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Four strategies that can help competitors compete with Amazon on Prime Day.
As retailers not named Amazon look back on the online giant’s second Prime Day, it’s clear that the annual holiday is not the Armageddon some had feared.
In fact, some competing retailers now see the marketing-made, annual holiday as a tantalizing opportunity to cash in with well-timed promotions and well-conceived efforts to artfully offer customers what they are looking for.
Yes, Amazon killed it on Prime Day 2016, doing far better than its inaugural run in 2015, which was ridiculed by some for its odd assortment of deals. The company said global orders were up 60 percent over 2015 and that the day marked its biggest day of sales ever.
But in the same way Black Friday and Cyber Monday have created a consumption culture, the mid-July shopapalooza appears to have unleashed a broader flurry of shopping that spilled out beyond Amazon’s borders. In fact, BloomReach data and other indicators show that the online event created a halo effect for online retailers.
“There absolutely is a halo effect, a ripple effect, however you want to say it,” says Tom Caporaso, CEO of Clarus Commerce, which runs the subscription-based freeshipping.com shopping portal. “More retailers don’t want to cede the day to Amazon.”
BloomReach found that visits to its e-commerce customers were up 29.8 percent, compared to an average day this summer. That represented an even bigger boost than the 20.9 percent increase BloomReach customers saw on Prime Day in 2015.
And those visits were paying off. Prime Day 2016 conversions for BloomReach customers were up 47.4 percent and the conversion rate increased 13.6 percent over an average summer day.
Caporaso said orders through freeshipping.com more than doubled on Prime Day, compared to an average day on the portal, which includes 1,000 retailers. The bump was no doubt driven in part by a promotion that promised 20 percent cash back, rather than the portal’s standard 10 percent offer.
This year, major retailers worked to latch on to the Prime Day frenzy by offering promotions of their own. Toys ‘R’ Us, Wal-Mart, Kohl’s, Best Buy, eBay and a litany of others tied offers to the mid-summer retail holiday. The numbers indicate that those efforts were successful to a point.
The danger, of course, is in trying to survive through discounts and promotions alone. The strategy is unsustainable, especially if you’re competing against a giant that is not expected to turn a profit on retail, or has margins so slim that even some pundits have questioned its return for investors.
“It could be a race to the bottom. You’re cutting your prices so low,” Caporaso says.
So, what can competing retailers do to draft on Amazon’s mega-holiday and to compete during the rest of the year? Amazon’s own Prime Day—and particularly its improvement year-over-year—provides some clues.
First, if you consider what Amazon did differently this year—better pacing of the best deals throughout the day, deeper inventory, tighter search filters to produce more relevant recommendations, more desirable products, better pricing—it all comes down to providing a better experience for shoppers. In fact, 91.7 percent of U.S. shoppers surveyed told Internet Retailer that there Amazon Prime Day experience was either “excellent” or “good.”
All of which translates to four specific steps other retailers can take to better compete:
- Show consumers products they actually want to buy: The biggest takeaway in the Prime Day post-mortems? Amazon upped its game in the products it was offering shoppers. In 2015, the event was famously described as a “crappy yard sale” and the Twittersphere lost its mind making fun of products, including long-handled shoe horns, Velveeta Shells & Cheese and dishwasher soap. Provide Prime Day shoppers with product recommendations that are relevant and tailored to them. These are motivated consumers. Once you have them, you don’t want to lose them.
- Yes, OK, pricing: Don’t price-cut yourself to death. Loss leaders can work, but keep discounting and consumers will expect lower and lower prices.
- Mobile, mobile, mobile: Clarus Commerce’s Caporaso pictures a Prime Day shopper as someone at the beach, armed with a smartphone. If that shopper doesn’t see what she or he wants after the first scroll of the screen, you can pretty much tell them goodbye on their way back to Amazon. Make sure you’re making the most of the small but precious real estate on your mobile sites and apps.
- Play off the day: Prime Day 2016 was bigger than 2015 and 2017 will be bigger than 2016. The hype around Prime Day created a communal shopping event. Consumers were ready to shop. Prime members—and especially non-Prime members—no doubt visited other sites to price-compare and check out alternatives. Be ready for them by showing the meaningful products that reflect their personal likes.
Amazon, of course, will remain a challenge the whole year long. But with the right strategy, it seems, Prime Day could be a day that all retailers celebrate.
Bloomreach provides search marketing services to 25 of the Top 500 online retailers in North America, according to Top500Guide.com.