Amazon Prime Day starts Monday, July 16th, and, while it seems innocuous on the surface and possibly even a little made up, Prime Day could be to Amazon CEO Jeff Bezos what the nuclear bomb was to Harry S. Truman.
It could be game over, checkmate, or, as Seinfeld used to call it, the Death Blow to many a retailer.
In his hands, Bezos, by way of Prime Day, holds the ultimate power weapon that, if unleashed, could render every other retailer a shell of its former self. Should Amazon ever decide to unleash Prime Day to its fullest potential by programming must-see-TV Prime Day events on the 1st and the 15th of every month, on not just big screen TVs and fancy electronics, but on non-discretionary items as well, Amazon could forever change the course of retail history in a manner that Walmart, Target, Costco, et al. would be powerless to stop.
None of the above is hyperbole either. Here are three reasons why an Amazon Prime Day every month would be the be all end all retail strategy move for Amazon in the 21st century:
#1) The American Consumer Would Love It
The American consumer already loves Amazon. Latest reports are that over 101 million Americans have a Prime Membership. That’s roughly one-third of the American population. That is not just consumers but the entire population!
Amazon is as ingrained in American life as apple pie.
The other incontrovertible fact is that the divide between the rich and poor within America continues to grow. More and more people are struggling to make ends meet and are living paycheck to paycheck. A Prime Day on the first and the fifteenth of the month that American consumers could count on, wait for, and stock up for would likely therefore be something Americans would welcome with open arms because it would mean people could stretch their budgets farther than ever before.
Prime Day would have to take on a different angle from what the consumer typically associates with Black Friday deals on electronics and pivot more towards stock-up purchases, a la what one does at a grocery store or Costco, but for consumers that depend on their paychecks to survive, that change in direction would be well worth it.
PR-wise too it would play really well. It is really hard to find any fault with such an altruistic strategy. Amazon could then say to the politicians, “Monopoly power? Say what? We take our prices down well below the competition in a big, bad way twice a month. That ain’t no textbook definition of monopoly we have ever seen. But sure go ahead and ask America to pay more.”
#2) Prime Is The Ultimate Trump Card
Prime, when combined with Amazon’s e-commerce logistics advantages, is Amazon’s ultimate trump card. No other retailer has this same combination of advantages that Amazon does. No retailers of any size and scale have a membership program outside of Costco, and Costco too cannot come close to touching Amazon on the fulfillment side of its business.
Prime therefore affords Amazon the ability to make a Prime Day every month a reality. Just this past week, USA Today discussed how signing up for a $119 annual Prime membership is worth it just for a single day of Prime Day discounts alone!
The math gets even more interesting with a little sensitivity analysis.
If a Prime membership is worth it for one day per year, then what would 100 million Americans be willing to spend to have it twice a month? Another $100 bucks? $200 bucks? Make the membership a cool $500 per year? No matter how you slice it, that’s roughly $10 billion, $20 billion, and $40 billion of incremental subscription cash flow for Amazon every year to fuel the flames of American consumerism.
The concept doesn’t even have to be for everyone. It could be an idea that people opt into just like how Prime memberships work now. No matter the case though, the types of numbers above would allow Amazon to pay for a ton of discounting and extra shipping expense.
#3) Legacy Bricks-&-Mortar Retailers’ Assets Are Too Outdated
Amazon dropping Prime Day every month is like Jeff Bezos donning parachutes pants and serenading his retail competition with a solo rendition of U Can’t Touch This because Amazon likely knows that Walmart and everybody else do not have a shot in the world of being able to compete with the idea.
Seriously, what’s even the biggest American retailer, Walmart, to do? Rely on its store network or put incredible price discounts online and go head-to-head? C’mon!
Amazon already wins first product searches considerably over everyone else, and Walmart’s front end e-commerce experience is nowhere near up to snuff with Amazon’s nor are its logistical capabilities. Walmart and others could try to compete head on with as frequent of discounting in stores, but consumers are going digital more every day so that strategy would be less effective over time and also it would degrade margins considerably without a Prime-like subsidy on which to fall back. Go the other way, and push the gas on e-commerce to compete, and Walmart and others would only end up cannibalizing themselves to the tune of even lower profits than in stores too, all of which would bring quite the wrath from Wall Street.
The whole situation would not be that different from when Walmart hung its hat on everyday low pricing prior to the birth of Amazon. Retailers like Kmart and others tried to compete head-to-head with Walmart on low prices, but they ultimately lost because because Walmart just had too many advantages in terms of its store locations and logistics prowess.
Prime Day every month is basically the same concept, just modernized for 21st century consumer behavior and subsidized by the very consumers its serves via Prime itself. You have to give Amazon credit. They one upped Walmart on price by understanding the intrinsic hook of Costco and the ever-increasing value of convenience.
Peer into the looking glass, based on even the slightest semblance of what is described above, and the future retail landscape becomes clear.
Gone are the retailers who fail to give consumers any reason to get off their couches and venture into their stores — i.e. the department stores and the middling specialty retailers.
Gone are the regional grocers who don’t have the financial capacity to compete on the size and scale of how 100 million Prime memberships can speak to America’s pocketbooks.
Not nearly the same are the big box retailers and warehouse clubs who try to compete with Amazon head on but can’t and never realize that their value lies in reimagining their physical experiences by way technology, architecture, and human experience design as opposed to the me too digital and fulfillment experiences Amazon will always dominate.
What remains is simply a feudal system of retail. One where those who still exist, exist to serve Amazon solely, like Kohl’s taking Amazon returns, for example. Taking returns is not so much a growth strategy as it is an early indicator of a future world where the retailers that will remain will be more like serfs working under a feudal lord, toiling and paying tribute by doing the things Amazon doesn’t want or need to do, if only to survive on the leftover table scraps of retail.