Prime Day: What it means for Amazon

Prime Day has become notorious for being referred to as the "Black Friday of summer" due to its vast quantity of deals and discounts on numerous consumer products. An event beginning in 2015 as a celebration of Amazon's 20th anniversary, this tradition has continued each year and has generated considerable revenue for Amazon and much attention in the public. But to what extent is Amazon Prime Day valuable for the company?

Last year, Prime Day achieved a new record for the company as its sales surpassed that of 2016 Black Friday and Cyber Monday, temporarily becoming the largest e-commerce day until eventually surpassed by 2017 Black Friday. Sales grew by 60% from the previous year, revealing its increasing popularity and interest. Just recently, it was reported that Amazon will control 49% of the e-commerce market by the end of this year, up from 43% from the previous year, which only hints at the massive growth in sales that Prime Day will achieve. Clearly, Prime Day is a noteworthy contributor to Amazon's revenue, but the company's master plan extends beyond this.

One major drawback of Prime Day is that majority of the deals are exclusive to members. But luckily, Amazon provides the irresistible free trial option that allows people to experience the benefits of being a Prime member for 30 days. In April, Jeff Bezos reported that Amazon finally attained 100 million subscribers, a milestone that highlights Amazon's ambition with Prime Day. By promoting its concept of Prime Day as a day (and a half) of mass deals and savings, Amazon hopes that many people will sign up for Prime. While some will cancel their Prime subscriptions following the conclusion of Prime Day, some continue to hold onto the service due to Prime's addicting allure of its advantageous features such as 2-hour delivery, free 2-day shipping, and Prime Video. Ultimately, Prime Day is simply a marketing machine to bolster its Prime service.

But there's something more peculiar about Prime Day, and it is correlated with its massive sale of Amazon products, particularly the Echo smart home devices that operate through the company's virtual assistant Alexa. Every year, Amazon promotes its incredible savings on the Echo Dot and Echo. Additionally, within the past few months, the company has also revealed other smart products dependent on Alexa, such as the Echo Spot and Fire TV cube. Amazon is creating an environment here - an ecosystem that revolves around Alexa. Its expansive marketing of Alexa is to push people toward the Amazon bubble such that they become dependent upon its abilities. The fisherman Amazon is reeling in the fishes, or the people. Already, the company has 39% of Amazon shoppers who reportedly own an Alexa-connected device, while 10% of Amazon shoppers that do not own an Alexa-connected device plan to buy one during the Prime Day event. In other words, it is predictable that nearly 50% of Amazon shoppers will own an Alexa-connected device after Prime Day ends. By doing this, Amazon hopes to gain enough market share in smart home devices such that it will belittle the success of its competitors, namely Google Home (and Apple's HomePod?), and become the reigning ruler of the household.

Amazon can accomplish much in Prime Day. However, it was discovered and reported that the website suffered many glitches during the first few hours of the event, consequently slowing sales. However, raw revenue is not only lost from this ordeal. The company is also concurrently losing thousands of potential Prime subscribers and several sales of Echo devices, both of which form the backbone of Amazon's empire.

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