3 retailer takeaways from Amazon Prime Day 2018

July 18, 2018
5 min read

Amazon Prime Day 2018 came and went with plenty of fanfare. Mintel eCommerce Senior Analysts, Alexis DeSalva and Matt Lindner break down the three major takeaways for retailers. Check out their perspectives leading up to Prime Day here.

#1 Target steps up as the new model for how to take on Amazon

Target’s Prime Day counter promotion might be the best and most memorable that we’ve seen in our coverage of Prime Day. As expected, Target offered the requisite discounts across all product categories on July 17. However, the added sweetener for consumers was that by spending $100 on Target.com on July 17, they get free same day delivery in the form of a six month “Shipt” membership in markets where same day delivery is available. Target is also waiving the shipping fee for next day delivery of Target Restock orders, essentially incentivizing consumers to try next day delivery of everyday essentials.

Over half of online shoppers will add something to an online shopping cart if they think they are getting a good value.
Here’s why Target’s offering is the ideal counter promotion to Prime Day, and why other retailers should consider trying something similar:

  • It rewards consumers for spending more: Mintel data shows that over half of all online shoppers will add something to an online shopping cart if they think they are getting a good value, while 36% will add more items to an online shopping cart to hit a free shipping threshold.
  • It hits Amazon where it counts: Two of the top reasons why Amazon shoppers would buy online from another retailer, are (1) better prices than Amazon and (2) free shipping. In this case, Target is using the lure of heavy product discounts to reward consumers with free and fast shipping during some of the busiest online shopping periods of the year.
  • It encourages new service trial: Nearly one in five of all consumers have used a replenishment service such as Target Restock. However, Mintel data shows that online shoppers have interest in buying the everyday essential items that are central to the Target Restock value proposition online. Removing the $2.99 shipping fee for a day gives consumers who may have been on the fence about trying Target Restock an incentive to do so on Prime Day, which could encourage future replenishment-type purchases.
  • It goes beyond price: Consumers have come to expect deals on Prime Day from all retailers. Target’s Prime Day counter promotion goes beyond simply offering consumers a good deal. It encourages future online shopping trips with Target by giving consumers the added bonus of six months of free shipping.

#2 Private label fashion is resonating

Mintel anticipated the retailer would spotlight its private label brands, with an emphasis on clothing and its newly launched Prime Wardrobe service, and Amazon did just that. Amazon’s own brands were a top featured deal across men’s, women’s and children’s clothing. Goodthreads, Lark & Ro, Core IO and Amazon Essentials had savings of up to 50% off.

Amazon has struggled to cement itself as a fashion destination, but Prime Day seemed to be a vehicle for driving brand awareness and interest, especially since the event appeals to the deal-seeking mentality that influences clothes shopping. According to Mintel US data on women’s clothing, less than half of female clothes shoppers feel it’s worth paying more for their preferred brands, while half of male clothes shoppers mostly shop wherever they get the best deals, suggesting many consumers are willing to shop unknown or private brands if the price is right. In addition to Prime Day deals, Amazon used Prime Wardrobe to further entice shoppers to purchase clothes by touting the ability to “try before you buy” with the service. A preference to see products in person is a top barrier to purchasing online, and Prime Wardrobe helps reduce hesitation, while also establishing Amazon as a legitimate clothing retailer.

Target’s one-day online sale made specific mention of the retailer’s owned brand collections. Not only does this reflect the importance of private brands for both retailers, but it also suggests Target views Amazon as a real competitor in both the private label space, and in apparel. If its apparel brands perform well on Prime Day, Amazon will likely become a more frequently sought destination for clothing needs, putting more pressure on traditional retailers in the channel.

#3 Learn from Amazon’s misfortune

Retailers that ran online sales to compete with Amazon Prime Day benefited (to some extent) from Amazon’s site issues. Numerous consumers reported getting error messages when searching for products on Amazon shortly after Prime Day kicked off in the afternoon of July 16, causing headaches for those consumers who were in a mood to buy online but couldn’t due to technical issues.

Data from Mintel research on competing with Amazon shows that price is both the top reason why Amazon shoppers shop on Amazon, and the top reason why consumers would buy online from another retailer instead of Amazon. If consumers couldn’t get what they wanted on Prime Day, they may have headed to other online retailers that were offering a competing flash sale given that they were already in an online shopping mood. Amazon’s plight on Prime Day illustrates the importance of making sure that online stores are continually stress tested so that consumers are able to buy what they want when they want it, even during the busiest periods.

Alexis DeSalva is a Senior Research Analyst at Mintel. Alexis focuses on US Retail and eCommerce reports.

Matt Lindner is a Senior eCommerce Analyst at Mintel. He has covered Prime Day extensively since its inception.

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