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Amazon Prime Day – the significance lies not just in the pricing!

16 July 2015 by Matthew Hopkinson

prime-day-hed-2015

In case you missed it yesterday was the UK’s first Amazon Prime Day. There are a number of things to note:

  1. This was a promotional event just by Amazon unlike the last November’s Black Friday and Cyber Monday.
  2. It was Amazon Prime members only who pay £79 a year (up from £49 in 2014) for being a Prime member.
  3. The deals were released throughout the day thereby creating engagement for the whole day rather than an unseemly 6am rush with its resulting consequences.
  4. The offers were for a limited time period (a few hours).
  5. There was a limited supply of stock which was visually displayed creating the ‘when its gone its gone’ mindset and
  6. As Prime guarantees next day delivery the chances of you changing your mind several days or weeks on then are unlikely as everyone takes delivery of their bargains TODAY!

All in all a truly amazing retailing feat and one that involved no shops, no police being called to break up fights over TVs and one that did not see the NHS A&E admission figures surge as a result of the in-store fighting we saw in November last year.

Surely, if the price was right, then what could be better than shopping from the comfort of your home with a cup of tea or glass of wine in hand and press buy once with their one click ordering for Prime members and 24 hours later there it is sitting along side you on your sofa!

As a market observer I am not here to profess a personal view as to whether this is a good or a bad thing as on one hand the shopper is driven by price and experience and arguably, subject to delivery on time (and it can be delivered anywhere you like) then this ticks all the boxes and not a human or shop in sight.

If the social interaction of buying, the smells and unique experience of a shop is what drives you then yesterday was of no significance whatsoever.

Price, however, is an important point to pick up on as no doubt the supposed ‘offers’ on Prime Day would have been no different to some shops and in many cases other retailers were quick to issue flash sales which will not help their profitability at what is not the peak sales season normally.

An example (that struck me as not your typical Amazon purchase) was 72 dishwasher tablets for £9.99. I toyed with the idea of illustrating my domestic bargain hunting skills to my wife when I get home today by announcing I had saved us money and her time by getting 72 dishwasher tables that I was sure we must need. I then did a quick hop over to mysupermarket.com only to see Tesco offering them for £10 (reduced from £20).

So whilst it was a good deal it was exclusive to Prime, BUT then again I could order with one click and look forward to their arrival today – an early Valentine’s present! In case you are wondering I chose not to enter into domestic procurement as my wife is much sharper on what a true deal is when it comes to our weekly shop!

No one can fault Amazon for what it has achieved globally and it is one of the best, most responsive and relevant websites out there where you can buy a second hand book (in near perfect condition) for less than a pound or anything else you might need although I didn’t see any cars on the site yesterday.

The customer is king at Amazon and the fact they won 14 customer service awards globally last year is testament to this. They watch what we look for and make sensible suggestions as to what you might like in order to keep you engaged.

That said they are not a profitable company whereas every other retailer that competes with them has to be and there lies the biggest significance and the one that will create the biggest debate with questions such as for how long? etc etc?

But Prime is not just about pay £79 and get free next day delivery like an Ocado delivery pass it is much much more than that (see here for their membership services) when you look at it and what they are cleverly doing is creating a loyal fan base who get the deals, free delivery etc but also video streaming, Kindle library and cloud storage for your photos etc.

It wont be long before every retailer will have to charge a minimum of £15 delivery - Clive Black

When most retailers are increasing minimum spend (£50+ in general) for free delivery and industry experts like Clive Black of Shore Capital are saying that it wont be long before every retailer will have to charge a minimum of £15 delivery then £79 seems like a pretty good deal unless of course it increases by £30 year on year as it did last year.

So the big question is how can this be sustained by Amazon, competed with by traditional retailers and what are the wider impacts for shops, delivery networks and congestion of white delivery vans on our roads creating annoyance and congestion for those who want to get the shops?

Are you an Amazon Prime member, did you buy yesterday from Amazon or take advantage of the other flash sales and what do you think will happen this time next year? And finally you wouldn’t want to be Amazon’s logistics partner today as I sense it will be a very very long day on the road!

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