What Can Retailers Learn From This Year's Amazon Prime Day?

By Channie Mize, Periscope By McKinsey

In July 2015, Amazon’s iconic Prime Day online summer retail event made its first debut in nine countries: the U.S., UK, Spain, Japan, Italy, Germany, France, Canada and Austria. The inaugural event and 2016 offered Prime members a 24-hour shopping bonanza. By 2017, Amazon had extended the shopping period to 30 hours to make more of its members’ desire for a bargain. Fast forward to 2018, and this year Amazon reports its fourth annual Prime Day surpassed all prior sales records in the e-commerce giant’s 24-year history – including every Black Friday and Cyber Monday – with Prime members ordering over 100 million products during the 36-hour sales event.

What does this all mean for retailers, and how can they effectively compete? To examine shopper sentiment toward the event and how it’s reshaping purchasing behaviors, Periscope By McKinsey surveyed 3,000 consumers in the U.S., UK, France, Italy and Germany to understand their attitudes and actions during Amazon Prime Day 2018.

The research found that:

More Consumers Are Participating And Spending

The U.S. (41 percent) and Italy (39 percent) showed the greatest shopper participation in this year’s event. Based on Periscope’s previous annual surveys, Amazon Prime Day participation has multiplied year-on-year in every country across 2015-2018. Participation had increased a typical 4-5x, with the greatest increase in the U.K. with a multiple of 6.8.

Looking specifically at spending, every country spent more than in 2017. The biggest move was in the U.K. where 59 percent of shoppers spent “a bit more” or “much more”; this was closely followed by France (57 percent) and Germany (54 percent). There are also signs the U.S. is becoming more constrained in its spending as the top country where shoppers say they “spent the same” at 40 percent.

Shoppers are also buying more items with a majority in every country stating they bought “a bit more” or “much more” product than in 2017. The greatest shift was in France with 62 percent falling into these categories, followed by the U.K. (57 percent), Italy (54 percent), Germany (49 percent) and the U.S. (46 percent).  

Prime Day Is Not Alone, Though, In Driving Purchases

While Amazon Prime Day continues to demonstrate its strengths, it has a lot of online competition when it comes to sales events during other times of the year. For respondents, Cyber Monday is widely regarded as the top named sale event competitor with an average 44 percent saying they participate, though it was as high as 65 percent in the U.S. In Germany, Mega Monday was the next most participated event (10 percent), but in the U.S. (30 percent), U.K. (21 percent), Italy (9 percent) and France (8 percent) it is Free Shipping Day, which celebrates its 10^th anniversary in 2018. While many feel they get a great deal at Amazon Prime Day, the results show a sophistication in some markets where the convenience of using a single marketplace, and low prices, is not enough to keep them from shopping in “other” places.

Shoppers Are Preparing And Educating Themselves

Shoppers appear increasingly sophisticated in their approach to Amazon Prime Day, with an average of 62 percent of consumers in the UK, the U.S. and Italy confirming they had preplanned the product categories they wanted to shop within on the day. However, 51 percent of consumers in France and Germany adopted a more spontaneous shopping approach.

But despite some spontaneity, consumers are getting smarter about checking prices outside Amazon before committing to their purchases. On average 62 percent of shoppers now check “a couple” or “several” of their prices. European countries were much more likely to check prices, with France recording the most consumers likely to check several prices (44 percent).

How Can Retailers Leverage These Findings To Their Advantage?

As this year’s research reveals, Amazon is rapidly becoming the preferred starting point for online shopping in all markets surveyed, and the platform on which an increasing number of consumers typically complete their online purchases.

In a world where multichannel or online shopping behaviors now predominate, it’s clear that Amazon is setting the bar against which all other online retailers are measured.

But consumers also appear to have a better grasp of what to expect when Prime Day comes around and are becoming more sophisticated in their shopping approach to the event. This extends to undertaking forward planning with regards to the items or product categories they plan to shop, perhaps to maximize the budgets set aside, and visiting rival online retailers to price-check deals on the day.

The rising popularity of the event represents an opportunity for other retailers to capture shopper appetites for deals and compete for a share of mindset and wallet spend. How can they do that?

• Invest in omni-channel retailing capabilities. Attaining success will demand more advanced channel management practices that include tailoring assortments, merchandising and promotions to the on- and offline channels. Organizations need to deliver truly individualized experiences across all touchpoints and gather real-time intelligence on what’s working or not for each customer.
• Capture shoppers’ appetites for deals and offer promotions that capitalize on known consumer desires to stimulate them to purchase. Retailers should also consider hosting their own shopping days or participate in events like Cyber Monday to boost sales, leveraging an advanced analytics approach to capitalize on these events and gain real value.
• Move from email promotions or product recommendations based on buying habits to a much more refined approach to truly maximize the value of personalization. To achieve this requires a real-time, 360-degree view of the customer – what they want, what they’ve bought in the past, their preferred engagement channels and what they’re trying to do right now. Personalized marketing techniques and messages increase the chances of showing shoppers an “unexpected delight” they’ll want to buy or help increase the basket size for “planners.”

For complete details on the survey’s global findings, download the report, Beyond the Hype – The Evolution of Consumer Shopping Behaviors, via this link.

About The Author

Channie Mize is the Senior Vice President & Global Sector General Manager for Periscope By McKinsey. In this role, she is responsible for ensuring success of retail clients in using Periscope and for driving the solutions’ vision to address current and future needs of the dynamically changing retail landscape.