Why Brands Can’t Pin Their Hopes on Prime Day
Editor’s Note: This article was originally published on July 15, 2019. It’s 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 holiday that offers deep discounts and deals to Prime members, took 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. But because of the pandemic, which led to Amazon’s own fulfillment problems and an economic crisis that rivaled the Great Depression, last year’s Prime Day took place in October—a time when both brands and consumers were getting ready for the holiday season.
Amazon reportedly sold $10.4 billion worth of products during Prime Day 2020, according to Digital Commerce 360. This was up 45.2 percent from the year prior, in part because of the event’s move to the top of the holiday season and the growth in overall ecommerce activity.
This year, Amazon has bumped Prime Day back to June 21-22—a time that ushers in summer and shopping for seasonal events like the Fourth of July and back-to-school. While industry experts expect growth to slow this year, they project that Prime Day sales will top $12 billion.
With over 200 million Prime members and an even greater non-member audience, selling on Amazon can help brands expand their reach and gain access to new customers. But those customers usually aren’t engaged with the brand itself. And often this access to new customers 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, and missed opportunities to create long-lasting connections with customers.
Many forward-thinking brands know 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 with no notice, leaving brands with little control over how, or even if, their products are displayed to potential customers.
Instead, many merchants have taken ownership of their growth and rely on the channels that are directly within their control—like email, website, and mobile—to deliver highly personalized and compelling customer experiences.
How brands are growing without 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 they received and their inability to engage customers after a sale helped spur the company’s decision to create their 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.
"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."
Kate Geller, director of affiliate marketing, Kiss My Keto
Without first-party data about your customers, it’s nearly impossible to develop long-term relationships with them, which are crucial to the growth and sustainability of your business.
“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,” Kate added.
Beardbrand, a men’s grooming company, initially used a third-party to sell their products on Amazon. It worked well, and the brand thought about bringing that function in-house so they could invest more into selling on Amazon. But when their products sold out on Amazon, Beardbrand noticed an unanticipated surge of sales on their ecommerce site.
“Why bother managing two different channels when we could just focus on one and make it really good?” Eric Bandholz, founder of Beardbrand said of their decision to change their sales channel strategy.
Instead, Beardbrand relies on content marketing as a key component of their 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,” Eric said.
"We invested so heavily in content marketing and our brand that people were looking for Beardbrand on Amazon rather than looking for our products."
Eric Bandholz, founder, Beardbrand
Mt. Capra, a family-owned maker of premium goat milk products, has been in business since the late 1920s. The brand sells its products on its own direct-to-consumer (DTC) website and Amazon, but 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,” Joe added.
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.
"We had our sales almost cut in half over the course of about a month simply because Amazon misunderstood three of our top listings. What that showed us is that you have to build your own customer list."
Joe Stout, president, Mt. Capra
How ecommerce retailers are creating their own momentum around Prime Day
Entrepreneurs and brand marketers increasingly realize the power of their own digital channels, and they’re swooping into the mid-year 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.
We saw that behavior change even more when consumers were forced to adapt their preferences during the pandemic.
“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,” said Zach Thomann, executive vice president and general manager for PFS, according to DigitalCommerce360.
Savvy ecommerce brands have created their own online shopping events. The goal? Engage customers and claim their portion of that imminent consumer spending.
- Chubbies, a men’s apparel brand known for its shorts, created two branded holidays to drive sales—one in July and the other during the holiday season. Chubbies’ “Julyber Monday” event was originally designed to help men get new shorts ahead of July Fourth. It’s “Thighber Monday” holiday coincides with Cyber Monday. The events have been so popular that last year, Chubbies introduced “ChubFest 2020” which 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.
- 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. This year, the event took place on April 28-29 and shoppers got access to “better-than-Black-Friday-deals” without the need for promo codes or coupons. Billed as its biggest sale of the year, Wayfair deeply discounts products like furniture, home decor, and more during this annual two-day sale.
- 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 based on their level of spending throughout the year, though the sale opens up to non-cardholders after the early access period. This sale, held both online and in-store, started long before Prime Day, but the popularity of it has grown significantly in recent years because of the emergence of influencer marketing and other digital marketing channels. Typically held in July, Nordstrom moved the event to August last year due to store closures and concerns about the pandemic. This year, though, the major sale returns to July with a preview that kicks off on July 6.
- Target is another retailer that holds an annual summer shopping event online and in-store to compete with Prime Day. Its “Deal Days” event, which typically coincides with Amazon’s Prime Day, 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. Last year, Target moved this popular event to October 13-14 to once again coincide with Amazon’s Prime Day. This year, Target has expanded its Deal Days to a three-day event that will take place on June 20-22 featuring “hundreds of thousands of discounts,” according to CNET.
Why brands must use their own channels to grow sustainably
Selling on Amazon can help brands gain access to new customers. But brands today have to go deeper than simply acquiring customers through transactional marketplaces if they want to grow sustainably.
“For ecommerce marketers, it’s not easy to constantly find new users, sell them on the value proposition repeatedly, or build a brand the way you want, especially when acquisition costs are climbing steeply. And our work will become exponentially harder with the changes Apple and Google are making to protect consumer privacy,” said Kady Srinivasan, head of marketing at Klaviyo.
Brands must be able to collect first-party data and use it to develop time-tested connections with customers.
“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.
You have the power to take ownership of your growth and uniquely engage your customers through the channels that are within your direct control.
Use the first-party data you capture from your interactions with your customers to deliver more personalized experiences. And use your digital channels to tap into the massive summer shopping season and nurture relationships with your customers throughout the rest of the year. This will help you stand out from the competition and compete for a share of shoppers’ wallets during the ultimate holiday shopping event—Black Friday and Cyber Monday—and beyond.
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