How much did Amazon’s Prime Day hurt rival retailers?
Prime Day 2017, Amazon.com has reported, was a huge success, helping the company and sellers on its marketplace achieve record sales. But what effect did the annual event have on those retailers competing with the e-tailing giant? The answer, it turns out, depends on whom you ask.
A new report by Sense360 shows that retailers, including Barnes & Noble, Best Buy, Home Depot, J.C. Penney, Kohl’s, Lowe’s, Macy’s, Sears, Target and Walmart, saw an average decline of 24 percent in store foot traffic during the 30-hour Prime Day event. To gauge Prime Day’s impact on foot traffic, the firm anonymously observed over 1.1 million visits to stores during 17 consecutive Tuesdays between March 7 and July 11, excluding July 4.
Seeing the biggest drop-off in traffic were department store retailers Sears (-36 percent), J.C. Penney (-34 percent) and Kohl’s (-31 percent). Macy’s was the least affected with a nine percent decline. Target (-28 percent) and Walmart (-23 percent) also experienced declines.
Decreases in traffic were most evident among consumers who have the Amazon app installed on their mobile phones. Traffic was down 32 percent among those with the app, while it slowed only seven percent among those who do not carry it.
Slice Intelligence, which analyzes data from a panel of 4.2 million online shoppers on a daily basis, found that rival retailers also saw their market share levels drop on Prime Day. J.C. Penney, which had a 0.52 percent share of the U.S. e-commerce market before Prime Day dropped to 0.14 percent while Kohl’s went from 0.61 percent to 0.35 percent and Macy’s from 1.8 percent to 1.0 percent. Walmart saw its share fall from 2.1 percent to 1.0 percent and Target declined from 1.5 percent to 0.9 percent.
While Amazon’s rivals may have lost sales on Prime Day, research by Liftoff, a mobile app marketing and retargeting platform, shows that many rebounded soon thereafter. The firm’s data shows purchases using non-Amazon shopping apps declined 12.84 percent on Prime Day. The effects were not long lasting, however, as purchases with non-Amazon apps peaked at nearly 71 percent two days following the event.
- Amazon Prime Day Drives Significant Decline in Foot Traffic for Big Box Retailers – Sense360/Globe Newswire
- Amazon Prime Day Impact on In Store Visits to Retailers – Sense360
- Prime Day 2017 Postgame Report: Amazon US Prime Day sales up 32 Percent – Slice Intelligence
DISCUSSION QUESTIONS: If you were competing with Amazon, how would you respond to Prime Day going forward based on the data shared in this article? Which retail channels (department stores, home improvement, mass merchandisers, etc.) do you think are currently most at risk when it comes to losing customers to Amazon.com?
Stefan WeitzExecutive Vice President, Technology, Radial
Stefan WeitzExecutive Vice President, Technology, Radial
Stefan WeitzExecutive Vice President, Technology, Radial
Stefan WeitzExecutive Vice President, Technology, Radial
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7 Comments on "How much did Amazon’s Prime Day hurt rival retailers?"
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Founder and CEO, Bobsled Marketing
In our mobile-centric world, this data point is one of the most telling: “Traffic was down 32 percent among those with the [Amazon] app, while it slowed only seven percent among those who do not carry it.”
We know that Amazon Prime members, and therefore their most loyal shoppers, skew to a higher household income. These households value convenience and selection, something that Amazon has set an exceptionally high benchmark for. Retailers who target the upper-middle income household will take the biggest hit from Amazon. Retailers who want to compete with Amazon will have to do it on a dimension that Amazon is weaker in such as product curation and discovery, impulse purchases or vendor relations.
Executive Vice President, Technology, Radial
While in-store sales and share declined, we actually saw increases in online sales. Online sales for companies we analyzed roughly doubled on Prime Day vs. an average Tuesday, and GNC (one of our customers) experienced a five-fold increase on Prime Day vs. a typical Tuesday. So it’s important to not look at this solely as Amazon’s gain being everyone else’s loss — we are seeing the tides raise many boats.
CEO, Fuse Inventory
As the article says, it depends who you are as a retailer and when and where your shoppers shop. Since traffic rebounded for most retailers, there are ways to bookend Prime Day with attractive offers and promos. It also depends on if you’re competing directly with Amazon or not as Prime Day has a different focus each year. As a retailer, it would be hard to go head-to-head (this year in electronics) but it’s certainly possible to focus on other products not emphasized by Amazon.
Strategy & Operations Delivery Leader
Retailers would be hard-pressed to compete with the reach, compelling bargains and impact of Amazon Prime Day. Amazon’s vast assortments and heavily discounted products on that day may just be an outlier that retailers will have to account for when they do their pre-season merchandising plans. Perhaps there will be a one-day substantial impact, and this should be planned for both from a store operations and supply chain perspective, yet in the grand scheme of things there may be ways for retailers to capitalize on this strategy.
Some reluctant retail brands such as Nike now have entered into the Amazon marketplace and they, certainly, as well as others will benefit from this increase in online traffic. So perhaps rather than cultivating strategies to compete with Prime Day, joining or collaborating with Amazon’s marketplace may be advantageous.
President, Protonik
sales management consultant