Many brands decided to offer steep discounts and pay Amazon for advertising to win sales on the site.
Amazon.com Inc.’s fourth annual Prime Day event lured shoppers from around the world, highlighting the promotion’s evolution from a rummage sale of obscure products to 36 hours of discounts on major brands such as Samsonite luggage, Callaway golf clubs and General Mills cereals.
It’s a sharp contrast from the first Prime Day in 2015, when customers kvetched on social media about underwhelming offerings that resembled a warehouse clearance sale. This year’s product depth demonstrates the leverage the e-commerce giant has when providing access to its loyal Prime subscribers who pay fees in exchange for shipping discounts, video streaming and other benefits. Many brands decided it’s smarter to offer steep discounts and pay Amazon for advertising to win sales on the site than to sit out an event estimated to generate $3.4 billion in spending.
Procter & Gamble Co. offered 25 per cent off Tide laundry products. Callaway Golf Co. offered as much as 50 per cent off golf clubs and accessories and Under Armour Inc. had discounts of about 40 per cent on clothing and sneakers, according to data from Boomerang Commerce, which helps brands set prices and ad pricing on the web store.
“This symbiotic relationship between Amazon and leading brands legitimizes Prime Day, as well as those brands serious about stepping up their e-commerce game,” said Guru Hariharan, chief executive officer of Boomerang.
Amazon doesn’t release Prime Day sales figures. Spending increased 89 per cent from a year earlier during the first 12 hours of the event, according to estimates from Feedvisor, which sells pricing software used by Amazon merchants. The sales boost came despite technical glitches that hobbled the early hours of the promotion. Many shoppers were disappointed when they couldn’t add products to their carts or their attempts to search for goods prompted an error page featuring dog photos.
Amazon acknowledged the issues, but has yet to explain what caused the crash. One possibility is that the website was attacked by bots designed to snatch up deals so buyers can sell them elsewhere, or those designed to lock up inventory to protect a product’s prices on other sites, said Ben Zilberman, marketing manager at Radware, a cybersecurity company in Israel. Bot attacks are common on retail sites during big promotions, and Amazon featured a lot of “captchas” used to distinguish humans from robots during the sale, an indication it was fending off bot traffic, he said.
“When traffic comes in such high volumes, it makes it difficult to run the security to distinguish between a regular customer and a bot,” Zilberman said. “A lot of traffic on retail sites is from bots, sometimes 75 per cent.”
The flood of traffic is good for Amazon’s fast-growing advertising business, a profitable revenue source that supplements its low-margin e-commerce business strapped with high shipping costs. Brands and merchants buy advertising to gain prominence on the site, helping Seattle-based Amazon make more money on the popular platform. Amazon is the fourth-most popular site in the US, behind Google, Facebook and Google’s YouTube video service.
Prices for keyword search ads are auctioned based on supply and demand, with the costs spiking on Prime Day because the company’s Prime members are big online spenders, said Jeremy Hull, vice president at iProspect, a digital marketing firm.
“Most brands increase ad spending on Prime Day,” Hull said, adding that they saw as much as a 30 per cent lift in search volume and brand engagement on Google and Facebook that day as shoppers browse before making an online purchase.
Small businesses also got a piece of Prime Day. Amazon has millions of merchants selling goods on its marketplace, mostly small and medium-businesses that had sales exceeding $1 billion during the promotion, Amazon said in a statement.
One of those companies is Perfect Bar, which makes refrigerated protein bars from peanut and almond butter. The company panicked when Prime Day began and shoppers experienced glitches because it had beefed up inventory in anticipation of the promotion. But then the power of social media took hold. Disappointed shoppers posted screen-grabs of Amazon’s error message and said they wanted to buy their favorite protein bars, putting the product and links to its Amazon deal in front of about 20,000 potential new customers. That generated social buzz for the product that boosted traffic when Amazon recovered, said Jeff Perkel, director of e-commerce for the San Diego-based company.
“It was kind of nerve-wracking when noon hit and we started seeing a bunch of dog photos,” Perkel said, referring to the images on Amazon’s error page. “Then we started seeing things on social media we couldn’t dream up. The glitch turned into positive impressions for us.”
