Prime Day may seem like a company-made gimmick. But it fits a theme that is only getting more important to the future of Amazon’s retail business.
Prime Day is more than a gimmick, it’s the single biggest event to expand Amazon’s defensive moat
New Prime signups are crucial to Amazon’s continued retail domination.
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Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
The Amazon-created shopping event, which debuted in 2015 as a way to boost sales during the non-holiday season through deep discounts for Prime members, kicked off this afternoon and will last 36 hours.
And if last year’s event is an indication, it is the most important day of the year for new Prime member signups — the main defensive moat for the company’s retail business — at a time when Prime membership growth in Amazon’s home country appears to be slowing.
Last year, Prime Day resulted in an 85 percent uptick in daily signups in the U.S. for Amazon Prime compared to an average day, according to an estimate from Second Measure, a startup that tracks and analyzes consumer credit card payments. Second Measure did this by comparing the number of Prime members who were charged for a new membership 30 days after Prime Day — the day the company’s free trial for new members expires — with an average day of signups.
And this year’s event is taking place as Prime membership in the U.S. grew just 12 percent over the past 12 months, compared with 35 percent for the previous year, according to survey data from the research firm Consumer Intelligence Research Partners. (It’s also the first Prime Day at Amazon’s higher price for Prime, which increased from $99 to $119 in May.)
That slowdown seems at least directionally accurate, considering that Amazon has spent the past two years adding different payment options, discounts and perks to the shipping-and-entertainment membership in the U.S. to attract shoppers newer to online shopping and those who might live in households with lower income than early Prime members.
Prime is crucial to Amazon’s continued success in retail because Prime members shop more frequently, spend more per year and price-compare less than Amazon customers who aren’t Prime members. These two charts from Second Measure help tell the story.
This article originally appeared on Recode.net.
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