Shopping holidays have been around for decades - think Black Friday or Cyber Monday. Marketplaces in China, such as Alibaba, JD.com, and Pinduoduo, have created shopping holidays to acquire new customers by offering access to lower-priced deals on branded goods.
Alibaba’s 11.11 Global Shopping Festival is the largest festival based on sales over time determined by the marketplace (normally more than 20 days with specific dates for access to discount coupons etc). The Global Shopping Festival was initially called Singles Day and aimed to offer single Chinese customers something to do when others were spending time with loved ones.
Amazon took inspiration from this event and created Prime Day to offer Prime members additional value in the form of access to promotions only accessible to them. This creates an opportunity for Amazon to gain new Prime members annually who buy items at lower-than-normal pricing. Amazon has used Prime Day as an opportunity to move Amazon hardware at a discount to customers. Amazon cleans warehouses containing year-old Kindle and Alexa devices in preparation for new device launches.
Initially, Amazon caught competitors such as Target and Walmart flat-footed as online deals were found on Amazon’s website, not on competing marketplaces or brand websites. It is also worth noting that Amazon has not communicated the actual number of goods sold in the various countries it operates in. Amazon has since evolved Prime Day into a two-day event amid increasing competition from retailers and online competitors.
Customers who are Prime members have access to promotions, but these promotions place strain on sellers and vendors who sell on Amazon’s platform, who now have to offer deals, coupons, and promotions on a variety of channels during the duration of Prime Day.
Is it a case of deal fatigue (remember those daily emails from Groupon), or the fact that Amazon’s early lead compared to the competition for promotions during Prime Day has disappeared? Why has Amazon waited months to disclose this year’s event date? And why do they need to leverage supply and demand dynamics to get customers to request access to an invite-only deals program containing promotions that will likely sell out?