Invented in 2015 to celebrate Amazon’s 20th birthday, Prime Day has quickly become one of the biggest ecommerce moments on the retail calendar. July’s event proved another success, with overall sales uplifts of 6.1% in the US and 2.1% in the UK.
If you ask most retail leaders to name their biggest threat, you usually get a common reply: Amazon.
It’s not just about scale. It’s about Amazon’s ability to read shoppers’ moods and behaviours with precision… and innovate accordingly.
Even in areas where it’s not gaining market share, Amazon’s commitment to solving customer problems means it’s consistently raising the bar in terms of payment options, delivery solutions and shopper experience. This is driving up customer expectations and increasing competitive pressure on other ecommerce players.
So, what can brands and retailers learn from Amazon’s evolution? Here are a few observations from Prime Day 2023.
The Art Of Personalisation
As a long-time Prime user, this year’s experience felt very different – with deal tiles served up based on my shopping patterns and previous purchases.
This meant a lead deal for Voltaren (yes, I’ve got a dodgy knee); followed closely by offers on gardening and household products. These latter categories were view-related and not necessarily items I’d bought before.
Strategically, Prime Day is all about retaining subscribers and recruiting new ones. More important than ever in a time of economic difficulty: over 600,000 UK households cancelled Prime subscriptions last year.
Hyper-personalisation is key to delivering this objective. It rewards Prime customers whilst differentiating the experience for non-Prime shoppers. It recognises the shift from indulgent splurging to purposeful deal-seeking. Evidence suggests it was the latter that drove this year’s increase in spending.
The Power Of Partnership
Collaboration, leading to new revenue streams, is a second big trend coming out of Prime Day.
In the US, we saw the first-ever Prime partnership with Amazon joining up with travel site Priceline. Amazon wants to own more of our travel and holiday money. Priceline wants to own a greater share of audience attention. As Lesley Klein, Priceline Marketing SVP, observed: “We want to meet customers where they are. We know travellers are shopping on Amazon and booking travel with Priceline”.
With everyone looking for new, more profitable routes to growth, this is a smart move by both parties. I imagine more of these service partnerships will be coming our way, opening new opportunities for brands.
The second layer of collaboration is around the amplification of deals offered up by small and medium-sized businesses. People can now search on the Prime Deals page for deals from smaller businesses. As more and more people, particularly GenZ, are making values-based purchasing decisions, this presents a real opportunity for brands to engage with shoppers in ways that go beyond price and product communication.
The Future Of Ecommerce Is Social
It is no surprise that 2023 saw Prime Day tap into its newly launched Tik Tok style “Amazon Inspire”.
This live shopping feed features short-form videos and photos inviting us to explore products, ideas and shop – with content created by influencers, brands and other customers. Interesting to see the amount of airtime given over to FMCG brands (Hershey, McCormick), compared with the usual suspects of clothes and electronics. Brands are clearly hungry to connect with people in the most relevant places and spaces, and Amazon is keen to provide the platform.
Live shopping streams can only spiral upwards. Social commerce is enabling new brands to connect authentically with people from all ethnicities and backgrounds. Meanwhile, younger shoppers are aligning with like-minded influencers who mirror their values and buying into brands they endorse.
As my colleague Debbie Ellison points out: “Get social commerce right and not only will you build brand equity by offering more relevant and personalised shopping experiences, but you’ll also secure fair share of $6.2 trillion of forecast global revenue.” A terrific growth opportunity.
As Amazon invests more and more media money into platforms such as Tik Tok and develops Tik Tok-style experiences on its own platform, there is a clear shift away from product cataloguing to content.
A la Alibaba, how long will it be before we see music events aired live on Amazon during Prime Day?
Buy Now, Pay Later – A New Engagement Moment
With Statista predicting the volume of BNPL transactions to grow by US$ 450 billion between 2021 and 2026, Amazon is clearly alert to the opportunity. Amazon Monthly Payments neatly allows customers to pay for Amazon-sold products and devices in up to 12 monthly instalments.
Sales via BNPL for the latest Prime Day increased in the UK by a massive 16%. A preview of what we can expect to see in the months ahead, especially as we near the Christmas gifting period.
BNPL provides brands and retailers an opportunity to offer shoppers a moment of joy and excitement – much needed in the current gloom. Of course, great care needs to be taken that people don’t over-borrow; but it may be a better option than maxing out the credit card in December. Some of our clients are already asking: how can we use this journey from buy now, pay later to stretch engagement for when shoppers are ready to buy again?
Amazon is on a journey to adapt its platform and content capabilities to engage with people in new ways and develop additional sources of high-margin growth, and it continues at pace. It’s embracing experiences to drive greater brand building, connection and conversion. And it’s not afraid to copy the success of other platforms.
Hyper-personalisation, collaboration, social commerce and payment innovations that demonstrate empathy during an economic downturn… there’s a lot to learn for brands determined to win on Amazon and retailers eager to find new ways to compete. Is it time to rethink how you’re bringing your offer to life for shoppers?
- Michelle Whelan is CEO at VMLY&R Commerce UK
Originally published in Modern Retail