Lessons in Priming the Retail Pump
Amazon Prime Day — a success or not a success? That is the question. And more… by what measures, by what KPIs? The pundits seem to be as conflicted as Hamlet. And, of course, the big question — what can we learn from this for our businesses?
The premise was simple: a one-day global online sale pegged to a paid annual membership that offers free two-day shipping, some programming perks and now some library lending rights.
The big question and the digibabble query… Was this a new concept spawned by digital realities, as some analysts would have you believe? Or, as others have suggested, is it merely Sears catalog redux?
With Black Friday and Cyber Monday already global, and sales in every locale of the world tied to just about every historical event, Amazon pulled this new rabbit out of their hat. And, if nothing else, it garnered media attention.
Yet, with the distance of a week now, some are still scratching their heads.
Analyzing Prime Day, to anyone who knows retail, is like watching basic familiar retail customer behavior. First, there was anticipation which drove recognizable patterns, like people staying up late to make sure they would get first dibs. (At least they would not get crushed at a mall by aggressive shoppers.) All followed by buying and then typical buyers’ remorse.
In between were the tweets and posts from both shoppers and real buyers. Many complained it was a garage sale, a yard sale, even a fire sale. For a time, it was Twitter sport to post the oddest item that Amazon was trying to sell.
People also groused that the items they wanted were gone by the time they got online (sound familiar?). Every 10 minutes new items would go on sale – attention Amazon shoppers. Let’s be clear, all of this was familiar to your grandparents' and maybe even your great grandparents' generation. It is how customers have behaved around these mega-sales, and I imagine always will.
And then the 24 hours were up. According to Amazon, the sale that brought so many sneers broke every global record for Black Friday.
People bought 34.4 million items.
Amazon got more new Prime members than any other day.
Much has been written on the top-selling items, from 56,000 Lord of the Rings Trilogy DVD sets to 42-Piece Rubbermaid Food Storage sets.
The same Amazon press release offers a real lesson in global consumer diversity. In Japan, the top seller was a green smoothie mix; Germany and Austria cornered the market on Crocs; France went wild over the Monopoly Board game, and Canada like Huggies diapers.
Like any other department store sale, there was really something to entice everyone — a basic merchandising tactic as old as merchandise. Clearly people were buying.
In anticipation of Amazon’s earnings report, Forbes declared that Amazon Prime has made investors giddy. While the impact of Prime Day won’t show up in these earnings, Forbes points out that Prime has an estimated 44 million U.S. customers, a 90% retention rate, and a 70% conversion rate for people who sign up for the 30-day trial period. Forbes estimates that Prime generates about $7.5 billion every year, from fees and incremental revenue, with many investors hoping this helps Amazon’s profitability and closes the gap caused by free shipping and selling under margin. Only time will tell.
Bottom line, the results of Prime Day are not insignificant. So, Amazon can once again weather the negative comments.
But for those who would like to find digital meaning in Prime Day, or even more so, digital innovation, that’s where the buck stops and the digibabble begins. No doubt the sale got attention in real time because of social channels and that it was more efficient because of technology, but to suggest that it’s a first or a new creation in retail shopping is nonsense.
At the end of the day, if you look for a parallel in history, the mail order catalog business came about in the U.S. because of printing technology linked to better warehousing and fulfillment, riding the back of the rise of a national postal service and coast-to-coast railways. Amazon’s success is tied to the technology of our time — and, by the way, is linked to the national postal delivery services and coast-to-coast transportation.
As an Amazon customer, I loved it. As an Amazon fan, I cheered it. As someone who believes that we need to be more honest and focused in digital innovation, look elsewhere. Let’s give Prime Day its due as a triumph for retail.
So what do we learn? Human behavior is still the driver. Technology is the enabler. So, if you’re planning a mega-sale or any other form of people engagement for that matter, start with the people. Everything else will follow.
P.S. Amazon’s just-released earnings report showed sales higher than analyst expectations, along with a surprise profit of 19 cents a share. The stock is surging, although the results of Prime Day aren’t yet reflected in Amazon’s numbers.
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Contributing Writer at Seeking Alpha. Technology Marketing, Stock Trader/Investor
9 年well sais, but even as retail innovation I would have to give Alibaba the credit since they debuted "Singles Day" years ago.
CEO Sprout Strategy HBS, QPR, AICD, BBus
9 年Great article, with a simple and enduring truth - start with the human behaviour always.
iNTELLECTUAL CHARGE
9 年Greter consumere engagement is required. However, huge value addition has been created where the customer needs have been anticipated rather than just serviced.
Wild Card - draw me for a winning hand | Creative Problem Solver in Many Roles | Manual Software QA | Project Management | Business Analysis | Auditing | Accounting |
9 年Here's how to really prime the pump. Pay your employees more. Henry Ford was right, when he paid his employees the record $5 per day back in the day. If you pay your employees more, they can afford to buy your products. Henry Ford got rich because his employees bought a lot of his cars because...they could actually afford them.