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Today is July 15th, and it's Amazon Prime day, declared a day with better deals than Black Friday. I took a peek, and so far it's pretty good.
The strategy for Amazon behind Prime Day was to offer so many deals that it would encourage more users to upgrade to their premium service. Think of it as a giant "loss leader" to get people into the store to buy (but a strong customer acquisition strategy).
On top of selling yearly memberships to their prime service, which is sure to create huge revenue, their strategy creates a few additional benefits key to their overall business strategy:
- Now customers get to try two-day shipping
- The benefits of two-day shipping might encourage customers to change their purchasing behaviour to buy more things on amazon.
- The other services that Amazon offers: music, movies and book subscriptions (like a Netflix competitor) will lead consumers to spending more time in the Amazon ecosystem, and ultimately lead them to spend more money.
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These tactics not only create additional revenue which for Amazon, which is obviously good. It will help them lower overall costs of shipping by having economies of scale. It also gives them good data on where to open up new fulfillment and distribution centers.
This helps to build a competitive advantage against their competitors, and will help them gain market share in several different categories.
I got myself an Amazon Prime membership, and I actually bought things before the sale because I liked the idea of two-day shipping. Their business strategy team knocked the ball out of the park with this promotion, and I think it's going to pay huge dividends for Amazon.