Prime Day: It's Not About the Discounts

Amazon leveraged Prime Day to deepen its relationship with members — highlighting new functionalities available within its mobile application and encouraging Alexa users to interact with the voice platform — while brands and rival retailers grappled for their share of the spending.THE BASICSPrime Day officially kicked off at 3 p.m. EST on July 16 and ran through July 17 for a total of 36 hours, adding an extra six hours to last year's sale. Deals leveraging the promotion's halo effect started as early as July 3, many of them on Amazon devices and other private label merchandise.Early reports indicate sales were on track to break records despite atypical site glitches caused by overwhelming demand. Total cumulative sales for the first 12 hours of Prime Day were up 89% year over year, New York-based analytics company Feedvisor indicated.Yet the effort is not just a sales bonanza intended to push product; it is a celebration of Prime membership staged to deepen the company's relationship with current members and to draw new shoppers to the "Prime lifestyle." Only members can take advantage of Prime Day deals and incentives, helping Amazon strategically grow membership year over year.To that end, the retailer's promotional strategy around the event included shipping huge boxes bearing its signature smile logo to major cities worldwide. The containers hosted "surprise entertainment events" showcasing the benefits of membership, according to reports.Among other inventive out-of-home marketing tactics, Amazon additionally set up virtual reality kiosks in 10 shopping malls in India. The kiosks provided Prime Day previews enabled by Oculus Rift, beginning with a balloon ride and tour of the many values that would be available and then letting users walk through rooms that reflect current Amazon store sections and handle products in full 3D, VentureBeat reported. (See video below.)The company also invested heavily in demand generation via TV ads, radio ads, social media and other online promotions for the event.AMAZON APP GIVEAWAYAmazon offered a slew of daily single-product giveaways leading up to and during the event, leveraging the promotions to draw attention to the camera functionalities available via its mobile app. Members had to watch videos describing the benefits of "AR view" to enter some of the sweepstakes. (See video below.) They also were invited to try out varying functionalities – AR view, product camera search, barcode scanner and package x-ray — via the app to earn an extra $5 off select Prime Day deals.HOME SMART HOME SWEEPSPoised to reach a new milestone in coversational commerce, Amazon also staged a central "Home Smart Home" sweeps highlighting Alexa and various compatible devices. The sweeps awarded a grand-prize package comprising a full suite of the devices, a Lexus ES with Alexa capability, a check for $52,000 and a trip to Seattle. It also doled out 10 first-prize starter packs comprising an Amazon Echo, Echo Dot and Kasa Smart Wi-Fi LED light bulb. Prime members could enter up to 10 times from July 3-15 by watching videos on Lexus and Alexa; visiting the amazon.com Prime Day, Alexa, smart home, Prime, Amazon shopping app or Echo page for one minute; downloading the Amazon app or enabling push notifications; interacting with Alexa using specific utterances; or by allowing delivery notifications on an Alexa-enabled device. Skokie, IL-based Promotion Activators handled.LIGHTNING DEALSPrime Day additionally is increasingly a way for Amazon to squeeze more money out of sellers. According to reports, Amazon hiked fees to run Lightning Deals during the event, asking third-party sellers for $750 per Lightning Deal, up from $500 in 2017, CNBC reported. Amazon did not charge any extra fees in 2015 and 2016 beyond the typical $150 cost. First-party sellers were charged the usual $500 fee and didn't have restrictions on the types of products that could participate.Lightning Deals are daily promotions that run year round on the amazon.com "Today's Deals" page to offer a limited quantity of merchandise for a short period of time at a discount; they become exclusive to members on Prime Day and are highlighted in short intervals throughout the day.Amazon also encouraged sellers to buy more ads on Prime Day, indicating that ads are more effective during the holiday with up to 300% increase in ad-attributed sales and 200% growth in ad impressions, according to the CNBC report, which cited Amazon marketing documents.In addition to adding to Amazon's bottom line, the move served to filter out products that wouldn't be popular enough to justify the cost. The deals have received poor reviews in the past due to the odd variety of merchandise offered.CPG BRANDSDespite increasing costs, many brands made an effort to stand out in the promotional melee. Among the CPG participants:General Mills is receiving special treatment for most of the month as the top-selling brand on Amazon Prime Pantry. From July 12-31, members who spend $40 via the service can add a free family-size box of Honey Nut Cheerios to their cart. They also receive $10 off their orders, according to MediaPost. Beginning July 16, the offer also extended to Amazon Fresh.PepsiCo's Mountain Dew dangled up to 30% off its beverages (as well as a variety pack combining Mountain Dew Ice with PepsiCo's Doritos Blaze). The brand detailed the deals in a July 16 email to subscribers, directing them to its revamped Amazon store.Procter & Gamble emailed members of its P&G Everyday online community on July 14 to announce that "Prime Day savings are already here." The missive promised 20% off to shoppers who "Subscribe & Save" on one laundry item, and another 15% off when they "Subscribe & Save" to at least five products. (Last year, P&G's Pampers took the Prime Day spotlight with a cause effort.)WHOLE FOODS MARKETAmazon this year is integrated Whole Foods into its Prime Day strategy, giving the promotion a brick-and-mortar presence for the first time. Click here to get the scoop.OTHER RETAILERSThe halo effect of Prime Day has opened up opportunities for other retailers to jump on the bandwagon. Petco this year scheduled its annual "Black Friday in July" e-commerce sale to coincide with Amazon's promotion, and many other traditional retailers that have an online channel also executed their own sales to capture Prime Day wallet share. See Related Updates below for details.Online rival eBay also went into attack mode, deploying digital spots aimed squarely at Amazon by offering more than 100 deals priced at $119 (including shipping) – the cost of an annual Prime membership – and touting that its products don’t require a membership.According to the AlixPartners 2018 Amazon Prime Day Consumer Survey and Outlook, 39% of consumer planned to look for deals at other retailers this year. Last year, 17% of Prime Day customers spent more in stores, 16% spent more on traditional retailers' e-commerce sites, and 23% spent more with online-only retailers, according to The 2018 Back-to-School Spend Report from Cardlytics.

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