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Jul 18, 2018

Prime Day: How Rival Retailers Are Countering Amazon’s Big Summer Sale

By Team Stash

Top retailers are fighting back against the online giant’s flash sale

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Amazon, one of the online largest retailers in the world, is known by some for its innovation, as well as its never-ending sales. Look no further than Prime Day, a newly-invented shopping holiday likely to provoke ire in those who despise Black Friday, but in the course of mere hours, is likely to bring in billions in revenue to the Seattle-based company.

Amazon is hoping to create a Black Friday-level retail event, out of thin air, holding it during the middle of the summer—months away from the traditional holiday shopping season. Many people’s excitement around the new shopping holiday appears to be so great, that competing retailers such as Walmart and Target, are jumping into the fray with similar flash sales of their own in order to capitalize on the buying frenzy.

What is Amazon Prime Day?

Prime Day is similar to a Black Friday sale in July. Amazon has sales and specials on hundreds, if not thousands of products, with new deals going live every few minutes.

Some Prime Day 2018 details:

  • Industry analysts forecast that Amazon will pull in $3.4 billion in sales during Prime Day 2018 (approximately three times higher than last year).
  • This year, Prime Day deals will be available for 36 hours—the biggest shopping window so far. (It was 30 hours in 2017, and 24 hours in 2016.)
  • Three-quarters of online shoppers are aware of Prime Day, according to industry reports, potentially demonstrating the power of Amazon’s marketing efforts.

Nudged by Amazon’s success, more than half-a-dozen traditional retailers are following suit with their own online flash sales:

Walmart is one of the only retailers that has managed to go punch-for-punch with Amazon so far. Walmart purchased to increase its online presence and has rolled out free two-day shipping in response to Amazon Prime’s membership perks.

While Walmart hasn’t quite caught up, it is making headway. During the last holiday shopping season, for example, online sales were up 10%. The company’s hoping to swing some of that momentum into the new summer sale season.

Why is the retail industry so competitive?

Generally speaking, however, the traditional retail industry has been under a lot of pressure, with numerous bankruptcies and store closures from name brands including Toys R Us, Radioshack, and Payless.

E-commerce shopping sales, on the other hand, is expected to grow by more than 40% to about $500 billion by 2020, according to research firm Forrester. So it’s a big growth opportunity, according to experts.

More background

Prime Day started in 2015 as a part of Amazon’s 20th anniversary.

Amazon share price is up roughly 280% over the past few years, according to reports, while the S&P 500 is up 31% over that same stretch. While the market at large has posted large gains, Amazon’s charge is atypical, especially in the retail industry, which has gone through a tough transition over the past decade. While Amazon has been growing fast, it’s likely that it’ll slow down, or at least hit some speed bumps in the near future.

Some issues that could arise are a slowdown in Prime membership growth, and underperformance in new markets, like India.

Meanwhile, the company’s surging share price has also helped Jeff Bezos’s fortune grow to more than $150 billion—making him the richest person in modern history.

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Written by

Team Stash

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