Amazon Celebrates 20th Birthday With Bid to Drive Prime Membership
Amazon is celebrating its 20th anniversary with a global bid to drive Prime subscriptions. The e-tailer is introducing a new shopping event on July 15, called "Prime Day," which it says will offer more deals than Black Friday, exclusively to Prime members.
The effort underscores how important the 10-year-old Prime membership program is to Amazon and its future. The e-tailer continues to invest heavily in expanding the program through services like Prime Instant Video, which Amazon spent $1.3 billion on last year; Prime shipping, Prime Now and the Dash button, according to company earnings calls.
"Members tell us every day how much they love Prime and we will keep making it better," said Greg Greeley, VP-Amazon Prime, in a statement. "If you're not already a Prime member, you'll want to join so you don't miss out on one of the biggest deals extravaganzas in the world."
The Seattle-based company has not revealed how many people subscribe to Prime, but the service's global membership grew 53% year-over-year in 2014, despite an annual price hike from $79 to $99, according to earnings. In the U.S., membership was up 50% last year.
"Prime is arguably the most important trend at [Amazon]," said Ross Sandler, a Deutsche Bank research analyst, in a July report. "[It] should be the first retail membership club to reach 100 million members in history if the growth continues -- a huge loyal base of high-frequency shoppers."
The "Prime Day" push is a fresh take on the mid-summer "Christmas in July" promotions that are common among retailers like Target, which has offered online "Black Friday in July" deals since 2010. Amazon's effort takes a similar approach, but with a focus on rewarding and garnering more loyal customers.
"It's really more about getting Prime members," said Charlie Anderson, CEO of shopper marketing agency Shoptology. "It feels like Amazon Prime is amping up to try to get some more people in the franchise for when Black Friday rolls around."
The push comes ahead of the back-to-school and holiday seasons, the two biggest shopping periods of the year. Shoppers who sign up for Prime now and pay to stick with it, will likely go to Amazon first when they online shop.
According to a recent study by Millward Brown Digital, Amazon Prime members convert to buyers 74% of the time, compared with an average conversion rate of 13% for non-Prime members. The study also said that Prime members convert at an average rate of 6% when they shop at other online retailers like Walmart, Amazon and Home Depot.
Following Amazon's lead, other retailers may look for unique ways to capture online shoppers ahead of the back-to-school and holiday seasons, Mr. Anderson said. Walmart, for example, is testing $50 unlimited shipping.
The "Prime Day" promotional strategy is uncommon for Amazon, which hasn't made many big, discount-heavy pushes for its Prime service before.
"This is not the typical Amazon playbook," said Sucharita Mulpuru, a retail analyst for Forrester. "We'll see in their numbers if there's any other alterior reasons they may have had," she said, adding that Amazon may have wanted to boost sales or Prime subscription numbers for its third quarter earnings.
Amazon also thought outside of the box with its marketing last month, when it began promoting the "Treasure Truck" in Seattle. The truck works with Amazon's mobile shopping app and offers customers exclusive and limited-quantity items that can be purchased remotely and picked up at the vehicle. It was slated to launch on June 27 and locations were to be posted on social media, but it has been delayed and the company has not said when it will open for business.
Almost since its inception, Amazon has been a trend setter in the e-commerce space, and has influenced the evolution of the Black Friday and Cyber Monday shopping holidays in recent years. "Prime Day" could start a new trend, or other retailers may try to time their own promotions to the event.
"I have no doubt that there will be thousands of companies tryng to jump on the coattails of Amazon and take advantage of the fact that there will be a whole bunch of people shopping online on July 15," said Ms. Mulpuru. "Maybe they can get some of the drippings from the table."
Amazon's July 15th deals will be available to Amazon Prime members in nine countries including the U.S., U.K., Spain, Japan, Italy, Germany, France, Canada and Austria.