Is Amazon still in Prime Position?
A view from Rob Sellers

Is Amazon still in Prime Position?

Today sees Amazon activate the second Prime Day. Not a dystopian elitist celebration of a master-race, but a 24-hour period in which Amazon Prime members can grab one of the site's 100,000 special deals, writes Rob Sellers, managing director, Grey Shopper London.

Amazon Prime encourages shoppers to sign up (for the cost of £79 a year) to get a raft of benefits ranging from faster delivery time, access to Amazon’s content platforms and online storage.

The first Prime Day ran last year as a celebration of Amazon’s 20th birthday, and was so successful that it looks like it will become an annual event.

But does this PR spin mask the dot com giant’s true priorities, namely driving subscriptions and reducing their exposure to stock levels of their own soon-to-be-obsolete tech products?

Retail and marketing experts will be watching Prime Day closely to see if this is a trend towards deep and drastic retail sales events, such as Black Friday, that prey on shoppers’ fear of missing out.

Flash sales and discounting "moments" will be advertised throughout the day, turning price promotions into a form of entertainment. As Amazon is now one of the western world’s biggest retailers, are we supposed to look at this and apply this thinking to our own retail marketing strategies?

Maybe. But for those of us who now need to understand Amazon in order to help our clients understand a fundamental sales channel, the existence and nature of Prime Day might tell us more about the retailer than it does about the attitudes and behaviours of Amazon shoppers.

We talk about Amazon as a retailer. But the whole premise of Prime appears to be at odds with a core retail purpose. Whereas other store schemes reward shoppers for loyalty, Amazon charges people for services they may or may not leverage.

And those charges are consistent, and mainly cover non-physical products (such as music and film content) where a cost-base can be controlled.

In addition, Prime customers will probably be more valuable spend more and buy more frequently than regular Amazon shoppers; conscious of getting their "money’s worth" for their subscription.

In April, Amazon posted their fourth straight quarter of profit – a word barely associated with the company in the previous 10 years.

Amazon has shifted from being the virtual book and record store of the 1990’s to being a 21st Century provider of data services, in much the same way that Apple sells so much more than personal computers. So Prime Day, like so much of Amazon’s tactical communication, is about subscriber acquisition, rather than typical retailer sales behaviour.

Another evolution in Amazon’s business in that over time has to become a tech hardware manufacturer. Again, taking on Apple, this time in the tablet and handset business – with mixed success. Indications are suggesting many of the deals available on Prime Day will simply be significant discounts on Amazon-owned products such as Fire tablets and TV sticks, plus Kindle E-readers.

As much as a success that Prime seems to have been, the foray into hardware may have been a more difficult one.

While bBooks and CDs don’t date, the pace of change in consumer tech is scary. Even though Amazon’s core products are sold at mass-market price point, tech business profitability is very sensitive to having lots of stock remaining that is suddenly deemed obsolete.

Keep an eye on the number and the depth of aggressive pricing of Amazon-own branded products during Prime Day. It might just show you for all the success of Prime, Amazon has more work to do in other areas of its now very diverse business.