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Should Merchants Jump on the Amazon Prime Day Bandwagon?

Online retail giant Amazon heavily promoted July 15th as a day of specials for its Amazon Prime members. With ecommerce aspirations of its own, Walmart saw an opportunity to make a play for the non-Amazon Prime members of the online shopping world. The big retailer announced they would offer plenty of “rollback” prices on items. Other retailers like Best Buy and Target launched competing promotions.

If sales holidays like these will be part of the future ecommerce landscape, other online sellers will want to prepare to take advantage of the heightened buzz around the next Prime Day. EcommerceBytes asked Rob Garf, Vice President of Industry Strategy and Insights at retail solutions firm Demandware about the nascent Prime Day phenomenon.

Regarding the future of such sales holidays, Garf made a cautionary observation. “The retail industry has been caught in a vicious cycle of perpetual deals for quite some time. While sales holidays like Prime Day create demand, they also risk further exasperated the constant game of chicken where consumers frequently delay purchases for the next, inevitable bargain.”

“Sales holidays are an interesting tactic to increase demand,” Garf said. “But retailers must be mindful of unnecessary margin erosion.” He also noted Amazon seemed less concerned with margin than customer acquisition, an opinion that matches Amazon’s public discussion of new Prime member signups.

Retailers looking for a time to try a sales holiday should consider trying one right after New Year’s, according to Garf. “Retailers are dealing with post-holiday consumer fatigue, excess inventory, and returned merchandise. And it’s a great way to encourage consumers to use recently received gift cards.”

But be prepared. The negatives surrounding Amazon’s Prime Day received plenty of attention. “Sales holidays, and other promotional tactics, are much more than creating pretty pictures and tag lines. They require careful preparation in areas like demand forecasting and distribution so customers are not disappointed,” Garf said.

Online reaction to Amazon Prime Day proved mixed. Some offered praise, while those who found out-of-stock items and less than desired discounts likely fueled the #PrimeDayFail social media buzz seen on Twitter and elsewhere.

It appears Amazon saw enough encouraging activity on Prime Day to merit a repeat performance. The company disclosed that Prime Day would return in 2016, and told NBC News the event attracted hundreds of thousands of new Prime members, signing up for $99 annual memberships.

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.