6/26

Tomorrow -- July 12 -- starts a now five day "celebration" of Amazon's Prime Day.  This is the company's effort to create online buzz and buying behavior analogous to the offline Black Friday start of the Christmas buying season... loosely associated with Amazon's founding date.

Once again joining the party -- with all the enthusiasm of a jealous, older half-sibling -- Walmart has announced its own set of Prime Day benefits.

Basically it's the oldest of marketing ploys, offering -- or at least implying -- deep discounts to drive traffic and thereby generate market interest, a predisposition to consume, and set the stage for purchases beyond the discounted items.  Offer a turkey for $5 and depend on customers to buy the rest of their Thanksgiving menu while they are in the store.

Prime Day discounts are only available to those who have paid a $99 annual subscription that guarantees two-day shipping for no additional cost... yet another tool for prompting a predisposition to purchase.  (The more I buy, the more I justify that subscription expense. Human psychology is predictable, but not always "rational" in the usual academic meaning of the term.)

According to Amazon and Money Magazine, last year's first stab at Prime Day exceeded expectations:

Eighteen percent more orders placed worldwide on its "Prime Day" than on last year's (2014) Black Friday, which was the biggest ever. 

The online retailer also said it got more new Prime subscribers for the Wednesday sale than any other day in the company's 20-year history. 

"Customers ordered 34.4 million items across Prime-eligible countries, breaking all Black Friday records with 398 items ordered per second," Amazon said. "Prime Day was also a great savings day -- members globally saved millions on deals. Customers ordered hundreds of thousands of Amazon devices -- making it the largest device sales day ever worldwide."

With all of this organized around the promise of "free" shipping, the supply chain implications are enormous.

Karl Siebrecht argues that the only effective way of competing with Amazon is to reconceive -- and more to the point, re-build -- distribution networks to focus on satisfying customer demand as the primus inter pares of goals. This often involves decentralization and diversification: reversing mainstream thinking of the last thirty-some years.

UPDATE:  Amazon says Prime Day purchases were up sixty percent over last year. AdAge reports that several other retailers saw same day online traffic triple or more.