EP093 - Amazon Prime Day Hot Take
Amazon Prime Day was July 11, 2017. In this episode we give our hot take on this Amazon created sales holiday.
Amazon Prime Day Recap press release
Amazon Deep Dive EP24 Podcast
Full interview wth Dorel Juvenille Group, Jamie Dooley - EP86
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Episode 93 of the Jason & Scot show was recorded on Wednesday, July 12, 2017.
New beta feature - Google Automated Transcription of the show:
Jason: [0:25] Welcome to the Jason and Scott show this is episode 93 being recorded on Wednesday July 12th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.
Scot & Jamie: [0:39] Hey Jason and welcome back Jason and Scott show listeners, well yesterday was the third annual Amazon Prime day and it's Day show we want to go over the highlights with a Jason and Scott exclusive Prime Day hot take.
[1:09] Well Jason did you take advantage of Amazon Prime.
Jason: [1:12] I did not as voluminously as I might have thought I would but I found a few things to buy.
Scot & Jamie: [1:18] I think the problem with you and I as we're probably at at Peak Echo so it was, it's actually frustrating day when you're at pekic Echo and you paid no I think I paid north of like 18190 for my couple of my Echoes and to see it there at at a. Much lower prices it's almost got a negative effect in a weird way.
Jason: [1:41] I have that happen in a couple of ways like certainly with Amazon first party for like but they're also some some other products I purchase from Amazon recently that then went on on Prime Day deals that they gave me a little bit of buyer's remorse in, night my family frequently likes to remind me that I have a very short gap between desire and fulfillment so it's. You know I'm not good I'm not going to waiting for those deals.
Scot & Jamie: [2:08] Yeah next you need to create a prime day blackout for pretty much all of the spring so no shopping past me.
Jason: [2:16] Yeah yeah that that would be the smart thing to do I'm not committing to it.
Scot & Jamie: [2:21] So it's funny I probably like you I spending a lot of time for the day looking at the deals and, really funny one I don't know why it made me think of you but I did and it was this lunch box and it kind of started working its way up as a hot deal pretty quickly and I don't know how many they sold these things but it must have been, thousands of them but it's a it's a lunch box and the gag is it's this kind of white medical looking box and it's got an EMT tag on it and it says human organ for Trans, so you know imagine you see your colleague in the lunchroom and they're brought walk in today open this up and start eating stuff out of its kind of like. Zombie apocalypse lunch box that was a really strange when you know some of the strange ones that you see over the years are like The Yodeling pickle and those kinds of things with this was a new I had not seen this before I am and it was kind, at the same company makes fake take out boxes that for you to put your lunch in so that he's kind of like you know, strange-sounding stores in you they they look like Chinese take out and you put your lunch in there any doubt of it just kind of like throw people off that what you're doing.
Jason: [3:28] I got it that seems like a lot of thinking type stuff.
Scot & Jamie: [3:31] Yeah yeah it was kind of funny it's from a third-party seller where these guys I will have to have one of our interns look it up and get back to you.
[3:43] But I thought it was pretty funny one to bring out for folks.
Jason: [3:47] Good luck with that with the interns I can't get those guys to do anything.
[3:53] Scot before we jump into this year's Prime day maybe it's worth a setting the table a little bit and talking about the the history and context answer the first thing I was like to remind folks of, is the Amazon is not the originator and does not own the market on inventing their own sales holidays there's a, a great great tradition there but specifically in an e-commerce you know Cyber Monday which is been the biggest shopping online shopping day of the year in the u.s. for many years was really an invented Holiday by one of our former podcast guests and the original shop.org team.
Scot & Jamie: [4:37] Yeah yeah you know the what to pull up the episode but Scott sober in the, does that story goes they saw the trend in the kind named it so you know the back before we all had Broadband Sans fight 3G 4G 5G kind of connections you would go to work and you would use that nice juicy Broadband connections that's why that Monday took off and they decided to name it, that was the first created holiday and then another one we talked about a lot is singles day.
Jason: [5:07] Yeah absolutely in that and you know that the global people and or the Alibaba people that created singles day.
[5:17] Would quickly point out that that the. It's it's become much bigger than Prime day or Cyber Monday are at the moment and so there's a lot of momentum there by the way the the Scott Silverman episode was episode 66 of any listeners want to go back in, and catch that up, so we have that Cyber Monday then we had Ollie Bob launching singles day where they took sort of a niche holiday and turned it into a huge shopping day and it's now you know by far the largest single online shopping day of the year globally in the end of course 2 years ago. Amazon 2015 Amazon launched the first Amazon Prime day.
Scot & Jamie: [5:59] Yeah and pretty quickly it has become their single largest day and that's a good segue thanks for a little history on that and before we dive into, a little bit more details on Prime day I think it's important to take a little bit of a step back and say why does Amazon do this I think the common. The surface level is to sell more stuff you know if you can take a month like July and make it into a put a peek day in there that that actually helps right and maybe pull forward some holiday things, and it also helps with Q3 you know Q3 is kind of slow or time. And summer is kind of, little bit boring any Commerce there's a lot of extra capacity in the system but but I think you know as we go to the episode, I think that you have to peel the onion on this to really understand, the first child refer listeners to the Amazon deep dive which was very early in our podcast and career which was episode 24 shame on you if you have not made it through that episode, but for those of you that the didn't which I know is very small part of our audience what are the keys to Amazon success is the prime program. Jeff Bezos has a fun crew out there that you're a lot he kind of says we want to put so much value into Prime that you would be effectively irresponsible not to join. And right before Prime day there's this, This research company called consumer intelligence research and they they they tend to have the highest approximation of prime users and it came out at 85 million Prime users.
[7:34] I think that's their Us number most other people are in kind of the 65 to 70 million range and, the other thing that is common about prime is it when someone's on Prime, they spend at least twice some surveys show twice as much and some show three times as much I believe is more towards the three times, as much so I believe the prime numbers a little bit lower than that you 5 million but I think the actual usage and the multipliers higher if that makes sense so, so I believe there's five reasons that Amazon created Prime day number one is to create a generate more sales or what we would call and Industry gmv gross merchandise value I like that term because it encapsulate Stu 1p in 3p, transactional volume a little bit clearer and that's too deep for this episode but again hours for you to that deep dive, the number to is prime adoption so again people spend more money on their own Prime and if they can get people to, try Prime data shows that, dead again this is from survey data so take it with a grain of salt this is not Amazon releasing this but as people there's nothing surveys out there I think you get a pretty clear picture that once someone enters a Prime trial 73% become paid numbers, flip side of that is 27% of people probably just join Prime for the 30 day, trial. And then turn out but 73% stick which is when you look at online trial rates is actually pretty high usually they're kind of been to tend to 15% stick on Amazon 73%.
[9:09] Then if people stay a year then the retention rate goes up to to greater than 90% so if they is kinda like the roach motel once you check in to prime your chances of checking out are pretty slim and Amazon's got a lot of devious things. Genius depending on which side you look at it for forgetting you deeper into Prime and accessing one of the many kind of spokes on the Hub, the third reason for this is an Amazon has an increasing we talked about this a lot on the show portfolio devices so getting more devices out to you and in your house, creates more stickiness in all those devices are tied to Prime Lenny's flywheels overlap each other the 4th when is prime day, drives engagement of the Prime offering and adds value so so it's kind of foreign five together so by driving engagement of saying okay I'm using and maybe you're enjoying today shutting will try video, Prime music try Prime Pantry Prime here's some exclusive deals Prime now try, Echo deals that are for Prime members only try some of our private labels that are prime exclusives, the more they can get you to activate inside of the Prime family and offerings and ecosystem the more kind of stuck you are in the web and, you're the fifth one is that that making sure that you're reminded every year that there is a big benefit in this annual sale is one of those many benefits that exist, Nordstrom's is kind of famous for their loyalty program they have their annual sale and giving people today's exclusives or something like that to go shop.
[10:43] Sets on the surface it feels like it's a reason to sell stuff but in reality I think the real reason and benefit of prime day is to drive Prime sign ups and add to the value prop in the seals are really just the icing on the cake.
Jason: [10:58] Yeah I would totally agree like of those five benefits the the sales while like certainly valuable and important as probably the least important of those five reasons so they. They recognize all those opportunities they launched the first Prime Day in 2015, and serve remind people how that went you know it was generally viewed as pretty smart and favorable that they had created their own holiday so I think they got like a good vibe and there was some Buzz coming out of, that first year but it was not what I would call a home run right like so there was a lot of the narratives from 2015 where. The man the deal sold out super quick and so a lot of people weren't able to take advantage of the deals and and we're somewhat upset, there were some actual you know customer-facing technical problems and so this hashtag emerged on Twitter Prime day fail and folks were complaining because. The card didn't work and they weren't able to take advantage of the lightning deal and then the deal expired and they missed out and they were upset there were some.
[12:06] Vin deals in in the prime day so they were there some kind of. Products with they were underwhelming that you know not very many people are interested in and or the deals weren't very good it was a little confusing to even find the deals. And you're going back to one of your subjects. You don't half of Amazon essentially is is that that 3p Marketplace and those guys really weren't included in the first Prime day it was almost exclusively for Amazon products and for 1p products in so that you know both was bad for customers cuz so many of the things that customers buy from Amazon or 3p, no certainly bad for all the 3p Sellers and then you know wow Amazon paid lip service to it being sort of a global holiday and being in all of the Amazon markets, from the volume standpoint you know it really only was meaningful in the u.s. in the UK.
[13:01] So in spite of all those challenges like you know I think the big win for that first year is you know that they were able to say that they added hundreds of thousands of prime users in that one day so regardless of those challenges, that alone would have made 2015 a success.
Scot & Jamie: [13:18] Yeah yeah it was it was definitely rough riding and on the 3-piece side I think they were so secretive about it, that didn't tell anyone about it literally until about 24 hours before they just had told us you know maybe like 3 days before that there was going to be something happening in to get the servers ready, so that was kind of funny and you know.
[13:38] It's only two years ago which is which is crazy but Amazon had some candles that line was getting kind of old and tired, they're the tablet's they had where did really didn't find kind of the niche that they have found now that's kind of like you know this value kind of tablet they were there still kind of, premium tablets and they just come off the failure of the fire phone you and I are the only two people that think in the globe the have them, and so there was a lot of that that device stuff that they could sell in 15 so then 16 came along and you know what how I would characterize that is typical Amazon fashion they learned a lot from 15 and in 16 they are they. They righted the ship in and fix a lot of the wrongs the deals were more aggressive they they now had Echo to kind of go out there and push. Call you and I bought a couple that multipacks tobacco so I think we bought some three packs of. Some of those kinds of things so if you are kind of, early adopter it helps you kind of get echo in your whole house which was nice. The spread the deals to the day so instead of having them all at launch and then it won't come through them they they were much more well distributed they open the valve a little bit for 3p and, then when the dust settled they announced that it was as big as Cyber Monday so they had actually created a day that was kind of into that top 5 kind of a day, two or three day for them dad and more countries so they expanded it they were in, nine countries and 15 Inderal and 10 in 16 but I would say they they got more serious about it and we're countries and in 2015 it was probably United say 80% attention was US 20 UK and then like.
[15:18] Almost nothing in other countries and then 16 they realize they could create more of a global push so there's a lot of push special an Indian and then. Again with the dust settled at Amazon announced that the sales were up over 300% from the previous year so 16 it feels like this really got a lot of traction. One thing to highlight is the top 10 deals from last year so I think that's kind of interesting as we can look at what, sold this year something to this quickly so the number one was this air vent cell phone holder, number two was an Amazon gift card so it's like a $50 card with $5 off which is effectively 10% off anything you want to buy from Amazon some in the ear headphones noise-canceling from pose a USB thumb drive that worked on both USB C and normal us, Echo was number 5 fire TV stick was number 6 fire 7 tablet was number 7 pressure cooker was number 8 and, one of those 5-port Chargers was an Amazon Basics 1, number nine and then one of those power Banks or or a movie like charger but it wasn't the movie was the 10th largest so. So that was really the the kinda the Highlight there from 2016 feels like they had addressed a lot of the technical issues and in really kind of, started to get their sea legs on the Steal.
Jason: [16:38] Yep and then when it came time to talk about prime this year Amazon made some, some pretty significant changes to the program so one of the biggest ones is it's no longer Prime day it's Prime dazed. Because they've extant extended the deals to 30 hours so it actually started the evening of the 10th and ran all the way through the 11th.
[17:04] So you got six more hours they really sort of. Try to prime the pump and get more people using their Alexa to do shopping and so they actually started offering deals. Alexa users that were willing to use voice two hours earlier so that started at 4 p.m. eastern time and that was a clever way to to get people to start doing a voice Commerce the.
[17:30] They greatly expanded the the number of deals that greatly expanded the the opportunities for three peas to have deals globally they added China India Mexico. They. For the first time they now had so many deals that they had to offer some some filtering so that you could filter deals by category and a little bit by price point so they started giving you some some basic tools to. Turn call through all the deals and find the ones that you're interested in they had a lot of exclusive deals to the Alexa platform. And they even had some International deals where you could do some cross-border shipping for some things in some markets.
Scot & Jamie: [18:18] Yeah and then so that was kind of lead up and then when the deals went live again we're talking about this year, I always think it's interesting to kind of see what they highlight on the homepage is kind of like those that is really kind of priority deals that they're launching and I think it helps you read the tea leaves on what's their priority for that Prime day, so there was the you're obviously echos a really big push so the. Was 34.99 versus 4999 so that's like a, that's a really low entry point to get into the family at like now at 3499 did is some interesting bundles with the. I saw him bundling it with the whole Sony speaker, that little Sony speaker only added like $15 so that was interesting, the main line Echo was 89.99 or his 179 sets half off which is very aggressive and I think I think. I think it 179 they're probably making a little bit of margin on the hardware I think it 90 they're losing money so they must see you know some some, data from putting these devices out there there must the razor razor blade thing must be working for them or I don't think they would be selling a, prices you and I both know did it was funny that they had a really good deal on Oculus where is effectively $100 off of via an Amazon gift card, another really big seen this year was home automation so they were really pushing folks like yourself and I that have already kind of, flushed out the The Echoes in the house should really try to do more home automation I took advantage of some of those but so some of the things like the higher-end Philips hue light bulbs kits were rather.
[19:49] Attractive price some of the plug automations I don't do the locks but I saw those were pretty aggressively priced so you can tell that that was a really big scene was was getting people to activate home automation in connection with the echo, another one that's really interesting I saw was some of these ancillary parts of the Prime mucosa.
[20:09] So they have Prime now which is same-day free 2-hour delivery and paid 1 hour delivery that's in about 45 markets now most of the stuff on Prime now was 25 to 35% off, plus they had this $10 off coupon that if you hadn't used the service before you could use on your first two orders, there's a program called Amazon restaurants which competes with Uber Eats. Push mates in all those kind of food delivery companies and in cities I don't have that where I am but where you are in Chicago they were pushing, people pretty hard on that Music Unlimited, Prime Pantry so those programs we've talked about on the show had pretty substantial discounts Prime Pantry with 35% off your first use, and then a lot of the private labels that was talked about on the show everything from apparel to amazonbasics and whatnot those were very aggressively priced up to 50% off. So heading into the day internet retailer magazine projected that for 2017 that they would have their first billion-dollar Prime day. And they were kind of saying it would be about a 20% increase.
[21:20] Zach that's kind of lead up to the day and when it first launched and here we are the day after and now have some early kind of hot take results that we can walk you through, Jason you want to take a stab at some of those.
Jason: [21:31] Yeah so you know. Amazon has issued some press releases of their own most of the stuff that they give us is sort of a relative number so how things did this year versus last year and then you know there's some third parties that do their own estimates based on surveys and things like that, so one of the the Amazon.
[21:53] Claims was that they sold 7 times as many Echo devices this year as they did last year so and I would have argued they sold the awful lot of echo devices last year so selling 7X. Is pretty impressive I think they mentioned that 50 of the top 100 sellers on the platform ran. Ran promotions and I think you know some of the Animas have said that this probably ended up being about a billion dollar day for them instead of put that in perspective. A normal Q3 day for Amazon's about 444 million dollars in Revenue so it's a little more than than twice a normal day as a result of of this pig sale.
Scot & Jamie: [22:39] Yeah I know that equates to when you start doing the math it's like you know between one and 2% so this you know I think people, you hear about these things that are like wow this is going to increase Amazon's overall sales 30% or something and certainly for the day it does but in the the overall vast sea of GMB that is Amazon actually. Doesn't move the needle that much but if they can add 10 20 30 million Prime users into a subscription into a trial period and and like I said at the top of the show 75% stick. That's huge when because those guys were are now in the ecosystem now they have to come like moving to the next up witches get them you get them loving 2-day Prime shipping and then get them using something else and then Delp Delp stay around forever, what are the interesting themes you and I have talked about a lot of the last year is Bran's really waking up to the Amazon opportunity and one of the guys we had on this show on episode 73 or the Wall Street analyst Omar Asad, he had a note out today and in his take away was. Did there was just this crazy level of participation from softline Brands this is topical because we had a lot of news here lately where we've had Nike coming onto the platform and and whatnot. So so you kind of rated the different brands and and how they did and. Let me kind of pursue this in the Brand's he saw take, Shakira advantage of prime day would I would imagine this is kind of a.
[24:12] We're going have a guest on later that will kind of walk us through how they think about it but you have kind of the foundation is you know you have to have product Prime eligible that's important which means they need to be fbar you can use self Rafael Prime and then. That's that's the platform then you need to offer deals into the different deal platforms Amazon has been kind of another dial you can turn as a brand of selling 1p, and even 3p most of these that is we'll talk about her one piece Amazon gives you quite a bit big of the big ad platform so they have AMG which is display ads and Ms which is search ads. So the highest levels participation in the softlines category coined Omar were awarded to Calvin Klein Hanes Carter's Lee and Wrangler VF Corp Levi's Puma. I feel like this is a who's who's list of who's gone the show fossil guess and Skechers the ones that kind of underperformed or really didn't, dissipate are let me see if I can get this right Gap American Eagle Lululemon Vans and and Nike I need to make sense I think. You a lot of those guys kind of proceed themselves beat up, so some of them are on the platform very aggressively it all a lot of them view themselves to be kind of a premier or luxury brand a lot of her new the platform like a Nike so Nike just started selling no literally. Days ago right it's been kind of formalized I don't know if they're late actively selling very much so I think next year will be a year for that so it's interesting his takeaway was this is kind of the year for four Prime day that Brands really woke up and participated in the end of material weigh.
Jason: [25:53] Yeah and I then I kind of think you know there's Brands they were very clearly playing defense.
[25:58] And you know they're on their and they're they're they're doing some participation but they're being really careful not to sort of poison. There other channels and in markets with promotions and then they were brands are playing offense and we're saying like Hey we're going to take advantage of this day when we have huge incremental traffic with my intent and try to sell as much stuff as possible.
[26:21] So the like looking at the official Amazon announcements they said Revenue was up 60% year-over-year. Which is obviously very good it's not as good as last year which was sort of in the area of 300% up but obviously. You know now they have a bigger base they said 3p was up more like he wasn't very helpful statistic, they said that they were a record number of new Prime members tens of millions in a 50% more customers this year than last year, more folks joined Prime yesterday than any other day in history and the number one product sold was the Amazon Echo.
Scot & Jamie: [27:08] Yeah and another one they highlighted a lot is they've gotten they worked with the manufacturer and I can't remember who it is but they made this TV maybe it's the element I believe it is and it's 55 inches and it's Alexa enabled, and I haven't seen one but I talked to a lady there and it is pretty wild you you can say the whole experience is through, everything you can do on a remote you can do to the Lexus so they've built this skill and you just going to say Alexa you know go to Channel 5 or Alexa find, you know the two men then whatever your favorite show is fine Star Trek next Generation or whatever and it will it will do all that stuff, so that's a relatively new product that was announced earlier this year and they promoted it very heavy another big element of. Prime Day this year is Nate they ran a lot of TV deals which I took his kind of putting a bit of a bull's-eye on on Best Buy and this TV day, they hiked it a lot going into they had a lot of them in his to be aggressive and actually sold out in 2 or 3 hours which means at to get this deal really over performed what they are expecting. They did put out a list of best sellers by country I want kind of take it went to that for once I wanted to just chat about quickly, pretty much an every country there was a private label offering so if Riggs ample in Mexico the number one seller was an Amazon basic, Cable in Japan happy but happy belly pure bottled water was a top seller that's a private label brand that they have for cpg there's.
[28:40] What other Canada the double a batteries the Amazon basic double a batteries were a top seller so what what's interesting is, private label seem to do very well this year I saw him pushing it very hard and in the u.s. deals also is a bunch of accessories so whenever someone buys that TV I'm sure then you get on Amazon basic HDMI cable, I'm so that was interesting to see a lot of private label push they didn't put any other stats out on that the other stat that was interesting is they said, stop base which means you're using the Amazon app on on your smartphone those orders doubled so if the whole day, orders grew 60% and does effectively doubled between hundred percent they really over indexed which means desktop Ryland group.
[29:23] Percentage when you're 30% Amazon does a lot of things where you can always see the deals and track them you know that the app experience is truly better than the desktop experience they said they sold 3.5 million toys again, it's a nursing number but I have does a lot of reference.
[29:41] Another one that's kind of interesting is this this voice Commerce so they're so aggressive with the Alexa deals and pushing those early, I looked at them they're pretty good too had a 3D printer on there that was normally $600 for like 250 or something like that and, that's some really interesting deals on there they had Greenies that were more than half off there's a PR firm kind of pushing stats that say, before Prime day 19% people had purchased using voice in a 33% additional intend to if we kind of when the dust settles on Prime day I think we're going to see. You know 30 to 50% of folks, either having use that for Prime day or will it with their new Echoes they will be ordering something online so so that's pretty interesting Callen came out the survey also right before Prime day that said, they believe 13% of us households have echoes, and you know if if it's since we have this Echo. As the top seller and eyemagine the normal Echo was up there these TVs it's going to nursing you know I think, by the end of this year with holiday and Prime day maybe we start to see 20% of households, that's pretty interesting because you know Amazon is on their lap of this thing and and the rest of competition is really kind of stuck on the starting blocks.
Jason: [31:01] Yeah absolutely that that's one where it felt like they came in the prime day with a commanding lead and then for that to be the the biggest seller and 7 times more than last year, they're absolutely lapping the field in terms of a penetration there so if they can turn your point they probably did make a bunch of money on any of those devices so the magic question is going to be vacant. They can turn that into customer value over time.
Scot & Jamie: [31:26] Yes sir so let's wrap up this segment with kind of what what were your your big takeaways from Prime Day this year.
Jason: [31:34] Yeah what's it looking at the day in aggregate I definitely feel it was a big win for the 3p sellers there we saw a lot more 3p sellers participating, there as a result doing a lot more deals in a lot of the Amazon advertising Vehicles which can be very effective. In addition to making some nice revenue for Amazon where vailable the three-piece hours for the first time so so definitely. A win on the 3-piece side of the fence. On the one piece out of the fence why we don't have real data I strongly suspect that by far the biggest win we're first-party Amazon products and so that's. You know certainly that the echo family that we've talked about but also the Kindles and all the new private label stuff.
[32:24] That they're starting to push and that really leaves me too. To my biggest takeaway from this whole thing which is to me the big winner and Prime day is the Amazon Echo System way more so than sales like almost everything we've discussed up till now. Was Amazon using prime day as a tool. To get people more addicted to the rest of Amazon so using more of their services discovering more of their services. And you know getting more value for that Prime membership and just making Amazon more sticky and increasing the customer lifetime value of all those Prime members and you know wow. I think that's in stark contrast to singles day. Which is really just a day to buy stuff like we really haven't seen Ali Baba turn singles day into this powerful flywheel for Ollie Baba. For the rest of the year like you know maybe they that use singles day a little bit to get new international brands on the platform but it really is.
[33:28] Kind of a one-day Wonder for Alibaba and to me the Amazon approach is almost the exact opposite it's way less about you know Dublin sales that one day and way more about.
[33:40] Making Amazon much stickier and making it in a much more difficult for consumers to choose to buy stuff.
[33:47] Elsewhere after they get addicted to all the stuff that they were encouraged to try for the first time on on Friday so in that way I think.
[33:55] Prime days a home run for Amazon in this year only sort of the extended that when I will say you know they're still things that aren't perfect as a result of having way more deals.
[34:07] You need to give users way better way to filter those deals and find the deals that are relevant to them and you know while they added some super rudimentary tools in the mobile app.
[34:17] I would I would say they were very deficient and so I like to say that they had a signal-to-noise problem this year that it was probably harder than ever before for consumers to find the deals.
[34:28] That would have gotten them excited and so I suspect that something will see Amazon work on and in years to come I mean you and I used to joke about.
[34:37] You know there being no search in the in the Echo skills go to store and in that same way like you know there's actually is no search.
[34:44] For for Prime Day deals for example you know I'm curious I think it depended a lot on category but in a lot of these categories.
[34:54] I'm not sure that the prime Day deals are necessarily the best deals of the year.
[34:59] So it's a promotional day but but not necessarily A deeply promotional day for everything you know I do chuckle.
[35:08] The reason Amazon doesn't give you any hard numbers for for any of these things are obviously they don't want to but they don't have to because this whole day is not financially material to them right in so you know what ones are reminder. Yeah they do no more than double sales from 450 billion to 2 a billion but that's still not a meaningful.
[35:31] Bump in the in the overall Amazon Echo System so while they brag about the day a lot it's really not about that that.
[35:40] Financial stuff and then I guess my last.
[35:43] Big takeaway is that by far the biggest winner of all is the the echo echo system or the echo platform.
[35:53] Is a quickly lead to hit mute on on my device in the room.
Scot & Jamie: [36:00] 8 devices in your house just woke up.
Jason: [36:02] Exact side note for people that haven't listened to all the previous episode shame on you but my sister-in-law is actually named Alexis so all the devices in my house have to answer to Echo not to Alexa. But I do think. There there is a a holy war going on to win that that end home intelligent agent every other retailer in in the world has huge reasons to root for anyone but Amazon winning it. And you know we we in our CES recap this year we talked about all the products at CES that had Amazon built into him you know they certainly have the Lions. Market share and then they're the only one that have a huge promotional event like this so it just it feels like. Despite the fact that you know a lot of people have a lot of reasons for to not see Amazon win in this category it's getting hard to imagine anyone anyone really catching them at this point.
Scot & Jamie: [37:01] Yeah I think voice Converses the big wind and. Not only is it just the device lead that they have but Google is stuck in this weird place where, yeah because they don't control a consumer experience for ordering anything with with exception of Google Express, you know it's this really it's hard to build that so if you say to Google Voice you know order me an air filter for my house they've got some Partnerships with eBay and that kind of thing and but you know, what are they going to do like shop that order out to Home Depot and Lowe's are you going to have to go and set a preference for everything you want to do it.
[37:39] Is that becomes an important part of this this home assistant, it's kind of game over for Amazon and then you know let's say Google does go solved that how are they going to monetize it their whole business is Mata, monetized off ads and you know a lot of the Google things the music and all has all these ads in it and it's like a really terrible user experience compared to that, now more more people are coming out with these assistance to Apple's it hasn't hit the market yet but they're already announced one Samsung has one coming out in Alibaba analyst 1, forgiveness cost at T Mall in the name so you everyone's working hard to catch up but I think Amazon has this inherent kind of.
[38:18] Advantage not only with the device penetration but with the use case of ordering stuff now you know you could argue home automation is a lot more level playing around, but again if they can get to 20% kind of out there and US households and it's clear from the deals that are running they want you to do more home automation they're already kind of got a commanding lead and and again if that kind of starts to become your standard and you start to use that, ecosystem are locked into it it's going to be heavy sliding for these other guys trying to compete, voice Commerce is kind of really interesting one to watch this year I mentioned the brand thing earlier, and I'll refute one of your points a little bit you kind of talked about it not being in material sales day and I agree but it is financially material because of the Prime Subs so if they get 20 million Prime subscribers the average Prime users. Spends about $1,200 to make math easy let's say they spend $1,000 a year, well on the day it's not a significant impact that's a 20 billion dollar add to the Top Line and that's like it oh that's like Walmart's entire online business. Doing the math right so so there is a long-term Financial impact by those Prime subscribers and then, the more they can keep them and you let say the number is 85 million if they don't want to turn in those folks so if they can get you to use another spoke on that benefit and lock you in even longer again it's kind, but huge win and it keeps you from going to other retailers.
Jason: [39:46] For sure and and I guess I meant to sort of lump the Prime Membership into that. Thing one of the powerful drivers in that ecosystem versus talking about the revenue.
[39:57] I would make just one other point that you so reminded me of on the how commanding this this voice, sweet is and how problematic it is.
[40:08] You know. More more products are going to be built with voice in them and if all the manufacturers have to build Alexa and because that's the strong consumer preference think would that means to every other retailer like you can go buy a bunch of Samsung refrigerators in Best Buy right now, and those refrigerators I'll have Alexa in them and so guess who's shopping list, when you are you're using with that product you bought from Best Buy is enabling you to shop at Amazon right and you know it's not exactly Apples to Apples but Walmart selling a bunch of Samsung phones that have the Amazon app in bedded in it and so you know you can tell how commanding this Echo System advantages when your competitors are forced to sell products that are, that are sort of gateways to your echo system.
Scot & Jamie: [40:54] Yeah yeah one other aspect of it we talked about it a little bit on the show but I want to kind of bring it up again, as I mentioned the report on Brands and one of the levers brands have to pull is, the advertising so so I'm pretty convinced I'm hearing more and more when I talk to brands that they are spending more and more ad dollars on Amazon and there's two platforms and so folks are interested in. We had, we had Melissa Burdick and Andrea on and they talk a lot about these platforms we don't have time to go into it today, but I'm convinced this is going to be not the next billion-dollar business for Amazon but it could be 30 or 40 could be the next.
[41:38] Cloud computing for Amazon because bran just can't get enough of these ad dollars into efficacy is super high we see a lot of people moving money out of, Facebooking Google into Amazon's add platforms and this day another win for this day was getting all these Brands to activate and get into those things you know, I ate when the if we could speak inside the Amazon curtain I think maybe the biggest Chunk on margin probably came from Those ads would be interesting and then, the huge long-term win is now they got a Brands kind of activated on those platforms AMG and Anna's I think that is is a huge huge. 10 20 30 billion dollar opportunity forum.
Jason: [42:21] Yeah I totally agree.
Scot & Jamie: [42:23] Well that's our view of what we saw for Amazon Prime day but we wanted to bring in a live first-party and third-party seller to understand what they saw from the frontlines of this exciting e-commerce holiday. Jason join me in welcoming back to the Jason Scott show Jamie Dooley. As a refresher for everyone Jamie is the head of e-commerce a dorel juvenile group we did a full episode with Jamie and one of his colleagues and that is episode 86 so, hi if you want to learn more about what they're up to as regards Amazon listen to that episode and tonight we're really here to get a fresh hot take about, Amazon Prime Day Jamie welcome back to the show xcaret.
Jason: [43:09] Hey Jamie thanks very much for doing this we totally appreciate it so obviously the the biggest and most important question how were your Prime Day sales.
Scot & Jamie: [43:20] They were very strong so it to remind everyone wear a hybrid so we we sell both.
[43:27] Directly to Amazon as 1T and we're a Marketplace seller or three-piece all as well.
[43:33] The data for Marketplace sales comes their way real time so we know that we had. Fantastic day on over the third over the course of 30 hours. As a Marketplace our sales were up 600% year-over-year and it was the second biggest day we've ever had on the market place II only Cyber Monday last.
[43:56] So it was it was certainly a very very good day for us on the market side on the one piece side that the data takes usually at least two days to get to work. And we're recording it's now only day after Prime day so we're still waiting for the final sales data to come but as far as we've we've seen we had a record-setting day. On Prime day again for even the one piece eyewear. Almost 100% of our lighting deals fold-out many of them in the first 30 minutes and then where is subscriber to one quick retail and they were able to give us. Intraday reads as well as a final estimation of what our sales were no looks like we beat all of our forecast.
Jason: [44:41] Well congratulations.
Scot & Jamie: [44:45] Yes 600% is amazing because Amazon announced they were up 60% so you over indexed by a factor of 10 which is which is pretty awesome set that leads me to ask you mention Lightning Deals, and you know this is. Did you guys participate in 15 where are was second last year so then been doing it for 3 years was last year when you really get serious about it or we actually was 15 kind of when you started.
[45:11] I'd say we we really got serious about it last year. But this year we we we took it to another level as well.
[45:26] So what what were some of the things that work well for you I know a lot of of both 1p and 3p people that are using what I would call different platform so different deal that they, they got a different deal for mats that I hadn't been in before also more people are in other parts that you go system like maybe Alexa deals Prime now, Pantry that there's kind of a wide range of things what were some of the platforms you guys utilize this year to get such a great result.
[45:56] Sure sure to remind everybody we're baby Products company so we sell strollers and car seats and Hardline items that really aren't. They don't play very well into a pantry or even to Echo there they require a lot of a lot of kind of stuff a lot of. Merchandising online and there is there's a lot of there's a lot of consideration that's required but what we we use the combination of of a mass and. We had a number of Lightning Deals as well as what it called Chianti's or or Prime member promotions that were on the. On the Friday deal page when when the customer. Navigated there and then we had aggressive pricing on on our everyday items as well I'd say on the one piece side we had a very good combination of. Traditional TNT's and Lightning Deals as well in in combination with. Advertising that we we we bought through Amazon as well as using social media and other external traffic drivers to drive even more traffic back to those promotions on Amazon.
Jason: [47:08] This great Jimmy a couple of follow-ups was that would you say it was a pretty similar promotional strategy to your 2016 so like when you look at that 600% comp is that mostly because. Prime day was more successful for three peas or.
[47:26] Or because you know you also got got more sophisticated in your in your marketing.
Scot & Jamie: [47:33] I think we on the marketplace side if I had to say what what drove the 600% year-over-year growth. Definitely one part was we have more items overpriced and obviously that that's that's really the name of the game on Prime day so that that certainly helped. We did you ever tizing much more aggressively this year and. On the marketplace side there were a lot more opportunities for 3-piece hours to to take part and Prime day so for one example to work really well for us with headline, search ads were available to Mark play for this year they weren't last year it's actually I think it's still in beta right now we were fortunate to be part of the beta program. We we watch that drive to some good sales growth. And I think we that come in combination with just many more items aggressively priced and and Prime dad's I think that that was the key to success of the marketplace.
Jason: [48:34] Got it and that that seems consistent with the general Trend that we've heard and talked about for this year that. Prime prime day was just much more accessible the two three piece sales so the fact that you're you were able to get many more products badge than you had a bigger palette of marketing tactics available to you that that all makes perfect sense that you'd blow it up with with 3p, that might imply that while I'm sure your 1p will be way up this year it may not be proportionately up as high as three peas that is that a affair guess.
Scot & Jamie: [49:08] I think so yeah we are we have obviously had a much bigger base of sales to the cop from last year's Prime day.
[49:17] So yeah we're not going to say I would expect us not to see 600% your growth if we do then I expect to be a CEO somewhere next year. Even if we even if we see no 104 just under 100% urea go that's going to be a huge win for us.
Jason: [49:35] The promise if you do 600% 1p growth this year your current CEO is going to take credit.
Scot & Jamie: [49:43] That's good.
Jason: [49:46] Totally fair a related question in your category or or specifically do you like how aggressive do you have to get on promotions are we I mean are we talking like. 20% 10% 30% like is it is there a is it similar to other promotions you do through the year do you have to get more aggressive what's the general. Promotional philosophy.
Scot & Jamie: [50:09] It's it's. It's not great it's it depends depends on the category and then it depends on the level of competition so in general what I saw in a lot of categories was, it only took 20 20 to 30% discounts to do some significant damage one of our biggest competitors. Most of their deals were running at about 20 to 25% off and I know they did I'm pretty sure they did extremely well most of our promotions hovered around the the 20 to 30% range and we sold out of our inventory for, lighting deals in in sickness and in a very quick amount of time. My takes away from this Prime day and it builds on last year as well as that you don't need to. To be at 70% off I need a robot aggressive deals out there that call them loss leaders or attention getters. We found we had some of those too but in general we focus on profitability too and we didn't feel like we needed to.
[51:16] Start a race to the bottom in our categories and I feel like. In general what we saw across our categories and other categories was the same you didn't see every deal required to be 60% or more.
Jason: [51:30] That definitely mirrors with what I sort of informally saw it felt like people were a little conservative with deals in their core products and maybe a little more aggressive with with some of the the West core products if you will.
Scot & Jamie: [51:46] I think we saw that and some of the day that one quick retail gave us too so we know that Amazon sales were up 60% but there was a 114%. Lifting promo count according to down so you thought many more deals but I did was there they weren't quite as aggressive and then I've seen reports. I'm all over the media where they're saying conversion rate was actually down for Prime day so I'm curious to see if that's at validated but that would all imply that. Progressive deals potentially across the board but not deeper so. What will then you and I are were chatting about is one of the interesting things is on on some of the non lightning deal deals you know they utilize that feature we had to add it to cart to see the price, why do you think that is what's going on there so I know that I've talked about this. I felt like that was sort of like burying the we we had and we had an item that was priced $50 off and the customer really had a, went and searched to see that they were getting a 30% discount on one of our top items and that was really consistent with with, with a lot more deals at work and keys throughout the deal.
[53:11] My opinion is that it allowed them to prevent Walmart and other competitors from price matching them as easily. I know that said you know what this Amazon ever going to come out and say that they're only really too big categories of a promotions that you can have to get onto the prime. Hyundai page deals of the day does he the Lightning Deals are pmt's and Amazon official word to us. Can keys are designed to allow you to be on that page with slightly less aggressive discounts so that would be widened Art discount, pricing is a set-up but I do think it helps avoid price-matching and we saw that in our category there was just a lot less price matching from Amazon's top competitors, on our deal because they were they were pmt's and they were harder to describe.
Jason: [54:07] But I guess one of the ironies there and tell me if it's different in your category but you know they sort of hurt the customer experience a little bit by bearing a lot of the deals in the, the carts to avoid letting our competitors price match but it kind of felt like most of their competitors unlike last year sort of sat out this year so it almost seemed like, like they had no intention of sort of aggressively. Trying to ride on the prime Day coattails this year at least I didn't see big indications of that did you.
Scot & Jamie: [54:41] No I didn't either so I I was actually that was one of my surprising observations would this last year. Competitors like Walmart even, they took a shot anyway I didn't see that I saw most of most of Amazon's direct competitors almost in feet, day in the week to Diamond maybe they'll plan something for later in July but any Amazon on that day and they only.
Jason: [55:09] Yeah I think eBay obviously did some like pretty serious National advertising that was sort of counter Prime programming and let you know they did a special deal with the Google home but the, you're right that the sort of traditional omni-channel retailers Walmart Target like really didn't see any indication that they were trying to make any head of the day.
Scot & Jamie: [55:31] Amazon credited manufactured this Holiday Inn is they've done a great job with us.
Jason: [55:38] Absolutely any promotions you saw from others that really surprised you.
Scot & Jamie: [55:44] Well I think one of the ones that I was surprised didn't happen as it was it was also not just Prime day with national blueberry. Muffin day and there were no blueberry muffin promotion so that was that was my biggest surprise I couldn't find any promotions to get me a cheaper blueberry muffin delivered. But I think the some of the ones that I thought we were actually our kind of our we talked about the last. Discounted just kind of product but it seems like in our category somewhere I competitors took some really big shots with with some deep discounts. One of our biggest competitor to deal with a day which they have some fairly aggressive discontent what was interesting was that they had some new merchandising that we've never seen before. With the car completely custom land and gauges on mobile and desktop that they were very interesting so it looks like they spent on a significant amount of money to make that happen and it'll be interesting to see whether. What are the sales actually paid off for those.
Jason: [56:47] Interesting I definitely agree with you I think there's a huge mess on the blueberry muffins I myself actually missed Prime day because I was spending all day at the Muffin Shop.
Scot & Jamie: [56:59] The morning was completely shot. How many muffins in the morning your teeth were blue all day.
[57:10] Cool Jamie really appreciate you coming on and you know we record this show late at night cuz we both have, allegedly have day job so I appreciate you taking time one last question so based on what you know and I know it's early what, what did Vice would you give to both Brands 1 p.m. 3 payout there for next year.
[57:34] The things I say were one plan it out as early as you possibly can. Some of the some of the issues we saw this year had to do with just operations and Terriers not being able to pick our ship and saw.
[57:48] To deliver them to Amazon DC's or two-and-a-half 3 weeks out from Prime day so. In retrospect next year I'd advise our is get your product into Amazon DC's as early as you can.
[58:04] And I think just in general planning in advance probably needs to start in Q4 or earlier for the next prime day is depending on the items that you want to promote. I'm already in existence today I already have sales history today already have product reviews if they don't you need to build all that up before Amazon even going to consider them for a major deal and then even want you to get those approved.
[58:31] They're going to need it before casted in depending on whether you're Lee X or. Your 90 days or 120 days or six months to have them into fakturert and shipped here you're talking about potentially you're 9 months in advance that you need to start thinking about your promotional strategy for. Prime day so far in advance based on your company's Lee X is number 1 number 2 is is expected the things are going to go wrong.
[58:59] We did a lot of contingency planning with what we.
[59:03] Is it going to go on call of a dead and we had a whole team of of of of e-commerce professionals from is to Ops 2 merchandising and sales all.
[59:14] Call pretty much working off and on The Whole30 hours and you'll eat we did have a lot of things go wrong on our end and it on Amazon so I think having a good contingency plan is is it real.
[59:28] Yeah I think.
[59:30] Third is just making sure that you know your competition and and having a good understanding of what's going to go on with pricing I think a lot of the deals we've heard. Other sellers just they lose they lose out on the light and gillikins cancelled a few days prior to. Prime day that's a very common thing and we were fortunate not to have that happen so the more that you can understand your your channel strategy and they make sure that the pricing that you have set up for for Prime day is going to hold out for the day that's.
Jason: [1:00:06] Wow what Jamie that is terrific advice, and that is going to be a great place for us to land because it has happened again Wii U, used up all our allotted time so certainly like to remind listeners that if you enjoyed this episode we love to continue the dialogue on our Facebook page and if you really enjoy the episode we'd sure appreciate a review on iTunes.
[1:00:31] So until next time happy commercing!