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Why Amazon Prime Day might become the new Black Friday

  • Amazon's third Prime Day was the biggest day ever in Amazon's history.
  • Sales grew by 60 percent compared to the same 30 hours last year.
  • "Amazon is absolutely trying to create an event with the retail black-hole-like gravitational field of Black Friday," says Craig Smith, VP of solutions and customer success at Amplience.

With the third Amazon Prime Day now over, industry experts are contemplating whether the e-commerce giant's annual day of deals will ever achieve the same status as consumer calendar events like Cyber Monday and Black Friday.

"Amazon is absolutely trying to create an event with the retail black-hole-like gravitational field of a Black Friday or Cyber Monday, but one that it owns entirely," Craig Smith, vice president of solutions and customer success at content cloud provider Amplience, told CNBC via email.

Prime Day is Amazon's celebration of its anniversary, offering 30 hours of deals to members of its Prime subscription service in 13 countries.

Amazon.com founder and CEO Jeff Bezos.
Getty Images
Amazon.com founder and CEO Jeff Bezos.

Tuesday was Amazon's third Prime Day and the retailer said it was the biggest day ever in Amazon's history. The event grew by 60 percent compared to the same 30 hours last year and said sales growth for small businesses and entrepreneurs was even higher. Amazon said more new members joined the Prime subscription service than on any single day in its history and that the best-selling product on the day was the Echo Dot.

While the main aim of Prime Day is to drive more subscribers to its $99 per year service, another aim is to position the event as an equivalent to Black Friday, the day after Thanksgiving where retailers offer promotions to mark the beginning of the holiday shopping season, or Cyber Monday, where small and online-only retailers offer special deals.

Amplience's Smith added that it was "an opportunity to cast its Prime service into the spotlight, boosting subscription sales, Amazon-branded products and services sales, as well as brand awareness on a level that few retailers can match."

The strategy seems to be paying off. Amazon Prime had 85 million U.S. members at the end of June, according to data from Consumer Intelligence Research Partners, almost double the number of users in June 2015, according to Statista.

Smith says Prime Day also offers Amazon and its retail partners the opportunity to move merchandise and clear warehouse space ahead of the fourth quarter.

Owning a day of the year

Amazon increased spending on advertising for Prime Day this year, which included launching a TV campaign.

Tom Smith, head of biddable media at mobile commerce company mporium, says this spending was successful, as data from Google trends shows searches for Prime Day this year started at a higher base due to more brand awareness.

"From the investment that Amazon are making on marketing this year, it appears that they really do want to make this an annual event and they are spending to ensure that the brand awareness is there of it as an annual event," he told CNBC via email.

"There are a few aims behind Prime Day for Amazon. The first, but my no means foremost, is to become part of the cultural conversation by literally owning a day of the year - something that their Chinese rival Alibaba has already achieved with Singles Day."

Amazon

Smith added that the main point of the day is to create more subscribers and draw more consumers into its ecosystem, as well as to deepen relationships with its brand and merchants.

Dave Glaser, chief product officer, global eCom at Worldpay, said Prime Day is quickly becoming a staple in the retail calendar.

"It's certain that Amazon will continue to disrupt the retail industry and it won't be too long before we're all asking Alexa (Amazon's voice-powered personal assistant) to bulk-buy chia seeds and benefit from the best Prime deal rather than purchasing online or in-app," he said in a press comment on Tuesday.

Does Prime offer a good deal for advertisers?

For existing subscribers, Prime Day is an "extra sweetener" to the bargain, according to Ray Fowler, director at digital transformation consultancy Transform, and said it could be called "Prime Tuesday".

"Black Friday is already far more established than Cyber Monday. The core offers are on Friday and consumers who've bought are unlikely to come back post-weekend. You could argue that it already is 'Prime Tuesday' in its own right," he said in an email to CNBC.

Boxes move along a conveyor belt at an Amazon fulfillment center in Tracy, California.
Getty Images
Boxes move along a conveyor belt at an Amazon fulfillment center in Tracy, California.

However, the value of Prime Day for advertisers and companies other than Amazon may be questionable. Celine Saturnino, chief operating officer at Total Media, says Amazon is a "frustrating black box" for companies questioning whether the platform offers them any incremental value.

"Arguably Amazon's value to advertisers through the consumer journey is still very much a contested space even if they are making strides in the consumer market. With their largely closed door policy around data and insight maybe it always will be," she told CNBC via email.

"Amazon's advertising revenue is a small proportion of their overall revenues and arguably less important to them than investing in their own products in a bid to dominate retail and other big business services."

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