This year's Prime Day struggles show that not even Amazon can keep up with the monster it created
AP/Gene J. Puskar
- Amazon Prime Day set another record as the company's largest sales event ever, but it wasn't without incident.
- The retailer's website experienced an outage at the start of the day, which CNBC reports was partially caused by higher-than-expected traffic.
- This reflects the fact that not even Amazon is always able to handle the mob it has created with its hard-to-resist Prime membership.
Amazon's Prime membership is extremely popular.
For proof of that, one needs only look at how demand for this year's Prime Day event briefly crashed Amazon's website on Monday afternoon. CNBC reports that the demand was much larger than Amazon had been expecting, and that contributed to the outage and subsequent website issues.
Amazon bills Prime Day as a one-day shopping event full of Black Friday-like deals. They're only available for Prime members, meaning the traffic surge was caused solely from those holding the $119-a-year or $12.99-a-month membership, or those who were intending to buy one so they could shop the deals.
Despite the issues, Amazon still says it racked up record sales for a single shopping event. In the 36 hours of Prime Day, which was six hours longer than last year's Prime Day, Amazon sold 300,000 six-quart Instant Pots and 150,000 LifeStraw personal water filters, which were two of its top-selling products.
Prime membership has surged to more than 100 million paying members, Amazon revealed earlier this year. Stick on top of that non-paying Prime members, like those on a 30-day free trial or a six-month-free student membership, and you've got a large and spend-happy force of shoppers. After six months, student Prime members pay a discounted $6.49 a month.
Amazon's legion of Prime members already shop more often and with larger order sizes than other customers, providing an engine to fuel Amazon's continued growth as it takes over online shopping. This means that Amazon has a vested interest in keeping them happy.
The value of Prime has risen steadily as Amazon has added more benefits to the program over the years. A recent JP Morgan analysis estimated that the service is actually worth $785 a year when everything it offers is counted together. That's six-and-a-half times the actual cost of an annual Prime subscription, even with the price increase. It's also an increase of about 12% from what JP Morgan estimated Prime to be worth last year, when its analysts said membership was worth $700 a year.
But Amazon has set a high bar for its Prime services, and if the services falter, like in the case of the start of Prime Day, customers may not see the value of paying for the membership.
"[Prime Day shows that even Amazon isn't immune and regardless of the retailer, discounts alone aren't enough and without a seamless, enjoyable experience, the consumer will go elsewhere," said Robin Copland, vice president at marketing firm Huge, which partners with retailers.
That means that although customers are increasingly tied to Amazon and addicted to its services, if those services start to falter, customers will start to look elsewhere.
Amazon has seen similar issues with its Prime two-day shipping and Amazon Fresh services, where customers have become very upset with the company if they believe its services are in any way falling behind the high bar Amazon has set for itself.
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