Amazon.com Inc.’s second annual Prime Day promotion was the online behemoth’s biggest sales day ever, with worldwide orders climbing more than 60 percent over last year.
Amazon created Prime Day to entice people to sign up for its $99-a-year membership, which offers free two-day shipping as well as free video and music streaming. How many signed up this time isn’t known, but the company sold a record number of its own gadgets. Deals for tablets, Kindles and the voice-activated Echo speaker were plastered all over the home page. The video-streaming Fire TV stick was the best-selling Amazon gadget and helped the company triple last year’s Prime Day sales of in-house devices.
The ultimate goal is to create a shopping experience and digital ecosystem that makes Amazon indispensable.
“Whether it’s video, e-readers, restaurant delivery, it all comes down to how much Amazon is part of your daily life,” said James Cakmak, an analyst at Monness Crespi Hardt & Co. “The more touch points Amazon can create with your daily routine the more it can monetize on membership.”
Though some shoppers encountered technical glitches early on, the problem was resolved and momentum built throughout the day. In the United States alone, Amazon’s biggest market, Prime Day sales outstripped 2015’s results by more than 50 percent.
“It’s a stellar number,” Cakmak said. “They’re well on their way to accelerating their mission of augmenting Prime usage.”
Prime subscribers spend about $1,200 annually on the website, compared with $500 for non-subscribers, according to Consumer Intelligence Research Partners , or CIRP, in Chicago. Amazon added 19 million U.S. prime members since the last Prime Day — for a total of 63 million as of June 30, according to the research firm.
“If more Prime members shop more with Prime it pulls users away from everyone else,” said Poonam Goyal, an analyst with Bloomberg Intelligence. “Not just Wal-Mart and Target, but apparel retailers too.”
By late Tuesday Amazon started to see increased sales, with orders for third-party merchants increasing by 30 percent compared with a year earlier, fueled largely by international demand. The company relied on thousands of these third-party sales to drive this year’s spike, offering more deals and deeper inventory.
More than two million toys and one million pairs of shoes were purchased, Amazon said, and more than 90,000 TVs were sold.
“They probably created more sticky customers,” with the sales, Goyal said. “Others have to think harder about how they’re going to compete with Amazon. They did a great job and it puts others at risk.”
Last year some shoppers were disappointed — inventory ran out quickly and the company offered deals on obscure items such as shoe horns and food containers. But analysts credited the event with boosting sales and building a strong foundation for the 2015 holiday shopping season, a trend that seems to have been repeated in 2016.
“After yesterday’s results, we’ll definitely be doing this again,” Amazon Prime Vice President Greg Greeley said.
Amazon spiked initially on the news but reversed course and was down less than 1 percent to $743.48 at 12:31 in New York. The shares have climbed 10 percent this year.
(c) 2016, Bloomberg · Nicole Piper