Amazon Gears Up for Prime Day With Early Specials

By Paul Ausick Updated Jan 11, 9:19PM EST · Published Jul 9, 9:45AM EDT

When Amazon.com Inc. (NASDAQ: AMZN) ran its first Prime Day promotion in 2015, only a few retailers thought the idea would catch on with consumers. Those same retailers are now planning how to compete with Prime Day 2018, a Black-Friday-in-July opportunity not only to grow sales but to get a promotional boost.

The goals are the same for both product brands and retail sellers. Last year’s Prime Day sale raked in more than $1 billion in sales for Amazon over its 30-hour duration. This year’s 36-hour Prime Day is expected to generate even more sales and, more important, more Prime memberships. In order to get Prime Day prices, signing up for a 30-day free trial or being a Prime member is required. eMarketer estimates Prime memberships will rise by 12.5% this year from a global total of 100 million, about half of which are U.S. subscribers.

According to Retail Touch Points, Amazon signed up a record number of new Prime members last year and sales of items from first-party brands rose to more than $600 million driven by 34,000 promotions. In the United States, almost 50 cents of every dollar was spent on a discounted item, and all 4.7 million items sold averaged a discount of 24%.

Electronics retailers got a jump this year, according to Retail Dive. They have increased their product assortment by 30%, and since early June raised their average discount by four points, from 32% to 36%. The firm notes that even Apple Inc. (NASDAQ: AAPL) raised its discounts by 24% this year.

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The “sweet spot” for discount pricing that still maximizes profit is between 30% and 35%, according to Retail Touch Points. Smaller discounts encourage consumers to shop around for a better price; higher discounts may call into question the product’s brand value.

Here are some price predictions from e-commerce research site BestBlackFriday.com for Amazon’s pricing on its own electronics products.

Echo Show: $129.99; a savings of $100 (available now)
Echo (Second Generation): $69.99; a savings of $30
Echo Dot: $24.99; a savings of $25
Echo Plus: $109.99; a savings of $40
Fire 7 tablet: $29.99; a savings of $20
Fire 8 tablet: $39.99; a savings of $40
Fire 10 tablet: $89.99; a savings of $60
Fire 7 Kids tablet: $59.99; a savings of $40
Fire HD 8 Kids tablet: $79.99; a savings of $50
Fire HD 10 Kids tablet: (179.99; a savings of $20; brand-new product)

Other early-bird specials include discounts on Amazon Brands such as furniture and AmazonBasic items; digital, DVD and Blu-ray entertainment; cheap trials of Amazon Music, Twitch Prime, Kindle Unlimited and eBooks; and a 65% discount on an Audible subscription.

Amazon is also extending its Prime Day discounts to its Whole Foods brick-and-mortar stores. Selected items will be available for an additional discount of 10%, but Whole Foods customers will need to be Prime members (or sign up for the free trial) in order to get the deals.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.