What Services Amazon Highlighted for Prime Day
During a two-day Prime Event that concluded on Wednesday, Amazon customers took advantage of discounts on food delivery, travel, and healthcare, showcasing the potential for expansion in services at the e-commerce behemoth, which has traditionally focused on physical goods.
Amazon’s 200 million U.S. Prime members snapped up $12.7 billion in goods, a record amount that represents 6.1 percent year-over-year growth, according to Adobe Analytics, with many taking advantage of discounts to stock up on back-to-school supplies.
Selling services and experiences may not have had a huge impact on its bottom line yet, but Amazon may have hoped that would change over time.
“Amazon has extracted all the value it can from just going through the goods and is trying to move up the value chain,” said David Klink, an analyst at Huntington National Bank, which owns $160 million in Amazon stock. .
“(It’s) a decision we’re also seeing with Walmart in its own decision to offer different services, like with the Paramount Walmart offering,” Klink said.
Amazon did not immediately respond to a request for comment on the change to include services.
PRICELINE, GRUBHUB AND ONE DOCTOR IN FOCUS
Along with discounts on leading product categories such as apparel and electronics, Prime Day shoppers received exclusive promo codes or discounts on hotel reservations through Priceline, Grubhub restaurant delivery, and One Medical, Amazon’s membership-based telehealth service.
Amazon’s Grubhub and Priceline partnerships are an extension of their existing advertising strategy, Klink said. He said Amazon’s non-traditional partnerships are an attempt to “make retail cool again.”
“If the Amazon site is where the people are, then brands like Grubhub or Priceline want to meet consumers there,” Klink said.
Amazon’s broader partnership with Grubhub, launched in July 2022 and expanded in June, offers Prime members a free one-year subscription to the Grubhub food delivery service.
For the first time participating in Prime Event, online travel agency Priceline, a unit of Booking Holdings, added an additional 20% discount to Priceline’s Hotel Express offers, which offer 60% off hotels.
Amazon offered a 28 percent discount on a year’s subscription to its One Medical service to US Prime members who signed up before the end of Prime Day.
EVENT BACKGROUND FOR SALES AND ADVERTISING
Amazon said on Thursday that the first half of its sales event was the most successful in the company’s history, supported by the growth of independent sellers.
The event garnered record sales, even though consumer spending, which squeezed the budget, slowed down in the second quarter of the year.
“Amazon is seeing slower e-commerce growth largely because consumers are just moving away from certain categories where Amazon is strong,” said Andrew Lipsman, principal analyst at market research firm Insider Intelligence.
Lipsman said experimenting with more Prime Day deals on services and discounted memberships could support Amazon’s advertising services. Merchants and consumer product companies pay Amazon to advertise their products on the site.
Amazon reported first-quarter advertising revenue of $9.51 billion, up 20.7% year-over-year. Investors expect ad revenue to rise to $11.2 billion in the third quarter, which includes Prime Day data, according to Refinitiv data.
The data Amazon collects through its partnerships with companies such as Grubhub and Priceline could help the retail giant “strengthen advertising” with other companies in those industries, Lipsman said.
