Merchants have less than two weeks to prepare for Prime Day
June 30, 2016 04:21 PM
Amazon.com Inc.’s announcement late last night that it will hold its second Prime Day sales event on Tuesday, July 12, leaves merchants with less than two weeks to prepare for a sales day that last year drove a bump in sales during what can be a slow period for many merchants.
“Sales were huge on Prime Day last year, and we suspect it will be even bigger this year,” says Jason Boyce, co-founder and CEO of online sporting goods retailer Dazadi Inc. He declined to specify just how much of a sales spike his company saw in response to the products it promoted during the first Prime Day sales event, which took place on Wednesday, June 15. “We would have preferred a little more notice, but we were anticipating that it was (coming up soon).”
“We saw an increase in sales almost equal to Black Friday sales,” says Karen Kang, vice president of discount electronics accessories retailer AccessoryGeeks.com, about the sales it generated on Amazon during Prime Day last year, even though it did not actively participate with a Prime Day offer. “Overall sales wise on that day, there was just a significant increase. It’s a major boost to us in the middle of the year.”
While Amazon just confirmed the actual Prime Day date, it began reaching out to marketplace merchants months ago about participating.
David Byun, president of CGETC Inc., AccessoryGeeks.com’s parent company, says Amazon reached out in mid-April, flagging which products would be a good fit for Prime Day deals. “Amazon specified the price we should run at,” Byun says. “A lot of times, the price doesn’t make us any (profit) margin. We had to pick and choose which (products) to run.” Accessory Geeks is No. 839 in the 2016 Internet Retailer Second 500 Guide.
The merchant eventually decided to feature two products as part of Prime Day, although it is still negotiating with Amazon on the selling price of one of those items. In early June, the merchant shipped the products it will be featuring to Amazon’s warehouses. Fulfillment By Amazon will manage the packing and shipment of orders for those goods.
Prime Day was held for the first time last year on July 15th to celebrate Amazon’s 20th birthday. The promotion gives Prime members, who pay $99 for an annual subscription that includes free delivery on orders in as little as an hour, access to over 100,000 deals, with new deals frequently appearing throughout the day. Amazon says it sold more than 34 million items on Prime Day last year and that it signed up more new Prime members that day than any other day in its history. Amazon does not disclose how many Prime members it has, but an estimate from securities research firm Consumer Intelligence Research Partners LLC pegs the number at 54 million.
Boyce says Dazadi (No. 673 in the Second 500) is taking a two-pronged approach to selling on Prime Day, offering a handful of lightning deals, which are limited time deals offered throughout the day, and discounting some of its other best-selling items. He’s not planning on having extra staff working throughout the day. The two vendor-operated warehouses Dazadi uses to fulfill orders will have staff on call in case demand becomes overwhelming, Boyce says. Dazadi also stocks some of the items it will be promoting with Fulfillment by Amazon.
But Amazon’s announcement wasn’t met with universal excitement.
Chantal Laurens, vice president of retail at online apparel retailer and custom t-shirt manufacturer Ann Arbor T-shirt Company, says Prime Day didn’t live up to her company’s expectations last year.
“We put forward a lot of effort last year on those of our products that were eligible for promotion but did not experience significant (sales) lift,” she says. “We did however see a small lift across all sales and listings as a function of the increased number of shoppers, but not on the Prime Day deals specifically. Rather than go through the same process this year for presumably the same (lack) of return, we opted to spend our efforts optimizing our listings and will promote existing products in the hopes that the increased volume and traffic will result in a sales lift nonetheless.”
Several shoppers responded to Amazon’s tweet announcing the promotion by recalling how disappointed they were with the deals that were offered last year. Amazon responded to one of those tweets, telling the shopper “We've been working hard to build a better Prime Day. We've got over 100K deals worldwide - keep your eye out for more info!”
Of course, the negative response on Twitter to the announcement of this year’s Prime Day pales in comparison to the social media backlash on Prime Day last year, when the #PrimeDay hashtag was trending on Twitter in part because shoppers were disappointed with the quality of deals being offered.
Experts say they’re optimistic Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide, has taken some of those lessons it learned last year to create an improved Prime Day experience for shoppers this year.
“I'm anticipating that Amazon will improve the deal quality and be more creative based on the negative customer responses they received last year,” says Peter Kearns, West Coast director of customer success for automatic repricing services platform vendor Feedvisor.
“I imagine Amazon will add more selection and more deals to this year's Prime Day,” adds David Spitz, CEO of ChannelAdvisor Corp., which helps retail clients sell their products on Amazon. “Last year, Prime Day was more of a promotional event to get consumers to sign up for a Prime membership ahead of the holidays. This year, Prime Day feels like its own holiday, especially with Amazon offering countdown deals from July 5 through July 11.”
Spitz says ChannelAdvisor’s clients selling through Amazon saw a 93% year-over-year sales increase on Prime Day 2015.
“Our clients are stocking up on popular products and prepping internal staff to treat Prime Day like a Black Friday or Cyber Monday,” he says. “Most third-party retailers can expect to be working late to fulfill orders, answer customer service questions and the other activities involved with running an e-commerce business on a wildly popular online shopping day.”