Breaking Down Retailers' Love-Hate Relationship With Amazon Prime Day

For a juggernaut in more industries than one, the annual, mid-summer Prime Day isn’t critical to Amazon.com, Inc. AMZN.

“I don’t think the survival of Amazon or Amazon Prime is tied to Prime Day,” Tom Caporaso, CEO of the customer engagement driving Clarus Commerce, told Benzinga. “It is much more of a promotion and an awareness. I think at the end of the day, if they didn’t have a Prime Day, there's still going to be multi-millions of people in Amazon Prime as a program and also shopping on Amazon.”

But the press doesn’t hurt, and neither do the sales, which support massive quarterly earnings reports.

“I think it is helpful. I think it’s an awareness play,” Caporaso said. “They did $500 million to $600 million in sales last year, and they’re going to do above that this year I think, so it’s not a throwaway day.”

With an estimated 80 million Prime users, the promotion is about retention and recruitment ━ appeasing existing consumers and enticing prospective shoppers, he added.

And maybe a little about denting the armor of rivals.

Retailers React

“The more people that get into the Prime ecosystem, the more they shop at Amazon, the less they shop elsewhere, and that’s ultimately helping Amazon from a sales perspective and hurting their competition,” Caporaso said.

With Amazon knocking prices of, say, its Echo from about $180 to $90, a deal $50 better than Black Friday and $40 better than last year’s Prime Day, rivals are scrambling to compete.

Retailers like Macy’s Inc M, J C Penney Company Inc JCP and Best Buy Co Inc BBY have responded to Amazon’s formidable strategy by running promotions of their own, pulse marketing they might not normally attempt in July. Caporaso said they’re trying to capitalize on the “halo effect” of Prime promotions.

“Trying to ride the coattails of Prime may make sense just because people are in that shopping mindset because of the promotion around Prime, and customers may try to find those deals [among rivals], as well,” he said. “There’s enough people doing promotion, and I think they’ll see a lift, but ultimately I don’t think they can go head to head.”

Some competitors do boast profits, though, including the Clarus Commerce-powered Freeshipping.com, which saw an uptick in both purchases and average order value during a 20-percent promotion last Prime Day.

But for the most part, retailers are channeling their efforts into back-to-school and holiday sales, particularly targeting Black Friday and Cyber Monday ━ dates less significant to the holiday-creating Amazon. _______ Image Credit: By alisdair (Delivery Uploaded by MaybeMaybeMaybe) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons