Looking beyond the hype of Prime Day 2018
By Channie Mize, Senior Vice President & Global General Manager for Retail, Periscope By McKinsey
Amazon reported its fourth annual Prime Day surpassed all prior sales records in the e-commerce giant’s 24-year history – including every Black Friday and Cyber Monday – with Prime members ordering over 100 million products during the 36-hour sales event.
To learn more about the impact of Prime Day 2018, and to help retailers look beyond the hype of the event, Periscope By McKinsey conducted research across five global markets (US, UK, France, Italy and Germany) to examine shopper sentiment towards the event and how it’s re-shaping purchasing behaviours.
Consumers are shopping ‘smarter’
Looking at how consumers shopped, an average of 38% in the UK, US and Italy described themselves as being more planned in their approach to Amazon Prime Day 2018, confirming they had pre-planned the product categories they wanted to shop within on the day. In contrast, 53% in France and 48% in Germany considered themselves to be more spontaneous.
But despite some spontaneity, consumers are getting smarter about checking prices outside Amazon before committing to their purchases. On average 62% of shoppers now check ‘a couple’ or ‘several’ of their prices. European countries were much more likely to check prices, with France recording the most consumers likely to check several prices (44%).
Amazon has a strong loyalty amongst its consumers. 61% of US respondents confirmed they have a Prime account followed closely by 58% of Italians. Germany (54%) and UK (53%) also showed a strong loyalty to Amazon through their Prime memberships with only 40% of French consumers confirming that they have a Prime account.
And those Prime members bought more items and spent 50% or more compared to last year – the biggest move was in the UK where 59% of Prime members say they spent ‘a bit more’ or ‘much more’ compared to 2017, closely followed by shoppers in France (57%) and Germany (54%). US consumers were more constrained in their spending, however, with 40% of shoppers saying they ‘spent the same’.
Competing with Amazon for consumer mindsets and wallets
Whilst Prime Day may be going from strength to strength, it has lots of online competition when it comes to other sales events throughout the year. Cyber Monday is widely regarded as the top named sale event competitor with an average 44% saying they participate, though it was as high as 65% in the US.
In Germany, Mega Monday was the next most participated event (10%), but in the US (30%), UK (21%), Italy (9%) and France (8%) it is Free Shipping Day, which celebrates its 10th anniversary in 2018.
Whilst many feel they get a great deal at Prime Day, the results show a sophistication in some markets where the convenience of using a single marketplace, and low prices, is not enough to keep them from shopping in ‘other’ places.
What does it mean for retailers?
1. Multi-channel shopping behaviours dominate among today’s consumers. As such, investment in omnichannel retailing capabilities is critical; attaining commercial excellence will demand more advanced channel management practices that include tailoring assortments, merchandising and promotions to the on- and offline channels. Organisations need to deliver truly individualised experiences across all touchpoints and gather real-time intelligence on what’s working or not for each customer.
2. Shoppers are purchasing more items with Amazon at each successive Prime Day, but they’re also getting smarter, becoming more price aware and increasingly willing to see what’s available elsewhere.
Retailers have an opportunity to capture shoppers’ appetites for deals and undertake some smart promotions that capitalise on known consumer desires – stimulating them to purchase items on their “wish list.” They should also seize the opportunity to host their own shopping days or participate in events like Cyber Monday to boost sales – but they’ll need to adopt an advanced analytics approach to capitalise on these events and gain real value.
3. Prime Day shoppers are forward-planning more, selecting which product categories/products they’ll shop for on the day.
It’s time to get personalisation right, moving from email promotions or product recommendations based on buying habits to a much more refined approach. It starts with gaining a real-time, 360-degree view of the customer – what they want, what they’ve bought in the past, their preferred engagement channels and what they’re trying to do right now. Personalised marketing techniques and messages increase the chances of showing shoppers an “unexpected delight” they’ll want to buy or help increase the basket size for “planners.”
In a world where multi-channel or online shopping behaviours now predominate, it’s clear that Amazon is setting the bar against which all other online retailers are measured. But the rising popularity of its summer shopping sales event represents an opportunity for other retailers to capture shopper appetites for deals and compete for a share of mindset and wallet spend.
For complete details on the survey’s global findings, download the report, “Beyond the Hype – The Evolution of Consumer Shopping Behaviours,” via this link.