Guest Column | September 27, 2017

Amazon Prime Day — Learn How To Make Flash Sales A Success

By Channie Mize, general manager for the Retail sector, Periscope® By McKinsey

Amazon Box

A look at the success of Amazon Prime Day 2017 and tips on how other online retailers can make flash sales a success.

This year’s Prime Day was Amazon’s third and largest sales event in the company’s history. Following the extended 30-hour, member-only occasion, Amazon reported overall sales for Prime Day 2017 increased by over 60 percent compared to 2016 — with 50 percent more Prime members making a purchase on the day compared to last year.

This increase in sales velocity truly shows Prime Day is part of the online shoppers’ sales holiday calendar. Further, the year-over-year increase establishes it as an evergreen shopping holiday that’s fast catching up with other popular dates like Black Friday and Cyber Monday.

To gain a better understanding of what is driving shopper interest in Amazon Prime Day, we conducted a survey of 1,468 U.S. shoppers revealing their attitudes, actions, and behaviors. Despite the fact this was just the third Prime Day ever, the survey uncovered consumer awareness of the event is impressively high. Eighty-two percent of survey respondents had both heard of Amazon Prime Day and knew it was an annual event. Thirty-six percent of respondents confirmed they had made a purchase, a substantial increase over the 22 percent who said they had actively shopped for Prime Day deals in 2016.

For many consumers, Amazon is clearly doing something right, but there is still great opportunity for other retailers. Almost one-third (31 percent) of respondents stated promotions are never on products they are interested in and, as a result, they did not engage with the event. Interestingly, a significant number of shoppers expressed skepticism about the benefits of buying something on Prime Day. A further 19 percent went on to say they viewed Prime Day as a “marketing trick” and that, in their opinion, pre-event price inflation was being employed to make deals on the day seem more appealing to shoppers.

There is no doubt online shopping continues to grow, and flash sales are a part of the online shopping mix. While flash sales have become a fixture of online retail, enticing shoppers to part with their money using a combination of limited time, limited quantities, and great deals is no longer enough to drive customers to buy on the day. Asked to evaluate what most influenced their decision to shop on Amazon Prime Day, more than half (54 percent) of respondents said their first priority was to check out discounts on items they had already planned to buy. You can’t just throw spaghetti at the wall and hope something sticks.

Amazon knows it must market to shoppers effectively if they are to make a purchase, especially in categories not on their “shopping list.” Examining what had motivated them to shop on Amazon Prime Day this year, over one-quarter (26 percent) said they had encountered offers in more of the categories they were interested this year. A further 12 percent confirmed having received more personalized marketing messages from Amazon, motivating them to shop more.

Thirty-six percent of shoppers said their shopping activities are equally split between online and in-store, but 35 percent stated they are predominantly shopping online these days. If retailers want to ensure the success of their own time-limited online shopping events, they need to learn from Amazon’s approach to personalization and marketing, as well as leveraging data analytics to deliver an optimized shopping experience. Consider the following tips as a way to influence your success:

  • Consumers won’t spend unless they have a compelling reason to do so — for them a “top deal” first and foremost is an offer that specifically relates to products they want or need. Targeted offers work best when you know your customer’s past shopping history and are able to predict with confidence what’s on their shopping radar right now.
  • Understand which categories are most likely to resonate with consumers and curate offers on assortments of products within this category that make sense to shoppers.
  • Managing consumer expectations is critical — pre-event marketing needs to showcase deals that encourage incremental purchases or the discovery of new “must-have” products. As consumers curb the volume and frequency of their spending, getting the right promotions in place is becoming increasingly vital to ensure that consumer expectations aren’t dashed — otherwise they’re likely to disengage from future events.
  • Growing consumer skepticism about the validity of flash sale event deals means retailers and brands need to tread carefully when putting their discount strategies and product category reductions together. Knowing which products are the right lines to discount or promote will drive incremental sales and margins over baseline sales. Companies that fail to improve their offers risk falling further behind.
  • Personalized marketing is highly effective at elevating awareness of offers that shoppers feel are relevant to them — and ultimately active participation on the day. 

Adopting technology and data analytics to drive your discount strategies, marketing, and personalization efforts will ensure you get the most bang from your online sales activities. As discussed, consumers are wise to tricks employed by some retailers and their scatter gun approach to sales activities and, for that, these retailers will risk customer sales and ultimately dissatisfaction. If you focus efforts on delivering sales and discount initiatives that resonate with customers, you will be best positioned to increase revenue and profits and strengthen brand loyalty.

For access to the complete survey results, visit Amazon Prime Day 2017: The Inside Story on Consumer Sentiment.