Why this year's Amazon Prime Day is so different

July 10, 2019 12:01 AM

Amazon Prime Day is a major retail event for the e-commerce giant and any rivals that seek to capitalize on the online shopping frenzy it inspires. But Amazon's intentions have always gone beyond simply boosting sales.

The Prime Day event is also a chance for Amazon to showcase a new range of devices and payment options — and to sell those devices at a discount to get them into more people's homes.

This year's version of the Prime Day holiday is two days long, and follows some key adjustments to Amazon's formula for digital commerce.

This item is compiled from reporting by PaymentsSource writers including John Adams, Kate Fitzgerald, David Heun and Michael Moeser. Click the links in each item to read more.

A sign alerts Amazon.com Inc. Prime members of savings during the grand opening of a Whole Foods Market Inc. location in Burbank, California, U.S., on Wednesday, June 20, 2018. Customer traffic was up 2.4 percent at Whole Foods stores during the first five months of 2018, a sign that Amazon has managed to draw in new shoppers with ballyhooed price cuts on a handful of items. Photographer: Dania Maxwell/Bloomberg

Dania Maxwell/Bloomberg

Short-lived discount

Last year, Amazon began offering a $10 account credit to people who spend $10 at Whole Foods during the Prime Day event, and ramping up rewards to 10% cash back for its Prime Rewards Visa cardholders.

For the 2019 Prime Day, Amazon is trying something different: It's still rewarding Prime customers for shopping in Whole Foods, but it's turning this into a pre-Prime Day promotion. Shoppers who spend $10 or more in Whole Foods or Amazon's Prime Now grocery service by July 16 will get a $10 credit for use during Prime Day.

The short-lived nature of the promotional credit makes it clear that Amazon wants to funnel as much spending into its two-day Prime Day event as it can.

Making peace with Google

If Amazon wants people shopping through its Fire TV devices and buying more of its digital content, it has to end its long-running feud with Google.

The dispute dates back at least to 2017, when Google — which makes a competing video-streaming device called Chromecast — blocked access to its YouTube service on Amazon's Fire TV hardware. For its part, Amazon didn't allow Prime Video content to stream via Chromecast.

Just in time for 2019's Prime Day, the two companies have buried the hatchet. Amazon now supports Chromecast, and YouTube now supports FireTV. This makes both companies' streaming devices a lot more compelling to consumers, and could put a lot more Fire TV devices in homes for Amazon to market its products through.

To sweeten the deal, Amazon is also hosting a July 10 concert featuring Taylor Swift and other artists — and it streams only to Prime members.

A deal for subprime shoppers

Targeting consumers with poor or thin credit, Amazon recently launched its Credit Builder Card, enabling those who put down a security deposit to shop online — while earning rewards on par with those offered to mainstream cardholders.

The card launched on June 10, just over a month before Prime Day begins, welcoming many new shoppers who may not have qualified for Amazon's mainstream cards.

Amazon Prime members with the new secured card earn 5% back on all Amazon purchases, the same reward provided by Amazon’s private-label credit card and by its open-loop card. Amazon Credit Builder is one of the industry’s first private-label secured cards, according to Stamford, Conn.-based Synchrony, which issues the new card.

Secured credit cards, which were dominated by hard-money lenders often operating outside of accepted industry practices before the 2008 recession, were reined in by the CARD Act of 2009, said Brian Riley, a director at Mercator Advisory Service.

“Today well-designed programs allow consumers to progress to standard, general-purpose cards, in a process that raises financial inclusion and broadens consumers' credit files,” Riley said.

More issuers are coming to the realization that there is an untapped market for secured credit cards, and that many of the potential users of secured cards would be good long-term customers once they establish a credit history.

Dashed hopes

Since Amazon stopped producing new plastic Dash buttons in March, the e-commerce giant has had to find new ways to get people to make impulse purchases.

Amazon Dash was a relatively early internet of things concept (early enough to be confused for an April Fool's story at launch four years ago). The Dash buttons are small plastic WiFi buttons that can be placed anywhere to reorder kitchen supplies, laundry soap and more.

2016's Prime Day sale provided certain deals only to those who use Amazon's newest gadgets such as the WiFi-connected Dash buttons.

In the three months leading up to 2016's Prime Day event, Dash button presses grew by 70%, Amazon said. Leading up to the sale, a slew of new brands came on board, with Amazon offering a discount that drops the buttons' price to 99 cents while still maintaining the $4.99 rebate offered on the buttons' first use.

Finding a fit for Amazon Go

Amazon Go, a rapidly growing network of e-commerce stores, hasn't yet featured prominently in any Prime Day marketing. But it's still a major component of Amazon's strategy.

Amazon Go is still adjusting its strategy to comply with local laws that prevent stores from banning the use of cash. Its first New York store, which opened in May 2019, is also its first to accept cash.

While Amazon could have included Go in its $10 promotion running at Whole Foods, it's catering to a different market with Go. The stores emphasize speed and convenience — the app actually reports to shoppers how much time they've spent on each trip — so anything that draws crowds to Go runs the risk of slowing the process and confusing the sensors that track what each shopper buys.

A longer sale

Amazon Prime Day is two days long this year, but it's not such a drastic departure. In 2018, Prime Day lasted for 36 hours. And the company has long marketed pre-Prime Day deals for eager shoppers.

The extra day lets consumers build on the new shopping and payment habits that Amazon encourages. Shoppers can buy an Alexa-enabled device on the first day, and still receive it in time to qualify for Alexa-only deals before the Prime Days end.

Those who go to Whole Foods to earn a $10 Prime Day credit won't feel rushed to use it. And given that Prime Day is a global shopping event, the two-day span allows Amazon to make the most of its marketing regardless of time zone.

Showcasing Twitch's talent

Amazon is making the most of its game-streaming property Twitch to promote Prime Day deals, with a programming block called "Twitch Sells Out."

Few details have been revealed about the corporate crossover, which will feature popular streamers (people who broadcast gameplay via Twitch as a hobby or career), whose names will be announced Wednesday.

Amazon purchased Twitch in 2014 and has integrated it with its Prime two-day shipping membership. Prime customers can subscribe to one Twitch streamer (essentially a $5 tip to content creators) for free each month, and can download free games.

A preview of what's to come

Amazon has unveiled a lot of new technology that won't be ready for Prime Day, but will likely factor into future years' shopping events.

Among these are Amazon Scout, which it announced in January. Scout is an internally developed autonomous vehicle designed for door-to-door deliveries.

Amazon is also reviving Prime Air, an airborne drone fleet designed for deliveries. The new version, announced in June, reportedly has a new array of sensors designed to keep the drone — and its cargo — safe from hazards such as power lines and pets. Amazon originally announced Prime Air in 2013, but the project seemed to be stuck in a holding pattern until this year's updates.