Why Brands Can’t Pin Their Hopes on Prime Day

prime-day

Editor’s Note: This article was originally published on July 15, 2019. It has been updated to include the most recent data and insights. 

Christmas in July isn’t a new concept. But the emergence of Amazon Prime Day, a two-day shopping extravaganza that offers deep discounts and deals to Prime members, has since taken that concept to a new level. 

With Prime Day, Amazon has created one of the year’s biggest shopping events aside from Black Friday and Cyber Monday. In fact, the event has been so successful, Amazon turned it into a two-day event last year.

This year, though, Prime Day didn’t take place during July as usual. 

Due to the global pandemic which led to an economic crisis that rivaled the Great Depression and Amazon’s own fulfillment problems, the event was postponed with no clear date.

Now after several months of delays, Amazon has finally announced that Prime Day will take place on October 13-14, 2020—a time when both brands and consumers will likely be getting ready to kick off the upcoming holiday season.  

Last year, Amazon sold more than 175 million products during the two-day event—more than it’s combined sales for Black Friday and Cyber Monday the year before, reports CNBC

This year, that number is likely to be even higher due to the marked rise in online shopping amid the pandemic. That rise in online shopping is projected to take ecommerce-driven sales over the trillion-dollar mark for the first time ever this year. 

With more than 150 million Prime members and an even greater non-member audience, selling on Amazon can certainly help brands expand their reach and gain access to new customers. 

But often this access comes at a hefty price—namely, monthly subscription, referral, closing, and fulfillment fees. 

Fees aside, the biggest price brands pay to sell on Amazon? The lack of data they get in return and missed opportunities to communicate and build relationships with customers. 

During a time when online stock-outs are still prevalent, that inability to communicate is particularly detrimental to a brand’s relationship with their buyers. 

“For shoppers who are considering or intend to buy an unavailable product, this lack of communication and transparency further complicates the matter and forces them to go elsewhere, at best. At worst, it enacts a feeling of instability from the brand,” writes Alex McPeak, content strategist at Klaviyo. 

Forward-thinking brands realize they can’t pin their hopes for sustainable growth on Prime Day or Amazon itself. Channels run by third-parties can change their rules and algorithms without any notice, leaving brands with little control over how or even if their products are displayed to potential customers. 

And consumers are demanding better from brands. Today, consumers can access information about a seemingly unlimited number of products and services in real-time. All they need is an internet connection. 

Consumers today want to engage with brands that are authentic and provide value—brands they trust. Trust evokes advocacy, which is one of the sharpest arrows in a brand’s quiver. 

Smart brands are taking back control over the customer experience and tapping into the channels they own, like email, website, and mobile, to deliver highly personalized, relevant, and compelling marketing experiences that build valuable long-lasting relationships. 

How brands are growing fast without heavily relying on Amazon or Prime Day

Kiss My Keto, a ketogenic lifestyle company, started selling on Amazon to test how customers would respond to their products. But the lack of data the brand received about its customers through that channel and its inability to engage with them after a sale helped spur the company’s decision to create its own ecommerce store. 

“We analyzed our profit margins, looked at the little customer data we had from Amazon, and realized that a large portion of our revenue was going to Amazon’s fees. Selling on Amazon was helpful to reach a wide range of customers, but it doesn’t give sellers the rich data we need to learn more about customers, create relationships with them, increase average order value, customize messaging to different segments, and drive long-term customer lifetime value,” said Kate Geller, director of affiliate marketing at Kiss My Keto. 

Without deep data about your customers, like profile and behavioral data, it’s nearly impossible to develop long-term relationships with them, which are crucial to the growth and sustainability of your business. 

Geller added, “With Amazon, we couldn’t provide our customers with information about ketosis—scientific findings, anecdotal videos, blog content, and other educational resources. Our voice was missing and we knew we could provide more value to our customers than just transactional ecommerce in a marketplace. We realized we needed to have our own ecommerce store to help us collect customer data and have more control over the customer experience.”

Beardbrand, a men’s grooming company, initially used a third-party to sell its products on Amazon. It worked well and the brand thought about bringing that function in-house so it could invest more into selling on Amazon, but ultimately changed its strategy. 

When its products sold out on Amazon, Beardbrand noticed an unanticipated surge of sales on its ecommerce site. Eric Bandholz, founder of Beardbrand said of the change in strategy, “Why bother managing two different channels when we could just focus on one and make it really good?” 

Beardbrand has since grown and relied heavily on content marketing as a key growth strategy. 

“We invested so heavily in content marketing and our brand that people were looking for Beardbrand on Amazon rather than looking for our products… With content marketing, and also with branding, you need to have a little bit of faith in your process, what you’re doing, and know that not every single thing you’re creating is going to have a call to action. It’s not going to be driving people to buy things. And you’re not going to be able to track that,” Bandholz said. 

Mt. Capra, a family-owned maker of premium goat milk products, has been in business since the late 1920s. The brand currently sells its products on its own direct-to-consumer (DTC) website and Amazon, but has found the latter to be challenging. 

“We had our sales almost cut in half over the course of about a month simply because Amazon misunderstood three of our top listings. They said we were advertising it in a way that was against their terms of service, but it wasn’t. It took a month and a half to get them to turn it back on, and by then, the sales never recovered,” said Joe Stout, president of Mt. Capra. “What that showed us is that you have to build your own customer list. You have to own the relationship with your customers.” 

Instead, the team at Mt. Capra has focused on building their customer list, segmenting it effectively, and creating personalized marketing experiences to drive their growth online. 

How online retailers are creating their own momentum around Prime Day

Brands are increasingly recognizing the power of their own digital channels and they’re swooping into the summer shopping season with steals and deals of their own. 

“Consumer behavior has shifted over the past few years such that people are actively looking to shop in the middle of July. And it’s no longer relegated just to Amazon,” according to Modern Retail last year.

This year, consumer preferences have been forced to adapt in the midst of COVID-19. 

Retail closures in early 2020 sent more people online than ever before and, once online, many found it difficult to find the products they needed in-stock due to supply chain disruptions while others encountered longer-than-usual delivery timelines. 

“Amazon’s decision to delay shipments of non-essential goods has led to significant behavior changes for both consumers and merchants,” said Zach Thomann, executive vice president and general manager for PFS, according to DigitalCommerce360

“From our report, 28 percent of consumers have moved away from Amazon as their preferred website for online shopping since Amazon has changed their shipping policies, raising to 39 percent for millennials,” he continued.

Zach told DigitalCommerce360 that “Consumers have also shown an affinity to cut out the middleman and buy directly from brands themselves. Thirty-nine percent would prefer to shop directly on a brand’s website rather than a marketplace website. Thus, DTC brands must be ready to cultivate a seamless experience for shoppers straight from their site, from check out to last-mile delivery.”

Savvy online retailers have started creating or dialing up their efforts on their own shopping events. The goal? Engage customers and claim their own portion of that imminent spending. 

Furniture and home goods online retailer Wayfair hosts its 48-hour Way Day event, which features the biggest discounts the brand offers each year across hundreds of thousands of products. 

Typically held in April, the online retailer opted to hold the third-annual event in September this year instead of April.  

Chubbies, a men’s apparel brand known for its shorts, created two of its own branded holidays to drive sales—one in July and the other during the end-of-year holiday season. 

Chubbies’ “Julyber Monday” holiday event was originally designed to help men get new shorts ahead of July Fourth. It’s “Thighber Monday” holiday event coincides with Cyber Monday during the end of the year shopping season. 

The events have been so popular for the brand that in 2020, Chubbies introduced “ChubFest 2020” which kicked off on July 12th and was positioned as “two weeks of insane deals” that would include “Julyber Monday.” The two-week event featured deep deals, new products, limited inventory, and free gifts. 

Nordstrom hosts its annual two-week Anniversary Sale, during which the retailer introduces new fall merchandise and clears out summer styles at deep discounts. 

Cardholders get early access to the sale based on their level of spending throughout the year, though the sale opens up to non-cardholders after the early access period. This sale started long before Prime Day, but the popularity of it has grown significantly in recent years due to the emergence of influencer marketing and other digital marketing channels. 

Typically held in July, this year Nordstrom moved this event to August due to store closures and concerns about the pandemic. While the shift negatively affected the retailer’s Q2 earnings, Nordstrom reported digital sales were up 20 percent during this timeframe, according to CNBC. And Nordstrom has already announced the major sale’s return to July in 2021.

Target is another retailer that holds an annual summer shopping event to compete with Prime Day. It’s “Deal Days” event, which typically coincides with Amazon’s Prime Day in July, offers shoppers deals of up to 40 percent off merchandise, according to CNN. The premise? You don’t need to be a member or a cardholder to score great deals. 

This year, Target moved this popular event to October 13-14, which once again coincides with Amazon’s Prime Day, and says that the event will feature one million more deals than last year’s event, according to CNN

Why DTC brands must tap into their own digital channels today

There’s no doubt that selling on Amazon can help brands gain access to new customers, which is vital to a brand’s growth. But brands today have to go deeper than simply acquiring customers through transactional marketplaces if they want to grow sustainably. Brands must be able to collect data and use it to develop deep relationships with their customers over time. 

“The most effective marketing operations exercise control over every customer interaction, including email, website, social, call centers… every customer touchpoint, making sure they are relevant and delivering value because that’s how you keep customers,” according to Susan Bidel, a senior analyst at Forrester. 

Brands have the power to take back control over the customer experience, uniquely engage customers through their own digital channels, and use the data they capture to deliver more compelling, personalized experiences that lead to long-term relationships. 

Heading into what will likely be the most competitive online holiday shopping season in history, the brands that do this the most effectively will stand out from the competition as they compete for a share of consumers’ wallets.

Want more tips to prepare your online store for the holiday shopping season? 

 

Check out this holiday planning guide to learn how to drive more sales.

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