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Amazon Prime Day starts ‘Christmas in summer’ today and rivals are jumping on the deal bandwagon

Amazon Prime Day starts ‘Christmas in summer’ today and rivals are jumping on the deal bandwagon
Business
Three years ago, Amazon.com Inc. created a summer shopping holiday out of thin air for its most loyal customers. That airspace is considerably more crowded today as its rivals jockey to grab deal-hungry online shoppers.

Retailers Target Corp., Best Buy Co., Macy’s Inc. and Walmart Inc. all have special promotions planned to coincide with Amazon’s Prime Day, which begins at noon in Seattle on Monday and runs for 36 hours in 17 countries. In a bid to distance the event from the Amazon brand, some companies are calling the day “Black Friday in July.” And while their deals on merchandise vary, the pitch is the same: No membership fee required.

Amazon’s Prime Day “presents a tremendous opportunity for other retailers if they know how to take advantage of it,” said David Bassuk, global co-head of the retail practice at consultant AlixPartners.

Backing up the assertion, research from Bassuk’s firm shows that nearly four out of 10 Americans plan to shop somewhere else besides Amazon on Prime Day. Nearly all shoppers do some pre-purchase research, bouncing around deal sites and social media. This creates an opportunity for retailers to lure them away from Amazon with deep discounts and freebies.

Companies are encroaching on Amazon’s terminology as well as its discount strategy: Last year, nearly half of the 100 largest retailers (excluding the Seattle-based e-commerce giant) had a limited-time sale or messaging that included the word “prime,” the survey found. And rivals also highlight their lack of membership fees, in contrast to Amazon, where prime members pay for access to benefits like free shipping on some items and access to music and media libraries.

That number should increase this year. Take Target, which is dangling six months of free same-day delivery for customers who spend at least US$100 on July 17. Or Macy’s, where prices on men’s suits and sport coats are up to 75 per cent lower through Sunday. Walmart, meanwhile, is offering some big-screen TVs at lower-than-Black Friday prices. Even Google has hopped on the bandwagon, slashing the price of its voice-activated home assistant by US$30.

“July has turned into a mini-holiday shopping season as retailers vie for shoppers’ attention — and share of wallet,” according to Steve Barr, consumer markets leader at PricewaterhouseCoopers.

Those digital wallets are expected to be fatter thanks to the new U.S. tax code and fuel prices that have cooled from a three-year high in May. The Bloomberg Consumer Comfort Index for the week ended July 1 showed Americans’ sentiment approaching a 17-year high, thanks to upbeat views of the economy and their personal finances. The most optimistic are those earning more than US$100,000, a segment that dovetails nicely with Amazon Prime members.

Shoppers will spend a collective US$3.4 billion just on Amazon during the Prime Day promotion, up 42 per cent from a year ago, according to Coresight Research. More than three out of four Prime members — a group that now numbers more than 100 million globally — plan to take part, AlixPartners found. And they’re in the mood to buy: So-called conversion rates, an e-commerce metric that measures what share of site visits lead to a transaction, spike on Prime Day, according to the Salesforce Shopping Index.

But Amazon is asking more of its Prime members these days, having jacked up the annual fee to US$119 from US$99 in April, its first increase since 2014. Online retailer eBay, which has battled Amazon for years, hopes to get shoppers to reconsider joining Amazon’s club by offering a week of exclusive deals beginning July 16 from hundreds of brands including Apple, Samsung and Adidas.

Last year, three out of four Prime Day shoppers visited other sites before purchasing an item on Amazon, with Walmart and Target the most popular destinations, according to a survey by Bazaarvoice, which monitors social-media feedback about brands. For Walmart and Target, the challenge is holding onto them.

The big win for retailers on Prime Day is when a shopper sees something they want on Amazon, and then finds the same thing for less on a competing site. This can give the rival a key advantage when holiday shopping season rolls around, and brand loyalty is critical since Amazon now captures nearly 50 per cent of all online spending in the U.S., according to Emarketer Inc.

“It’s important for retailers to win customers early on because it pays off during the holidays,” said Siddharth Kulkarni, analyst at Adobe Digital Insights. “Being top of mind in e-commerce is important because it pays off year-round, not just on one day.”

Bloomberg.com

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Target, Best Buy and Walmart all have special promotions planned to coincide with Amazon s Prime Day, which runs for 36 hours in 17 countries

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