Amazon Prime Day: Jeff Bezos' most lucrative magic trick

Jacob Chidester loads boxes into a truck at Amazon’s new delivery center in American Fork on Thursday, May 20, 2021.

Jacob Chidester loads boxes into a truck at Amazon’s new delivery center in American Fork on Thursday, May 20, 2021. (Laura Seitz, Deseret News)



SALT LAKE CITY — It's quite a feat to take a made up shopping "holiday" from zero to $11 billion in six years.

But that's exactly what Amazon just accomplished this week in a two-day, online shopping frenzy that generated more revenues than 2020's record-breaking Black Friday ($9 billion) or Cyber Monday ($10.8 billion.)

Amazon Prime Day launched in 2015 to celebrate the company's 20th anniversary and currently offers insider deals to its 200 million Prime subscribers who pay $119 a year for memberships that include one-day shipping, access to streaming content on Prime Video, discounts at Amazon-owned Whole Foods grocery stores and other perks.

Widespread home isolation under COVID-19 restrictions helped drive 50 million new Prime subscribers since last January to the company Jeff Bezos launched from his Seattle garage in 1994. And while not all of the $11 billion in online shopping revenue flowed to Amazon (and the company is famously reticent when it comes to releasing its own revenue numbers) analysts with Adobe Digital Economy Index team reported the $5.6 billion spent on Monday, along with the $5.4 billion on Tuesday, pushed the 2021 Prime Day growth for all retailers more than 6% over last year's $10.4 billion haul.

Within this year's Prime Day sales volumes, some Amazon competitors saw big jumps over last year, with Adobe reporting large retailers (over $1 billion in annual online sales) up 29% over 2020 and small retailers (less than $10 million in annual online sales) getting a 21% lift.


Clearly, Amazon has accrued a huge amount of power. And that's because whoever controls the end user, the consumer, controls the market.

–Jeff Larson, BYU marketing professor


This "halo effect," where other retailers work to siphon off some of the millions of shoppers Prime Day draws to Amazon's site, continues to gather steam even in a year that industry watchers said was notable for less dramatic sales prices and tactics than previous iterations.

"U.S. retailers continued to benefit from strong shopping momentum on the second Prime Day, catapulting total online spend to $11 billion for both days," said Adobe Digital Insights director Taylor Schreiner in a statement. "This is despite relatively muted discounts across most categories, suggesting that there's a pent-up demand for online shopping as consumers look forward to a return to normalcy."

Himanshu Mishra, a researcher and professor of marketing at the University of Utah's David Eccles School of Business, said Amazon's success in cultivating a sense of mild panic among shoppers has helped the e-commerce giant build Prime Day to its current levels.

"One of the main drivers of Amazon's success with Prime Day is its ability to create a perception of scarcity," Mishra said. "Deals may or may not be outstanding, but they invariably disappear in a short time. So they capitalize on the fear of missing out."

Mishra also believes that even though Prime Day's halo effect provides a short-term boon for some retailers, the biggest winner is Amazon.

"It will increase sales of retailers who partner with Amazon, but it is unlikely to represent major gains for Amazon's competitor," Mishra said. "As it has done in past years, it will only lead to bigger market share for Amazon."

Data from marketing analytics website eMarketer shows Amazon is on track to grow its 2020 share of all U.S. online retail business of 39.8% to 40.4% in 2021. And while that .6% may seem minuscule, it represent billions in new revenue and is predicted to be the largest gain for any retailer in the coming year.

BYU marketing professor Jeff Larson said he's not surprised by Amazon's success in building an artificial shopping holiday and points to the company's high focus on three critical tenets: build a large group of regular customers, make transacting as simple and painless as possible, and effectively share knowledge about products and discounts with that audience.

"Clearly, Amazon has accrued a huge amount of power," Larson said. "And that's because whoever controls the end user, the consumer, controls the market."

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The methods and strategies Amazon has employed to build that market dominance are coming under increasing scrutiny as federal lawsuits and multiple federal legislative proposals aiming to curtail the power of U.S. big tech companies continue to move forward.

But while Democratic and Republican officials have found some bipartisan moments in their shared criticism of alleged anticompetitive practices of U.S. Big Tech companies, the conduct being questioned has not dissuaded consumer interest in their products.

In an opinion piece for The Hill, Joshua Brown, industry commentator and CEO of Ritholtz Wealth Management, wrote that legislators comparing the conduct of companies like Amazon, Apple, Facebook and Google to the market power abuses of early 20th-century industrialist robber barons with names like Andrew Carnegie and John D. Rockefeller is simply off the mark.

"The monopolies of past eras of American history attracted the ire of antitrust proponents because, upon attaining a certain size within their industries, they had become abusive to everyday consumers who found themselves with a limited amount of choice," Brown wrote.

"What's tricky about today's alleged monopolists is that they've actually used their size to do the opposite. Consumers have not been harmed by Amazon's dominance over e-commerce, they actually love it."

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Art Raymond

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