Amazon officials jubilantly reported that Prime Day sales grew 60 percent sales growth over the same event in 2016 while Prime membership growth also set a record.
Analysts have estimated that about 70 percent of U.S. households have Prime memberships. But the number of U.S. Prime households grew by more than any other single day in the company’s history. This likely meant that the company generated more than $1 billion dollars in sales during the 30-hour period that started at 9 p.m. eastern time on July 10.
The single most popular product sold on Prime Day was the Amazon Echo Dot, the diminutive cousin to the Amazon Echo. The Dot was being sold at its lowest price ever, which helped explain the heavy sales. Meanwhile, the more expensive Echo was being sold at half price, so it also sold well.
Amazon also reduced its entry price for its Music Unlimited service to 99 cents for four months, posing stronger competition for Apple Music. Furthermore Music Unlimited subscribers can play music titles on any device that runs the app, not just Apple devices.
Best Buy got bad news when Amazon announced that it would field a team of experts to help install smart home units, resulting in a stock tumble for Best Buy as investors feared this would mean less work for its Geek Squad.
Instead Amazon’s stock price was the beneficiary of all this activity, rising on July 12 to over $1,000 per share.
During Prime Day, Amazon worked to change consumer attitudes on how retail sales were conducted. There were bonuses for ordering through Alexa, the virtual assistant that runs in Echo devices. Amazon was also quick to point out how fast its Amazon Now service worked on Prime day, with some buyers getting their orders in as little as 12 minutes.
According to Amazon, the fastest deliveries were in Sunnyvale, Calif., Berkeley, Calif. and Kirkland, Wash. to prime members who ordered snacks, writeable DVD packs and a Samsung Internal solid-state storage drive.
Still, Amazon’s instant gratification plans only work in relatively small parts of the U.S. Where Amazon Now isn’t available, the Amazon Prime free 2-day shipping usually takes three or four days, and some of Amazon’s other services, including its expert installation and even its grocery business, simply aren’t available.
But none of that means that Amazon’s plans for retail industry domination are off track. It just means that the company still has work to do. In addition, while Amazon is certainly an influential e-commerce force, it’s not alone. China’s Alibaba is another e-commerce giant that’s gaining ground, according to Fortune’s Global 2000 list. Amazon is in 83rd place and Alibaba is in 140th passing target this year.
In the U.S., however, Amazon is in its own league. Other retailers including Sears. K-Mart and JC Penny are closing stores in their efforts to stay in business, while also beefing up their e-commerce activities.
Smaller retailers are finding that their best chance for success is to sell through Amazon’s retail ecosystem. Startups and small businesses are finding that they can see healthy growth by becoming Amazon suppliers and partners.
In its Prime Day announcement, Amazon highlighted several startups and small businesses that did very well by participating in Prime Day, including one that saw its business grow 500 times over. Amazon said that other companies that participated in Prime Day saw record breaking sales.
All of this translates into an evolving plan to dominate retail sales by driving retail competitors out of business unless they are partners with Amazon in one way or another. Small retailers and producers of retail goods can do very well if they sell through Amazon and perhaps even better if they hand off their warehouse and fulfillment processes to Amazon as well so that their products are eligible for Amazon Prime.
The big stumbling block for Amazon is Walmart, which despite Amazon’s best efforts is still the largest retailer. Walmart is showing no signs of giving in.
To compete with Amazon, Walmart acquired one of its competitors, online retailer Jet. Following the acquisition, Walmart began to combine the operations of the two companies and to change the way in which Walmart does business in the e-commerce world. This has aligned the company and its e-commerce divisions including Jet to do battle with Amazon, while also having access to Walmart’s vast resources.
But what both Walmart and Jet have failed to realize is that the real goal for Amazon isn’t just about sales. Amazon is working to become indispensable to consumers world-wide. The record number of sales of Echo devices is just as important to Amazon as anything else that happened on Prime Day with the possible exception of the record number of households signing up for Prime.
The idea is to make Amazon the only place where consumers think to shop. Instead of getting in the car and running over to Walmart, Amazon wants them to ask their Echo device to get it for them. If those consumers know that the price for whatever they want to buy will be competitive, and that they can get the product they want in a timely manner, then they won’t need to fight traffic to get to Walmart; they won’t need to fight crowds inside of Walmart; and they won’t have to wait in lines when they leave.
Instead, all the consumer needs to do is ask and the item they want will appear at their door. Any friction between desire and purchase will vanish and unless Walmart does a brilliant job with its e-commerce efforts it will be left wondering what happened to its business.
Amazon’s goal is well along, depending on where you are. Monday evening as Prime Day began, I asked Alexa, which was running on my Amazon Echo, to order a black Echo Dot. It appeared on my desk minutes ago. Not quite instant gratification, but pretty close.
