The One Amazon Prime Day Deal That Walmart and Target Can't Match
By Sebastian Herrera and Sarah Nassauer
Amazon.com Inc. and other big retailers kicked off an annual
July sales event that has come to rival Black Friday in terms of
discounts and the surge in online shopping.
But for the e-commerce giant, the Prime Day event isn't just
about selling discounted Instant Pots or Levi's jeans. It is
another way to tighten its grip on shoppers by getting them to
enroll in its Prime membership program, which adds an important
revenue stream and loyal customers.
Walmart Inc., Best Buy Co., Target Corp. and others are offering
their own online discounts this week and typically match Amazon's
prices. The traditional retailers are using the event to steer
shoppers to their stores, their house brands or their own online
offerings in what is typically a slow month. But none of them sells
a similar membership program that can help offset ecommerce's
razor-thin profit margins.
Last year, Amazon said more than 100 million people around the
globe were paying for Prime. The company has expanded the program
by adding discounts at its Whole Foods grocery chain, a
video-streaming service and also offering one-day or faster
shipping in many markets. It raised the annual price of Prime
membership to $119 from $99 last year. It also offers a plan for
$12.99 a month.
Amazon added more new Prime memberships on the first day of last
year's Prime Day event than any other day in the company's history,
according to Jefferies analyst Brent Thill. He says Prime members
are key to driving the company's growth as they spend two to three
times as much as nonmembers.
The July sales event, now in its fifth year, has expanded beyond
the U.S., with Amazon offering deals in more than a dozen
countries. Mr. Thill estimates that Amazon's Prime penetration is
roughly 30% of U.S. households and less than 5% of international
Walmart tried to launch a Prime rival several years ago and
abandoned the effort, instead offering free two-day shipping on
many products if shoppers spend at least $35. Walmart now offers
one-day shipping in some markets.
Target offers same-day delivery for customers that sign up for a
$99 annual membership to its Shipt grocery-delivery service. It
also offers discounts and free shipping on many orders for holders
of its REDcard loyalty program, which is free.
The Prime Day event is another opportunity for Amazon to push
sales of its own devices with deep discounts of its Echo speakers,
Fire TV sticks and Kindle e-readers.
Online coupon tracker RetailMeNot projects more than 250
retailers are promoting sales during this year's Prime Day, which
spans two days ending late Tuesday. Adobe Digital Insights, which
collects sales data from thousands of U.S. retailers, estimates
that sales will jump 79% at non-Amazon retailers around Prime Day,
with more than $2 billion spent online by consumers.
"The Prime shopping period has become the peak shopping period
for the third quarter," RetailMeNot marketing director Michelle
Skupin said. "There's long been this concept of Christmas in July,
but Amazon really changed the game by concentrating those deals
over a shorter time period."
Retailers weren't always so savvy around Prime Day, Ms. Skupin
said. When Amazon started the shopping spree in 2015, only seven
other retailers were promoting sales in response. The next year
roughly 20 more retailers joined in before the number spiked to 119
in 2017 and then 194 last year.
In some cases, retailers are taking direct aim at Amazon. EBay
promoted a "Crash Sale" for Monday, alluding to technical glitches
Amazon's website had during last year's Prime Day. On Monday, some
customers were reporting technical issues with the site, such as
problems adding items to their carts. Amazon said the issues only
affected a very small portion of customers and were resolved within
In a video ad released before Prime Day, eBay mocked the
retailer's $119 yearly fee. Walmart's website Monday promoted deals
"exclusive to everyone."
As Amazon has faced increased competition during Prime Day, it
has spent big to promote the event and has expanded its time frame.
Amazon this year booked music artist Taylor Swift for a Prime Day
concert and gained exclusive rights to sell a new beauty product by
Lady Gaga beginning on Prime Day.
Write to Sebastian Herrera at Sebastian.Herrera@wsj.com and
Sarah Nassauer at firstname.lastname@example.org
(END) Dow Jones Newswires
July 15, 2019 14:30 ET (18:30 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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