Amazon Prime Day Wars: Do Competing Sales Really Work?

In just four years, Amazon has turned Prime Day into an industrywide shopping event that no one – especially its biggest rivals — can ignore.

On Monday, just as the e-commerce giant began its 48-hour discount bonanza, Target kicked off its Deal Days event, eBay launched its Crash Sale and Walmart began The Big Save — all designed to feed off the buzz generated by Amazon’s members-only sale. As the name of eBay’s event hints at, some of the halo effect that other retailers have experienced in the past has been the product of tech problems on Amazon’s end; the traffic surge on Prime Day has caused website glitches every year since the company started the holiday in 2015.

Now, though, competitors want to do more than just draw thwarted Amazon customers. They also want to be the first stop for some bargain hunters, which means slashing prices aggressively on certain items. According to AArete, a global consulting firm, the number of retailers offering mid-July deals has increased from 20 to 25 in 2016 to over 250 this year.

“Prime Day has become a retail holiday and its expansion demonstrates the influence it is having on retail overall,” said Marshal Cohen, chief industry advisor at The NPD Group, a market research firm. “Retailers are smart to develop competitive plans of their own, but Prime Day is still driven by Amazon.”

Last year, major retailers — those with annual revenue of at least $1 billion — saw a 54% lift in sales on Prime Day as compared with a typical Tuesday, according to Adobe Digital Insights. This year the analytics firm forecasts a surge of up to 79%. After the 2018 event, Target told investors that it was its highest online sales day so far in 2018 (though it would later be topped by Black Friday).

Still, Amazon stands to benefit the most from its midsummer sales holiday. According to NPD research, more than two-thirds of Amazon Prime members — a group that now numbers more than 100 million in the U.S. alone — plan to shop on the site during Prime Day, while only 15% plan to shop with other retailers as well. Even technical difficulties didn’t seem to damage Amazon’s sales last year: It sold 100 million products worldwide, and the sale brought in an estimated $3.5 billion in revenue.

Competitors, then, are duking it out for the same share of consumers’ wallets, and settling for lower profits in exchange for a boost in traffic and sales.

“One separating factor for many retailers is how they can use their brick-and-mortar footprint to separate their offerings from Amazon and bolster their execution and offering across all channels of retailers,” said Tyler Higgins, director of the retail practice at AArete. “While Prime Day is still an e-commerce-driven event, creative retailers will try to figure out how to respond online and manage foot traffic during these two days or even two weeks.”

The downside of Prime Day falling on a random day (or rather, set of days) in July, however, is that unlike sales tied to national holidays like Thanksgiving or the Fourth of July, people are actually at work. Here, Target has a distinct advantage: more than 80% of its online orders are now fulfilled by stores, which reduces its logistics costs significantly and allows customers to pickup their purchases in store or have them delivered the same day.

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