Amazon Prime Day creates a ‘halo effect’ for rival retailers

Prime Day may be intended to benefit Amazon, but it can also work for rival retailers, as shoppers looking for deals tend to visit not just Amazon, but many other sites. 

With today being Amazon’s second Prime Day, it’s a good time to look at some findings from last year’s sales, thanks to some interesting data from BloomReach.

BloomReach analyzed data aggregated from its US retail customers sites (desktop and mobile) for the Summer (June 1 – August 31, 2015).

The company works with approximately 30 of the Internet Retailer Top 100 and almost 60 of the top 500. It sees data from approximately 20% of US ecommerce sites (though Amazon.com is not a customer).

Here are some key findings from last year’s Prime Day:

  • Prime Day created a halo effect for other retailers, with online traffic increasing by an average of 21% on Prime Day (July 15). Conversions also rose by 57% on average.
  • Wednesdays are not typically high-traffic and conversion days for ecommerce sites, yet Prime Day was significantly higher than other Wednesdays.
  • Interestingly, conversion rates spiked to their highest levels that summer on the Sunday (July 19) following Amazon Prime Day.

This year more retailers are set to compete with Amazon, with several retailers, including Neiman Marcus, Sears and Newegg launching sales today, or during this week.

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I asked Raj De Datta, CEO of BloomReach, about Amazon’s Prime Day strategy, and the best tactics for rivals to make the most of it.

What was Amazon’s strategy behind Prime Day? Do you think it worked last year?

Prime Day was designed in part to drive Prime memberships, and while there were some complaints on social media about the deals last year, ultimately it did accomplish its main goal.

However, regardless of what is sold and the hype, the customer behavioral data behind that tremendous traffic is invaluable.

Understanding how consumers click between products, how they engage with content and how they use devices to shop and purchase is worth just as much in the long run as conversions.

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For rival retailers, is competing with Amazon on price a good tactic?

Competing on price and fulfillment vectors is unsustainable in the long run for 99% of retailers. They simply don’t have the resources or capabilities to do so, and probably never will.

The data behind traffic for retailers is important though, because it can help you personalize experiences better, and they do have an opportunity to win on experience.

However, many retailers simply don’t have the data capabilities to win on experience. And that is double-edged sword because not only are you more than likely going to lose on price, you’re probably going to alienate the consumers who were willing to give you a chance.

Most will probably go back to Amazon after a bad experience, but you can’t say the same for other retailers.

If you’re getting a spike in traffic on something like Prime Day, you better be ready to get the content right for those individuals. Even if consumers are just price-comparing, leaving them with a bad taste in their mouths is worse.

Your stats show that traffic to other retailers was up 21 per cent as a result of Prime – why do you think this is?

Amazon Prime Day has seen enough hype for it to become a special online shopping day.

Consumers are already on the hunt, so they want to compare deals, read reviews and explore content all over.

Here’s the interesting part. Our statistics also showed that conversions were up by 57%, which signals that retailers can capitalize on traffic if they are offering the right content. Impress them while you have them.

I can see that Amazon has an opportunity to convert customers to Prime with Prime Day, but what’s in it for other retailers?

Our data showed that Amazon Prime Day has created a halo effect for retailers. Prime Day is almost making another ‘online shopping day.’

Consumers seem to be in the mood to buy, and that’s good for retailers. Granted a portion of the traffic is attributed to consumers comparing retailers prices to Prime Day deals, but even if a retailer can’t compete on similar product prices, do their sites intuitively know what related products or alternatives to offer? And beyond that, what products might that specific visitor want?

What mistakes should rival retailers look to avoid? What is the best strategy to adopt?

Retailers shouldn’t get sucked into the low-low-price game unless their game is being an ultra-discount retailer. They’ll never win in the long run, and many times all it does is make customers expect deeper and deeper price cuts.

Having a few discount sales can be good for business and to get people to visit a site, but there’s even greater value in being an experience leader.

The truth is that Amazon is always going to get its portion of the market, but as long as a retailer has products consumers want at reasonable prices, you have an opportunity to drive higher conversion rates by optimizing for engagement.

We’re starting to see that with more with smart retailers: focusing on engagement rather than just profit.

For more information on this topic, see our Ecommerce Checkout Best Practice Guide.

For more reports, including guides on mobile commerce, customer experience, and social customer service, head to ClickZ Intelligence

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