Amazon is gearing up for its third consecutive Prime Day. The July 11 event could turn out to be Amazon’s “biggest day ever,” exceeding last year’s success in which 25% of U.S. households shopped the event (Figure 1). Originally created as a marketing ploy for Prime recruitment, Prime Day has since evolved into an effort to deepen Amazon’s relationship with existing members. With 37% of U.S. households now Prime members, Amazon will look to build off last year’s Prime Day positioning to lock in long-term loyalty from an expanded base — Amazon added more U.S. Prime households in 2016 than it did in any previous year — during a key Prime renewal period.

Figure 1. Percent of Shoppers Who Shopped and Purchased on Prime Day
(among all primary U.S. household shoppers)

Note: Arrows indicate significant difference between time periods (95% confidence level).
Source: Kantar Retail ShopperScape®, July 2015 and July 2016

During the third iteration of Prime Day, Kantar Retail will be watching for the following themes: 

An Extended Timeline

Prime Day essentially pulls forward demand during an otherwise quiet retail month and serves as a test for Amazon’s fulfillment and logistics network before the holiday season. As it did last year, Prime Day’s timeline will again model Amazon’s Black Friday and Cyber Monday structure, with countdown deals leading up to the event to elevate urgency and interest. Indeed, Prime Day is no longer a single-day event: Peak Prime Day discounts are set to last for 30 hours, starting the night of July 10. However, unlike on Black Friday or Cyber Monday, which fall within the holiday gift-giving season, anticipate Prime Day’s conversion rates to be lower due to the event’s self-indulgent nature.

Food and Fashion Deals in Focus

While Prime Day 2017 offers will largely involve discretionary items, including electronics and entertainment, Amazon will likely capitalize on shoppers’ heightened interest in its fashion and grocery proposition as a result of all the news about its latest moves in these two key categories. As such, Amazon will leverage Prime Day promotions to create incentives for shoppers to try new programs, such as sample boxes, subscriptions, and Prime Wardrobe (pending its public launch). In grocery, Amazon will look to draw shoppers’ to its various consumables channels, including AmazonFresh, Prime Now, and Prime Pantry, to appeal to shoppers exploring its grocery options after news of its planned Whole Foods acquisition. Anticipate Prime Day bundling of items and services to offer a unique value proposition while avoiding price comping from competitive retailers. Across the board, Prime Day messaging will likely emphasize the Prime-exclusive status of these benefits to help reinforce Prime membership.

Watch for Amazon to feature its growing private label apparel and food selection on Prime Day. We expect prompts to order these products via Alexa for a greater discount, making Amazon’s own products the default choice for future voice purchases.

Elevating Entertainment Ecosystem Engagement

Mirroring last year’s approach, Prime Day 2017 will reward Prime’s most engaged members with promotions that encourage them to adopt Amazon’s services, such as new digital media benefits, and emerging technologies to ease shopping. With more voice devices in circulation now after the holiday, Amazon will continue to tout the Alexa-exclusive deals it introduced during Prime Day 2016. This year, expect Alexa deals to focus on greater integration across Amazon’s ecosystem, including Prime Now. Also anticipate steep discounts on the broadened Echo portfolio. In addition, be on the lookout for more video across the site — and perhaps a Prime Video special — to drive engagement and assert Amazon as an entertainment destination.

Rather than attract one-off deal seekers, Amazon will ultimately use Prime Day to cultivate lifetime loyalty among members by embedding itself in their daily lives with added-value offers. This strategy is perhaps due to Prime’s scale; as membership levels off in more mature markets, Amazon is feeling pressured to get more out of its existing membership base to continue growth.  

Prime Day Diversification

From a global perspective, expect a more diverse event as Amazon tailors the positioning of Prime Day 2017 to the developmental stage of each market. In established geographies, the objective of Prime Day will be to underscore Prime’s critical role in members’ routines, while in countries like Mexico, where Prime is still in its infancy, the tone will be more about recruitment. However, as Prime scales in mature markets, like the U.K. and U.S., a subset of Prime Day’s targeting efforts may focus on attracting underpenetrated shopper segments, such as lower-income shoppers. This initiative will be especially relevant in the U.S., where Amazon recently launched a monthly Prime membership discount for shoppers receiving government assistance.    

The Halo Effect on Other Websites 

This year, watch for more competitors to take advantage of the widespread uptick in online traffic during Prime Day. Across channels, retailers will offer limited-time item discounts and free shipping promotions in an attempt to capitalize on the excitement that Amazon generates online. However, competing retailers that apply learnings from last year will perhaps find the most success by aligning with Prime Day’s fundamental mission: to cement Amazon’s connection with its most dedicated core. Using the occasion to prioritize deeper omnichannel relationships with a competitor’s own shoppers and assert a differentiated proposition will help secure loyalty and defend against Prime’s threat.

 

Stay tuned to KantarRetailiQ.com for an in-depth analysis of Prime Day 2017 once the event unfolds.

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