Why are Amazon holding “Prime Day”?

Amazon Prime DayThis week on Wednesday the 15th July Amazon are holding their first every Prime Day to celebrate their 20th birthday. They’re promising more deals than on Black Friday including thousands of Lightning Deals and six popular Deals of the Day.

It’s not like Amazon to give stuff away for free though, so what’s it really all about?

Subscription payments

First and foremost it’s about converting more customers into paying customers. Not paying for products – but paying up front for a year’s free delivery. Prime costs £79 per year in the UK, but last week Amazon had an offer where you could sign up for £59, a £20 saving – that offer has ended.

Of course what they didn’t tell you is that if you want to participate in Prime Day you can sign up for a 30 day trial and still get free next day delivery on any purchases and simply cancel your Prime membership before the end of the trial period. Plus the £59 offer wasn’t quite as good as it looked anyway – If you sign up for a free trial you get a month’s free Prime so you get 13 months for your £79 so the £59 offer was effectively on a £13 saving (although still not to be sniffed at).

Ongoing sales for a year

Signing up customers to Prime will automatically mean those customers will spend more during the course of the year. Why wouldn’t you purchase from a marketplace that’ll ship everything for free rather than shop elsewhere? Free expedited shipping gives Amazon a price advantage for a whole year when you compare buying the same product at the same price from a competitor but will have to add on the shipping cost.

Shifting excess aged stock

Then of course you’ll need to consider the type of products Amazon will have on offer. Whilst I’ve not doubt they’ll have limited quantities of some very desirable products at a knock down price, most of the items on offer will be the stuff Amazon have at the back of the stock room and are having trouble shifting. We’ve seen before that deals on marketplaces aren’t always for the products you might want to buy… someone somewhere will, but don’t expect all deals to be irresistible.

Add on sales

Amazon are also likely to see increased sales across the site. Whilst buyers might log on to check out the Prime Day deals, it’s likely that some customers will also make additional sales whilst they’re in the buying mood. Even without the sales on deals, Amazon are likely to see an uptick in revenues during the day and that’s no bad thing.

And if that’s not enough reasons….

What Amazon want to do is dominate the world of online retail. They don’t like eBay, they don’t like Rakuten, they don’t like Aliababa, and they definitely don’t like upstarts like Jet and daily deal sites that threaten to encroach on their business. Amazon want every consumer to spend their money on Amazon and their Prime Day is a way of not only getting you to spend on the 15th, but a way to tie you into spending on Amazon for a whole year (and probably longer ass you’ll never remember to cancel your Prime subscription before it automatically renews).