What you should know about Amazon’s 2018 ‘Prime Day’

News
This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

Amazon has successfully invented a new shopping holiday, and it’s set to capitalize on the rewards.

The fourth Prime Day (and a half) will begin noon PT (3 p.m. ET) Monday, extending for 36 hours. The savings event this year is running longer than prior years, available for shoppers in more countries, and Amazon is promising a million deals — the most yet — for Prime members.

It’s also the first Prime Day with Whole Foods, Amazon’s most expensive acquisition, integrated under the Jeff Bezos umbrella.

Prime Day means far more to Amazon than a one-day annual marketing play. Sure, Amazon gets to flex its muscles over the retail industry and juice sales numbers. But, more importantly, Amazon uses the savings event to spotlight its own products and hook new members on a subscription program that more than 100 million people around the world count as an indispensable part of their shopping lives.

Priming the pump

Amazon doesn’t disclose revenue from previous Prime Days, but it’s predicted to reach $3.4 billion this year, according to retail think tank Coresight Research.

Sales for the event are projected to shatter last year’s total by 40% and become Amazon’s new single day record, breaking its 2017 Cyber Monday haul.

But Monday will be trivial to Amazon’s financial picture, noted Michael Pachter, an analyst at Wedbush Securities. Sales are projected to be only six times a normal day, or around 2% of Amazon’s annual retail revenue, he said. The company brought in a total of $177.9 billion in sales last year across its retail and web services division.

Prime Day serves a longer-term importance to Amazon by driving new members to its $119 annual free-shipping program and tightening existing customer relationships to the company’s ecosystem. More than half of Americans said they lived in a household with Prime, according to a Cowen survey in December.

Prime is the “most critical driver” for Amazon’s e-commerce business in the long run, argued Cowen analyst John Blackledge.

Prime has added around 10 million new subscribers a year for the past three years, and Blackledge believes Amazon has even more room to convert non-members who shop on Amazon into loyalists. The Prime model adds monthly and annual fees into Amazon’s coffers, and Prime members spend more on the site than shoppers without the subscription.

Members spend $1,400 a year, compared to about $600 a year for non-members, according to market research firm Consumer Intelligence Research Partners.

“From Amazon’s perspective, Amazon Prime members improve with age,” said the firm’s co-founder Mike Levin. “As more Prime members reach their third, fourth or even longer anniversary, average spending should increase.”

‘Step Aside Black Friday’

Amazon tested out its inaugural Prime Day in July of 2015 to celebrate the company’s 20th anniversary. It designed the day to replicate Black Friday for Amazon die-hards, but boasted more deals than the November shopping tradition.

“Step Aside Black Friday – Meet Prime Day,” Amazon said in a news statement unveiling the event.

Amazon recorded $900 million in sales its first year, according to Coresight. Amazon CFO Brian Olsavsky called it “Christmas in July.”

The company decided to bring it back for a second year with more deals. Sales hit $1.5 billion, according to Coresight’s estimate.

In 2017, Prime Day “really got a lot more traction…in particular internationally,” Olsavsky told analysts last October. The company had a record number of free Prime trial sign-ups, and its Echo Dot smart speaker was the best-selling product.

“Amazon is betting long term on voice-enabled commerce,” Magid retail analyst Matt Sargent said last year.

Prime Day has forced Amazon’s rivals to adjust to the frenzy.

“The day creates a short-term urgency,” said Barbara Khan, a marketing professor at Wharton who studies retail. “People get engaged just to make a purchase, to take advantage of the deal.”

It has become the firing gun for the start of back-to-school shopping, the second busiest shopping time of the year.

“Prime Day has changed the terrain of the summer for retailers,” said Adobe Digital Insights director Taylor Schreiner. “Retailers need an effective strategy to address it. The only guaranteed losing play is to ignore it.”

Rivals aren’t sitting on their heels: Walmart, for example, debuted new apps and online tools for back-to-school shopping, including a 3D virtual experience called “Buy the Room,” and deals on school supplies. Target also announced a one-day sale to rival Amazon on Tuesday for “everyone—no membership required.”

Whole Foods’ debut

Amazon again will again offer deals on Alexa-enabled devices such as Echo, Echo Show, Fire TV and Fire tablets this year.

It’s highlighting discounts on its growing lineup of private label brands such as Stone & Beam, Rivet, Presto!, Wickedly Prime, and Goodthreads.

Despite the heavy promotions, selling its own products on Prime Day should help the company’s profit margins because it can cut out first and third-party sellers.

Whole Foods will be the biggest change to the 2018 show.

Amazon is offering Prime members a $10 credit when they spend $10 or more at Whole Foods between July 11 through 17. Whole Foods is also offering deals on grocery items like boneless chicken breasts, and doubling the cash back bonus to 10% from 5% for Amazon Prime Rewards Visa card holders.

“This year seems a bit more ambitious, as they have fully integrated Whole Foods into the mix,” said Wedbush’s Pachter.

Whole Foods has recorded nine straight months of 2% to 3% same-store sales growth since the acquisition last year, according to RBC Capital Markets analyst Mark Mahaney. Amazon is driving traffic to Whole Foods by lowering prices and increasing Prime discount benefits.

Monday will be the biggest opportunity yet for Amazon to lock more Whole Foods shoppers into Prime members.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trademark and Copyright 2021 Cable News Network, Inc., a Time Warner Company. All rights reserved.

About FOX 2 News

FOX 2 and KPLR 11 in St. Louis cover the news in Missouri and Illinois. There are over 68 hours of live news and local programming on-air each week. Our website and live video streams operate 24/7. Download our apps for alerts and follow us on social media for updates in your feed.

President Harry Truman said: “It is amazing what you can accomplish if you do not care who gets the credit.” That spirit is alive and well at Fox 2. Our teamwork is on display each and every day.

Our news slogan is: “Coverage You Can Count On.” We quite frankly are too busy to worry about who gets the credit. Our main concern is serving the viewer.

We go where the stories take us. Whether it be Washington, D.C when a Belleville man opened fire during a congressional baseball game practice or to Puerto Rico where local Ameren crews restored power after more than 5 months in the dark.

Coverage You Can Count On means “Waking up your Day” with our top-rated morning show. From 4:00 am-10:00 am we are leading the way with breaking news. But our early morning crew also knows how to have some fun! Our strong commitment to the communities we serve is highlighted with our Friday neighborhood shows.

Our investigative unit consists of three reporters. Elliott Davis focuses on government waste, Chris Hayes is our investigative reporter, and Mike Colombo is our consumer reporter. They work in unison with the news department by sharing resources and ideas.

We continue to cover breaking news aggressively and relied on our seasoned journalists to make a difference with the stories we covered. The shooting of Arnold Police Officer Ryan O’Connor is just one example of that. Jasmine Huda was the only reporter who had exclusive access to the O’Connor family during his amazing rehabilitation in Colorado.

Last, but certainly not least, FOX 2 and KPLR 11 are committed to covering local politics. We host debates among candidates and have the most extensive presidential election coverage. Our commitment to politics isn’t just during an election year. We produce two political shows that air every weekend.

Popular

Latest News

More News