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July 17, 2015Blog

Christmas in July? Not quite for Amazon Prime Members

Christmas in July? Not quite for Amazon Prime Members

Lessons Learned for Marketers from Prime Day by Shawna Thayer, Senior Director at Analytic Partners

The Hype of Prime Day

On Wednesday, Amazon launched “Prime Day,” promoted as a sale event bigger than Black Friday to celebrate their 20th anniversary and the loyalty of their Prime member customers. Amazon advertised for weeks leading up to the event, promising deep discounts and encouraging shoppers to sign up from Prime Membership in advance.

I am an avid Amazon Prime member – I purchase everything from toothpaste to TVs on Amazon. I am also a big advocate for Amazon, sharing stories with my friends and family on how Amazon saved me time last Christmas. Prime Day should have been a great event for a customer like me, so why do I feel so cheated?

The Reality of Prime Day

Promotion Relevancy: The products featured as part of this sale were not relevant for me. Given this was an event exclusively for Prime Members, I assumed that Amazon was going to take their product recommendations to the next level. Maybe they would reward me with great deals on a few items in my Wishlist. Or maybe they would give me a summer break on camping accessories for the tent I purchased on Amazon a few weeks ago. Nope – the products on sale had nothing to do with me personally, but were sent out to the masses. Sorry, Amazon, but I have little use for a Radio Shack VHS tape rewinder or krill oil nutritional supplements or a 55-gallon barrel of lubricant branded “Passion” (that’s a lot of passion).

Promotion Timing: The whole reason I enjoy online shopping is because I can do the shopping when it is convenient for my schedule. Like many of Amazon’s customers, I work full-time and do not sit at my computer scanning deals all day. However, on Prime Day, Amazon offered “Lightning Deals” during extremely limited expiration windows; I missed out on most promoted items while at work. When I did log in to shop that evening, I put a promoted item in my cart and was distracted by a phone call. Ten minutes later, I came back to a popup message that the deal in my cart had expired. Too late, so sad, not today.

I’m not alone in this reality — although early estimates suggest that sales skyrocketed on the day of the event, the negative backlash on social media continues to grow. Customers like me are disappointed in the products offered as well as the extreme expiration deadlines, and we are not shy to discuss it.

Lessons Learned for Marketers

The long-term impact of this sale remains unknown. It’s possible that Amazon’s push for new Prime Membership subscriptions alone was enough to make this event a business success. It’s also possible that the negative Word-of-Mouth associated with this event could hamper their brand image. In either case, there is clearly room for improvement by leveraging fundamental retail best practices to inform the next promotional event.

1) Target your Audience

Customers expect more than a one-size-fits-all approach to promotions, especially when participating in a membership program. With this expectation in mind, retailers must leverage customer-level analytics to ensure that the right promotion gets to the right customer at the right time. In our experience, retailers who keep customer insights at the forefront of business decisions and focus their marketing, merchandising, and operational efforts on satisfying the needs of their most valuable customers, drive both short-term sales and long-term loyalty.

2) Experience Matters

Retailers need to evaluate the customer experience when developing new marketing programs. Our work regarding the influence of Word-of-Mouth on business outcomes suggests that negative customer sentiment is 2x more influential than positive discussion; the negative reaction in social media may be a challenge for Amazon. Meanwhile, Wal-Mart stole some of the Prime Day opportunity, offering easy “Rollback” deals on mainstream products, at significant discounts, all at once, for the next 90 days. Wal-Mart results have not been announced yet, but sources note that traffic to Walmart.com was particularly heavy that morning.

Given their history, this one misstep by Amazon will likely have little long-term impact on their business growth. However, we are certain that the lessons learned from this experiment will inform Amazon competitors about the importance of targeting and customer experience as they compete for shopper dollars.

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