Amazon Prime takes on Black Friday in flash sale to drive customer loyalty

by: Lucinda Southern on 09 July 2015

Amazon is launching a 24 hour sale excusivity to Prime account holders, but heavy discounting is not the best way to drive loyalty.

Amazon has announced a 24 hour-period of sales for members of its Prime service, calling this Prime Day, taking place globally 15th July.

For $99 (£79) a year Prime members receive free shipping on their Amazon products, usually – although not always - dispatched the next day. For Prime Day non-members can sign up to the service for 20% less than the annual fee, or enjoy the day-long sales across Amazon’s range and cancel their subscription after the 30 day trial is up.

Amazon has been very clear in its marketing around Prime Day that is going to be bigger than Black Friday, the day of sales that take place in America over the Thanksgiving weekend in November. There will be more items on sale and, Amazon hopes, more buyers, meaning also presumably more chaos when it comes to check-out. There are approximately 40 million global Prime members potentially putting a lot of pressure on Amazon’s site on 15th July.

Amazon typically generates huge sales from Black Friday. According to statistics from ChannelAdvisor who tracked sales across multiple retail sites, in 2014 Amazon was the most successful retailer on black Friday, increasing its sales by 76.91% from 2013.  

Hitwise data reinforces this, recording 173m visitors to Amazon’s site, an 83% increase from the previous year. Data overall shows the UK YOY growth increasing at a great rate than the US, as the trend picks up pace across the Atlantic.

Although offering produce at a discount has the danger of acting as a short-term fix, and there are many critics of this as a tactic. Ian Horsham, divisional director of promotions and incentives, The Grass Roots Group, argues that discounting is not the way to drive customer retention as it encourages more fickle custom.

“Dropping prices for a short time is nothing different to programmes already in existence,” he says. “Amazon should firstly look to satisfy the customers that regularly flock to its doors. This could be by surprising them with unexpected offers to enhance the perceived value, in return for their loyal custom.”

Real success, argues Horsham, is in programs that offer “a more holistic approach appealing to the requirements of individual shoppers, and what they really want.” Here, as we’ve seen from 2014’s Black Friday and Cyber Monday figures, is where mobile can play a key feature in the purchase journey.   

The psychological effects of a 24-hour sale are powerful among consumers, if looking at previous Black Friday behaviour is anything to go by. Amazon’s retail hold is strong and its cash-flow is not critical, making this less of a risky move.

Prime Day will drive a spike in sales during these quieter summer months, as well as work as recruitment for Amazon to drive more long-term customers into its loyalty program; Prime members spend more money and make up a core part of Amazon’s business. Taking on Black Friday was Amazon’s loud-and-clear message, and the online retailer is not going to shy away from this as an exercise in PR.