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Amazon's Prime Day causes some stir for other e-retailers

July 14, 2015 04:47 PM
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On the day before Amazon Inc. holds its much-ballyhooed Prime Day, other online retailers held limited-time or flash sales of their own, paying no mind, at least publicly, to the top online retailer’s event.

Consumer electronics chain Best Buy Co. Inc., No. 14 in the Internet Retailer 2015 Top 500, took a veiled shot at Amazon on its Facebook page when it announced its own 24-hour sale on Tuesday, proclaiming in its online promotions:  “No membership needed for these deals.”

Wal-Mart Stores Inc. was less veiled. On Monday it rolled out new online deals and lowered its free shipping order threshold to $35. Fernando Madeira, president and CEO of Walmart.com, wrote in a blog post titled “Why Every Day is Low Price Day at Walmart” that consumers should enjoy low prices every day. “We’ve heard some retailers are charging $100 to get access to a sale. But the idea of asking customers to pay extra in order to save money just doesn’t add up for us,” he wrote.

Amazon announced plans for its 20th birthday party earlier this month, billing it as bigger than Black Friday, the day after Thanksgiving, for Prime customers, who pay $99 a year to receive free two-day shipping on 20 million items and other services, such as free streaming video and e-books. On Wednesday, new and existing members of Prime will have access to Lightning Deals and Deals of the Day.

Prime Day puts other retailers in a tricky spot, ChannelAdvisor Corp. executive chairman Scot Wingo says. If an e-retailer doesn’t respond or acknowledge the sale, the merchant risks missing out on the likely wave of commerce, but joining in the hype plays into Amazon’s hand and promotes the event, so “it’s pretty clever on Amazon’s part,” he says.

ChannelAdvisor, which helps retailers sell on web shopping portals like Amazon and eBay, has noticed an unusual amount of inventory moving around leading up to Wednesday’s sale. Retailers are actively logging in and putting more products on Amazon, “priming the pump for the big day,” Wingo says.

The immediate and long-term impact of Prime Day remain to be seen, but ChannelAdvisor, like many others, is watching closely, he says. Amazon.com has 300 million active buyers globally, and an estimated 40 million Prime customers.

Rob Garf, vice president of industry strategy for e-commerce software provider Demandware, says, “This manufactured holiday is a smart tactic to increase Prime membership. Given the sheer volume of consumer traffic and loyalty, there are only a few retailers worldwide that can independently match this strategy."

Some experts say that by not trying to compete with Amazon, smaller retailers are doing the right thing.

Paige O’Neill, chief marketing officer for digital technology vendor SDL, says the key to weathering the Prime Day storm is for retailers to keep the focus squarely on the customer.

“Among the retailers participating in ‘Black Friday in July,’ the one that will win is likely to be the one who not just has the best deals, but the one that offers the best and most personalized experience,” she says. “Send customers personalized recommendations about sales based on their preferences or shopping history throughout the year, rather than generic email blasts about the latest deal. This is what will win customers over and this should always be the approach, regardless of what the big brands are doing.”

Rather than try to compete with Amazon on price, John Pincott, senior vice president of Europe and global marketing with e-commerce and technology services provider Shopatron, says multichannel retailers should focus their efforts on leveraging the one asset they have that Amazon lacks.

“Retailers with both an online and brick-and-mortar presence need to start using the inventory in their stores to their advantage,” he says. “Offering items for immediate pickup and shipping from stores to shoppers' homes can boost efforts to stack up against Amazon's online commerce perks.”

 

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