The last few weeks were quite eventful, with the summer’s biggest online sales event coinciding with the launch of augmented reality phenomenon, Pokemon Go. Many online retailers benefited from Amazon Prime Day, while physical retail stores got a surge of traffic from the Pokemon hype.
What does this mean for retailers, both online and offline?
Marketplace Seller Sales Surged by 30% on Amazon Prime Day
Prime Day was Amazon’s biggest sales day in history, with global merchandise sales eclipsing the first Prime Day by 60%. But it’s not just Amazon benefiting from the spike in consumer traffic. According to Amazon, Marketplace sellers sold 30% more items on Prime Day 2016. This number accounts for the influx of new sellers joining the third-party seller program.
“Prime Day is great for customers and sellers,” said Peter Faricy, VP for Amazon Marketplace. Prime members purchased more than 14 million items from Marketplace sellers during last year’s Prime Day. This year, the number of participating vendors more than doubled, with 30% of all Lightning Deals sold by Marketplace sellers.
By having more sellers on the Marketplace, Amazon can boost the number of available Prime Day deals without exposing their own inventory. As Prime Day continues to be the biggest sales event of every summer, Amazon sellers will need a robust inventory management system to handle Prime fulfillment requirements.
Via Retail Dive
Rival Retailers Also Benefited From Amazon’s Prime Day
Prime Day had a positive impact on sales for a number of Amazon’s competitors. Competitive retailers such as Walmart, Macy’s and eBay countered Amazon deals with their own. For instance, Walmart’s “Dare to Compare” sales offered bargains on electronics, baby and kids products, and apparel - the most popular categories from Prime Day’s product assortment.
According to marketing agency HookLogic, Retailers saw a 13% increase in site traffic, and a 62% conversion rate compared to an average Tuesday. Prime Day likely spurred consumers into buying mode, shopping for deals and discounts across marketplaces. This surge in comparison shopping underlines why retailers need to diversify their channels in order to reach more customers.
Amazon to Phase Out List Prices from Marketplace
If you shopped on Prime Day, you may have noticed some missing list prices. That’s because list pricing is slowly being omitted from products sold by Amazon and third-party sellers. This new approach may be due to the increasing number of consumer lawsuits arising from fake discounts and inflated list prices, many of which got Amazon in hot water. Eliminating the list price or MSRP basically removes discount as a factor in purchasing decisions.
The removal of list prices is the subject of controversy, with analysts weighing the pros and cons. On one hand, shoppers may be less likely to purchase items if they don’t appear to be “on sale.” By having a single selling price, consumers will have to compare prices across multiple marketplaces to get an idea of the product’s value.
By contrast, retailers can now sell products at a higher selling price without competing against bogus MSRPs. This allows them to focus on repricing strategies based on selling price and not on inflated list prices.
Caught in the Hype: What Does Pokemon Go Mean for Retailers?
Years ago, Amazon brought the shopping experience directly into consumers' homes. Today, Pokemon Go is bringing back traffic into malls and retail spaces. Food establishments have taken advantage of the hype, using virtual objects known as "Lures" to attract Pokemon and their would-be hunters. These businesses reported as much as a 25% boost in sales.
But foot traffic doesn’t always equal conversion for retailers, especially those who do not sell Pokemon-related merchandise or external phone batteries. Players are simply too busy catching Pokemon to notice window displays or products on sale.
Whether or not Pokemon Go remains relevant in the weeks to come, the cultural phenomenon underlines the potential of mobile technology and location data applied to the retail space. Retailers can win customers by applying location-based mobile marketing, gamifying the shopping experience, and investing in the customer experience on all channels, whether in-store, in-browser or on mobile.
According to futurist Tim Bajarin, “Physical retail’s best tactic against Amazon is technology. Most retailers simply don’t use it effectively. This is the start of something interesting when local businesses can start taking advantage of blending the physical and digital in ways that online-only players cannot.”