The stakes are high for Amazon since it reported a loss of $3.8bn in Q1. With a double day of discounts for prime members, and further offers in the days leading up to the sales frenzy, the e-commerce giant hopes to increase traffic, revenues and subscriptions to the prime service.
With recent struggles of share prices dropping 12% this year, Amazon is hoping one answer might lie in live commerce and leaning on influencers to boost sales whilst shoppers are more conservative during inflation and the cost of living crisis.
With up to 10% of UK shoppers potentially abandoning their Prime Day purchases in the face of choice overload this year, according to a study, how can brands encourage the right customers to purchase, and are discounts the answer during tougher times for consumers?
Amazon Live, the platform’s QVC-style livestream shopping market, is also hosting live chats with creators talking about Prime Day deals.
The event features comedian Kevin Hart, Australian model Miranda Kerr, actress Kyle Richards, as well as American TV personalities Kandi Burruss and “Selling Sunset” star Chrishell Stause.
Viewers watching the Prime Day livestreams can buy the featured products and brands through a scrolling carousel below each video.
PMW spoke to five leading performance marketers to get their take on the changing e-commerce landscape.
“It’s not about less choice, it’s about the right options”
Kelsey Jones, Global Director of Product Marketing, Emarsys said: “Consumer choice is not a bad thing, but in the busiest sales periods it’s important that retailers don’t overwhelm their customers to the point of paralysis. Brands need to empower shoppers with the products, promotions, and information they want and need to make informed decisions. Beyond that point, they risk overloading them.
“While major sales events are a great opportunity to offer customers discounts on a wide range of products, retailers must focus on getting the right products in front of the right people — that requires a targeted, data-driven approach. For brands like Amazon, the mix of online deals and data gathered in-store (via Amazon Fresh and Amazon Go) creates a powerful targeting combination.
“Whether it’s Amazon Prime Day, the Jubilee, or even the Christmas sales, brands like Puma and Adidas Runtastic need to deliver highly targeted marketing and sales strategies rather than a barrage of potentially irrelevant options. It’s not about less choice. It’s about offering the right options.”
“Increasingly demanding consumer expectations”
Marcel Hollerbach, Chief Innovation Officer, Productsup commented: “I’m interested to see the results of this year’s Prime Day, given Amazon recently reported its first quarterly loss since 2015. Driving sales has become more challenging for all brands and retailers – even the big players.
“Overall, businesses should expect lower spending during the two-day event compared to previous years. However, shopping at discounted rates is a high priority for most consumers right now, so companies should still expect high traffic. Prime Day has always been, and will continue to be, an opportunity to push out excess inventory and engage with new customers.
“That is if brands and retailers can meet increasingly demanding consumer expectations. Research shows that the leading factors that would make someone choose one brand or retailer over another are whether shipping fees are included in the price (35%) and how detailed product information is (35%). Going the extra mile to add more information, like sustainability credentials, texture, weight, etc., and removing any hidden fees from the final price can be the difference between a sale and an abandoned cart.
“If Prime Day is to be a success, companies need full control over their product information value chains to make quick updates to their listings. Keeping product feeds accurate throughout the event as items run out of stock or deals change will help boost consumer trust and the likelihood of purchases.”
“Retailers need to prioritise measurement of real-time performance”
Sarah Rew, Senior Director, Global Marketing, LoopMe: said "Around Amazon Prime Day, retailers need to prioritise measurement solutions that allow them to track and optimise real-time performance if they are to align with fast-moving shopper habits. Reliance on proxy metrics, such as click through rates and impressions, provides an imprecise understanding of return on investment, and lacks the full performance picture needed to adjust to unfolding trends.
“To bolster immediate campaign results around Amazon Prime (when competition for attention is particularly high), retailers must be able to review the probable success of each ad before delivery. Tangible metrics drawing on data from first-party interactions, purchases and audience intelligence research, afford swift responses to evolving consumer behaviour, ensuring ads are persistently matched to shopper needs and allowing retailers to track campaigns against outcome-focused KPI’s.”
“What is the role of brands in a cost of living crisis?”
Victoria Herrick, Strategy Director, Strat House, said: “It is not the job of the brand to decide who can and cannot afford their offerings. Only the consumer can do that based on their own personal circumstances and priorities. For many, Amazon Prime Day might offer a little ray of lightness in tough times – an opportunity to indulge or simply to get what’s badly needed at a reasonable price. Provided the deal is genuinely a discount – it isn’t exploitation – it's genuine helpfulness.
“So what is the role of brands in the cost of living crisis? There’s no blanket answer for this, because it all depends on the brand’s reputation and what the brand offers. In tough times people tend to gravitate toward tradition and nostalgia as a way to regain a sense of stability. Many brands are well qualified to offer this. I also believe it’s important to think of new ways to be helpful (and yes occasionally discounting is the way to do that). It’s really all about building reputation and trust for the future – even if your customers can’t buy from you today.
“Brands should be wary of rushing to slash prices. There’s a risk that this could devalue the brand in the longer run."
“Lowering prices can lead to dependency on promotions”
Justine O’Neill, Senior Director, Analytic Partners explained: “Looking at this through a marketing effectiveness lens, cutting prices can be one piece of a bigger, data-led recession strategy – the core of which should be communicating and offering value; which can be found in a variety of ways, including real and perceived discounts, distinctive value propositions, and enhanced experiences. Brands and retailers must make sure they keep communicating this value to current and potential customers, as well as ramping up marketing. Finding innovative ways to convey the benefits of purchasing now and not later goes well beyond price. And, keep in mind that your competitors have an impact on your brand. According to our ROI Genome research, the average brand could lose around 15% of its business if a competitor of comparable size doubled its marketing expenditure.
“Nonetheless, retailers must keep an eye on the competition, be price competitive (whether at, below, or above competitors, depending on the brand's value proposition and quality), and maintain profitability and margins – not only during tough times. But, the lowest price is not always the best option because it frequently affects profits and depresses long-term sustainable performance. Constantly lowering prices or oversaturating the market with discounts can even lead to dependency on promotions and loss of base sales.
“Instead, we’ve seen that continuing to spend on media can help reduce price sensitivity while prices are rising and helps brands maintain or increase their ROI during economic crisis. In fact, brands with more media spending are also less sensitive to price hikes and suffer fewer sales declines. This strategy, which will take many brands down different paths, must use data and advanced analytics to understand holistic impacts, including online and offline, direct and indirect effects. The one thing they all have in common is the need to maintain communication with both old and new customers.
“Amazon has revolutionised the way we shop”
Matt Andrew, UK MD & Partner, Ekimetrics, said: “As we mark Amazon Prime Day, it’d be hard to ignore the impact the once humble internet retailer has had on the way every one of us lives our lives. Amazon has truly revolutionised the way we shop, relax and work. And it is precisely because Amazon has a presence in all aspects of our lives through its many linked services that it is able to continually stay close to its customers. In doing so, Amazon can reduce the need for heavy advertising and reallocate these resources to grow in emerging markets, promote other parts of its business like AWS or reinvest into operational expansion.
“Focusing on shopping specifically, Amazon has had a singular vision and strategy: to deliver ease of experience for the end customer. With a rigorous approach to client centricity, customers are now well accustomed to the service it affords. Amazon’s seamless digital experience, speed and ease are essential qualities that make its customer base sticky. For brands looking to replicate Amazon’s success, an attempt to simply mimic Amazon’s journey is unlikely to be successful for all. Instead, brands must have a laser-focus on a key differentiator – whether that’s quality, a unique product range or customer service – and pursue this with rigour.”
"Prime day continues to be a tentpole retail event"
"Prime Day 2022 gave marketers a chance to test livestream strategies. They ranged from hard-selling pitchmen hawking power tools all the way to friendly next-door-neighbor types chatting about products that made their lives easier—products that were discounted on Prime Day. The latter streams tended to be directed at the brand’s target consumer, but were not necessarily promoting the brand’s products.
"The video hardsell in not new. QVC and its sister channel HSN mastered the technique years ago, serving 400 million households and amassing revenues of $14 billion (2020) in the process. But video brand building via livestream is much more challenging. Converting digital engagement to brand affinity will not be easy, and any solution will likely be category specific. Hence I found it encouraging to see so many companies testing a variety of approaches."