Prime Day is coming.
And it’s all about the deal. While deal days like Black Friday are familiar to consumers, Amazon has manufactured a sales holiday seemingly overnight, making one of the slowest retail months a deal-hunter’s dream. So who are the consumers that can’t wait to shop online this July, and how can brick-and-mortar retailers keep consumers walking through their doors?
As of September 2017, Amazon had roughly 90 million Prime members (and you have to be a Prime member to shop the deals). According to a 2016 Business Insider report, over 75% of these customers were members of upper-income households making over $112k per year.
A recent Commerce House study found that affluent online shoppers* tend to skew male and be a Millennial or Gen Xer (between the ages of 23 and 53). They are educated, with over 80% holding a bachelor’s degree or higher. Compared to the general population, they are more likely to enjoy gaming, social media and sports.
And they love electronics. In fact, 67% of these affluent online shoppers view electronics as cherished purchases, while 56% find these purchases to be low risk. So when Amazon offered over 100,000 deals on products like Amazon Echo smart speakers, flat screen TVs and robotic vacuum cleaners during their Prime Day 2017, customers responded.
6 out of the top 10 best sellers from that event were electronic items, and Bloomberg estimates the event generated around $1 billion in revenues for Amazon. This year’s event is expected to see a 40% sales increase, reaching at least $3.4 billion globally, per the retail think tank Coresight Research.
34% of affluent online shoppers
say that the #1 reason they prefer
to dine and shop from home is ease
58% of affluent online shoppers
find the ability to experiment with
or try out new products very
important when shopping
Affluent online shoppers shop from home because it’s easy.
As compared to the general population, the affluent online shopper is far more driven to shop from home due to the ease of shopping and purchasing. Amazon has capitalized on this need for ease, offering Prime members benefits like free two-day shipping, free 2-hour delivery of groceries and restaurant food, and free returns. [Stat for call out: 34% of affluent online shoppers say that the #1 reason they prefer to dine and shop from home is ease].
But this convenience comes with a cost: $119 a year (after a recent increase from $99) . When asked about the membership price increase, only half of members were comfortable with the increase, while the other half said they weren’t willing to pay that going forward.
With the value of Prime membership debatable in the eyes of consumers, brick-and-mortar retailers have an opportunity to win or retain more shoppers.
Brick-and-mortar has the experience advantage.
Affluent online shoppers will venture to a physical retail location when checking out new products. In fact, 58% find the ability to experiment with or try out new products very important when shopping (as compared to just 44% of the general population). But like most consumers, they also find a good deal and good customer service important components of an in-store experience. [Stat for call out: 58% of affluent online shoppers find the ability to experiment with or try out new products very important when shopping].
In 2017, mass merchants took advantage of consumers’ need for deals and in-store experiences by offerings their own deals on Prime Day. Kohl’s offered discounts of 30%, Macy’s offered discounts of up to 60% (with free shipping) and Office Depot offered discounts of up to 70%. And they saw the benefit, with sales on Prime Day up 124%.
As we approach Prime Day 2018, other retail sectors may now feel the impact. With its purchase of Whole Foods, Amazon is bringing its Prime Deals to the grocery retail space, offering Prime members 10% off sales items in store and rewards on Whole Foods purchases. In fact, 10% of consumers in a BlackFriday.com and Offers.com study said they were most likely to purchase groceries (in person or online) on Prime Day this year.
To compete for customer dollars during the Prime shopping season this July, in-store and online deals are a must. In past years, those retailers that didn’t offer discounts around Prime Day saw the lowest sales increases (5%) the week of the event. However, as other previously online-only companies like Warby Parker, Casper and Untuckit also bring their low prices and unique customer service experiences to the physical retail landscape, traditional brick-and-mortar stores can’t fall into the trap of solely competing on price (at the risk of following in Toys r Us’ footsteps).
So while Prime Day is all about the deal, brick-and-mortar retailers have an opportunity to entice shoppers to walk through their doors by offering not only great deals, but value through ease of shopping and relevant product experiences.
* Affluent online shopper: a consumer with a household income of $100,000 or more annually and purchased 50% or more of their household essentials online