But for Amazon, the July sales event isn’t only about selling discounted items. It is another way for the e-commerce giant to enroll new customers in its Prime membership program, which in turn brings more people into its ecosystem.
However this year, it appears a greater number of savvy shoppers opted to sign up, browse for bargains — and then immediately cancel their membership.
“Searches for ‘canceling Prime Day’ skyrocketed 18x yesterday,” says Jon Reily, a retail expert with Publicis Sapient. “And that can’t be ignored, with people perhaps joining the party to get the deals and then moving on.”
Amazon offers shoppers the chance to sign up for a trial Prime membership for 30 days. At the end of that trial period, customers are converted to a paid membership plan unless they cancel. However, those who cancel are still eligible to use their membership for the rest of the 30 days. It’s this flaw in Amazon’s system that allowed new customers to take advantage of Prime Day discounts.
“Amazon always has to continue to add more subscribers, but they’re also beginning to reach about peak numbers,” Reily notes. “Estimates are that there are about 120 million members in the United States, that’s pretty close to how many households there are in the United States.”
“Prime is a part of Amazon’s long-term strategy to be the premier digital over Google and Facebook, so they absolutely have to continue to grow those Prime numbers, and Prime Day is a large part of that,” says Reily.
Everybody wins on Prime Day
Amazon’s competition wasn’t sitting on the sidelines this week. Walmart, Target, eBay and others rolled out their own discounts, taking full advantage of the online shopping frenzy.
“Everybody wins on Prime Day,” says Reily. “It also brings some pretty healthy competition between the tech giants. eBay of course having its ‘if Amazon goes down, we’ll have a sale’ sale. And then Target, I think, was the ultimate winner here with the slogan of ‘Membership Not Required.’ You can buy things, you can get great deals and you don’t have to be a Prime member.”
According to Adobe Analytics data released after last year’s Prime event, major retailers — those with over a billion in annual revenue — saw a 54% increase in sales on Prime Day, compared with an average Tuesday.
“Retailers have been searching for a late Q2, early Q3 holiday forever,” Reily added. “So anything they can do to boost sales in the doldrums is a win. And ultimately this seems from year to year, that this helps everybody. Last year Walmart saw 120% uptick in search, Target’s was pretty close to that, and if I recall correctly, eBay’s was 200%.”
Reily noted Amazon’s Prime Day and its associated bump to other retailers are likely to strongly impact July’s retail sales numbers, putting retailers in a good position leading into the holiday period. He expects their future earnings will likely reflect this.