Prime Day, Amazon’s annual sales event for Amazon Prime subscribers,
kicks off July 15 at 12 a.m PST. This year’s Prime Day will last 48 hours
instead of 36, with some early deals popping up on Amazon’s website several
days before the event, turning it into a week-long discount bonanza.
Much like Black Friday, Amazon Prime Day has become a markdown period
for all e-tailers, as competitors reduce prices around the same
time, looking to go head-to-head with the retail giant which has made
founder Jeff Bezos the world’s wealthiest person.
According to retail analytics firm Edited, US retailers offered an
average discount of 42.5 percent around last year’s Prime Day, a slight
increase from 2017 at 39 percent. Target, for instance, discounted 20
percent of its assortment around Prime Day, with an average markdown
percentage of 30 percent. The strategy has been intensified this year: 30
percent of Target’s assortment is currently reduced at an average discount
of 22 percent.
Target is far from being the only one. Walmart, Macy’s, Zappos,
Nordstrom and Zara are also betting on aggressive markdowns as a means to
compete with Amazon’s event. According to Edited, they were the retailers
offering the largest discounts around last year’s Prime Day and we can
expect them to mirror the same patterns in 2019.
In an email to FashionUnited, Edited said it expects this trend to
strengthen as retailers continue to slash prices as a reaction to Prime
Day’s popularity. Last year’s Prime Day was the most successful in Amazon’s
history: over 100 million items, worth 4.19 billion US dollars, were sold,
up from 2.4 billion US dollars in 2017.
The strategy to follow Amazon’s Prime Day seems to pay off for sizeable
competitors such as the companies mentioned above: the number of sellouts
increased by 52 percent around Prime Day last year, as measured by Edited.
However, the number of products having their prices reduced diminished 4.4
percent from 2017, which indicates most e-tailers are choosing to offer
higher reductions on key items rather than using Prime Day to try to get
rid of old stock.
Amazon’s Prime Day poses threat to smaller e-tailers
For smaller e-tailers, however, Prime Day does not represent a chance to
piggyback on Amazon’s increased sales. “Amazon’s clear purpose is to obtain
new members through this event, which in the past they have been very
successful at. That sounds great if you’re an e-tailer that sells on
Amazon, but for those who do not, it’s increasingly difficult to keep up
with what Amazon offers. Not only with the turnaround time to receive a
product, but also in offering free shipping”, said Sara Lone, Senior
Research Analyst at the Ecommerce Foundation, in an email to
FashionUnited.
“Amazon’s potential to take customers away from them by offering
unattainably cheaper prices, shipping times and shipping costs, is
increasing more and more, boosted significantly by Amazon Prime Day. The
more customers Amazon has, and the more of a monopoly they have on the
entire ecommerce market, the more likely they are to price gouge e-tailers
selling on the platform, as well as entirely squash small and medium-sized
companies who don’t”, added Lone.
Lone also emphasizes the social and environmental costs of Prime Day.
“Most smaller e-tailers do not have the luxury of offering free shipping,
and to be quite frank, the planet doesn’t either, as the cost of free
shipping is much more than just monetary”. In addition, she said, Prime Day
“comes at the cost of employees working around the clock with unbelievably
difficult targets”.
It remains to be seen whether Amazon will be able to deliver all its
Prime Day orders on time this year, since warehouse employees in Minnesota are planning a six-hour
strike to bring the company’s attention to their demands for
improved working conditions. “Amazon is going to be telling one story about
itself, which is they can ship a Kindle to your house in one day, isn’t
that wonderful? We want to take the opportunity to talk about what it takes
to make that work happen and put pressure on Amazon to protect us and
provide safe, reliable jobs,” said William Stolz, one of the employees
organizing the strike, as quoted by Bloomberg. The Minnesota warehouse is
just one of Amazon’s 100 warehouses across the US, however.
Last year, thousands of Amazon workers in Germany also walked out
on Prime Day to protest against the repetitive and stressful
nature of their work. Similar strikes were staged across Europe on Black Friday
.
Amazon raised its minimum wage to 15 US dollars an hour in October 2018,
following the outcry caused by a report by nonprofit organization New Food
Economy, which revealed the e-tailer is one of the American companies with
the most employees receiving SNAP benefits, also known as food stamps. In
Arizona, for example, nearly one in three Amazon employees were on food
stamps or lived with someone who was in 2017. “We listened to our critics,
thought hard about what we wanted to do, and decided we want to lead”, said
Jeff Bezos in a statement at the time.
Images: Amazon Facebook
