus from both the media and consumers. Both parties seemed to have their attention squarely on the inaugural celebration.
Amazon’s approach seemed a well-positioned sales boost for the online leader, and given that deals were exclusive to Prime members, a potential membership driver for their Prime program.
The major risk Amazon assumed was focusing on discount drivers that strayed from their core foundation built largely on convenience and trust. They went toe-to-toe with the discount juggernaut, Wal-Mart, on the field it has clearly mastered.
To comparatively track the efficacy of each retailer, Yahoo! Finance opted to grade each on their Prime Day offers, giving higher marks to Wal-Mart for name-brand offers, relevant deals and shopping experience.
Graphic credit: Yahoo! Finance
Amazon’s “underwhelming deals and odd ball offerings” were not just the opinion of Yahoo! Finance, but also shared by myriad of consumers.
We finally know where all that crap from SkyMall ended up... #PrimeDay— Joshua Decker (@jdbt) July 15, 2015
you know a sale blows when you're seriously considering buying compression socks just because they're the best thing offered #primedayfail— Sanjana Seelam (@SanjanaSeelam) July 15, 2015
The “Prime” issue for Amazon is the widespread consumer perception that the brand didn't live up to the promise of “more deals than Black Friday,” at least in terms of quality and relevance. In fact, a whirlwind of criticism swept across social media channels highlighted with a myriad of hashtags from displeased Amazon shoppers ranging from #AmazonFail and #PrimeDayFail to #unhappyPrimeDay and #AmazonSucks. Consumers also resorted to calling it “April Fools Day in July” in lieu of “Black Friday in July.”
The criticism of Amazon largely stems from the apparently sporadic offers and limited quantities of their “lightening deals,” which ended up turning away many disappointed consumers, resulting in this unanticipated blowback from first consumers, then the media.
News outlets including CNNMoney, USA Today, Time, Gizmodo and even E! Online all featured articles on Amazon’s “fail” with “mediocre deals.”
Payback vs. Blowback.
On the whole, Amazon’s Prime Day event will largely be billed internally as a success for the company thanks to boosted sales and an uptick in Prime memberships. The question is, at what expense?
While some analysts have pointed to the stalling of Prime memberships in recent years, Prime Day arguably sparked resurgence with its membership boosted to 44 million, up three million during Q2 2015, according to CIRP. It’s debatable if this can be fully attributed to Prime Day, but one has to assume the event played a role, at least with the latter potion of the quarter.
In terms of financial growth, Prime Day saw a reported boost in sales upwards of 80 percent in certain U.S. regions, including New York, and 40 percent in pockets across Europe, according to ChannelAdvisor. It will be interesting to see how the sales numbers look across the entire business.
While these significant upticks are an immediate boon for Amazon, the brand also has to cope with the negative blowback from consumers, the media and the growing perception that questions the overall value delivered by the Prime program.
Drifting away from Amazon’s core competency to focus squarely on discounts is a strategy that will be questioned by many, particularly given the array of offers that were questionable in both value and relevance, from beer coolies to shoehorns. It’s an approach that could end up alienating a segment of its core base of loyal customers. What’s worse is that it also arguably gave an opportunity for Wal-Mart, a major competitor, to steal the spotlight by beating Amazon squarely on its own discount turf.
Amazon will no doubt be fine in the long run, but Prime Day could end up damaging the Amazon brand in certain consumer circles and delivering a perception of questionable value, accurate or not, in the market.
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