Despite grumblings from customers about the quality of the deals on offer, Amazon immediately hailed its Prime Day event a triumph with shoppers purchasing an estimated 34.4 million items in 24 hours.
Amazon cherish Prime members because they spend twice as much money on the site as regular users. So the success of the initiative will only really be made clear in the long-term when we find out whether these new converts behave in the same way
This one-off spike in sales is certainly impressive, but the success of the event needs to be measured on its ultimate goal of converting more customers into Prime members.
When the discount day was announced shoppers were told that only Prime members could take part, with the retailer cleverly playing on the FOMO (fear of missing out) phenomenon to persuade people to sign up to avoid being excluded from a bargain.
Amazon cherish Prime members because they spend twice as much money on the site as regular users. So the success of the initiative will only really be made clear in the long-term when we find out whether these new converts behave in the same way. Are they spending the same amount as existing members? Or did they just come on board for Prime Day? Did the event encourage members to spend in new categories?
It’s important for retailers to remember that the number of members signed up to their premium scheme needs to be evaluated in the same way as their social media following – big numbers look good, but they are only really of value if the individuals that make them up are engaged and active. So as well as quantity, Amazon needs to be looking at the quality of its new recruits.
A one-off discount bonanza can actually be a risky strategy for a big brand and Prime Day has already been compared to Black Friday, which is often lamented by retailers for devaluing product and making customers reluctant to pay the full price the rest of the year round.
Amazon also needs to be wary about creating a ‘class war’ between Prime members and non-Prime members, which is something all retailers with a membership scheme need to be mindful of
Prime Day seems to have sidestepped this criticism by being positioned very much as a reward for loyal customers rather than a free-for-all, although there has already been talk about when the next event will be held – meaning the retailer will be under pressure to make this a regular occurrence.
Amazon also needs to be wary about creating a ‘class war’ between Prime members and non-Prime members, which is something all retailers with a membership scheme need to be mindful of. A premium proposition needs to provide subscribers with added value without detracting from the main offering, or making regular customers feel left out.
Amazon has been careful to avoid this so far, via its 30-day free trial which meant that consumers could benefit from the PrimeDay discounts without having to fork out for membership before they’re convinced of the benefits.
This is only a temporary solution though, and Amazon will have to negotiate the territory between not discriminating against regular users and benefiting from memberships very carefully. A discount day may have been an effective way to kick-start its recruitment campaign, but it will need to have more up its sleeve to keep customers happy in the long-term.