That all comes ahead of Tuesday’s second annual Prime Day, when subscribers will get access to over 100,000 deals.
Analysts project it will be Amazon’s biggest day ever. Countdown deals rolled out last week, and on Friday Amazon started offering specials to consumers ordering goods on the Echo smart speaker and other Alexa-powered devices.
While the shopping holiday results in sales of tens of millions of products, the longer-term strategy is for Amazon to pull more consumers into its universe of gadgets, services and content so they see less value in buying stuff anywhere else. Prime memberships increased 51 percent in 2015.
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“As Amazon adds more benefits to Prime — such as faster delivery times with Prime Now, Prime Video, photo storage, music, and restaurants — we believe the service is helping Amazon to capture greater overall share of consumer wallets by building loyal users,” wrote Ronald Josey, an analyst at JMP Securities. He has a buy rating and price target of $775, or 3.9 percent above Friday’s closing price.
Starting at midnight Pacific time, members of the $99 a year Prime service will see deals as frequently as every five minutes throughout the day. Prime Day will be available in 10 countries, the same as last year with the addition of Belgium.
During the inaugural Prime Day last July, members purchased 398 items a second, according to Amazon. For many subscribers, the quality of the offers left plenty to be desired. Across social media, consumers made fun of the tiny discounts and undesirable products that kept surfacing.
Prime Day 2015 added 2 percent to Amazon’s third quarter revenue growth, and Josey expects this one to be at least as successful. Rob Sanderson, an analyst at MKM Partners, predicts that total Prime Day revenue could double from last year to between $750 million and $800 million.To add deals without dramatically increasing its exposure to inventory, Amazon is promoting more products from third-party sellers. Last year, marketplace sellers accounted for 14 million of the 34.4 million units shipped, and the number of participating merchants will more than double from a year earlier, the company said.
Sellers who want to participate in Prime Day do have some guidelines, which they received from Amazon in April with a submission deadline of May 4. Merchants were invited to apply for “lightning deals,” which last for a few hours, in contrast to spotlight deals that come to an end when the products sell out.
To be eligible for lightning deals, products would have to be part of the Fulfillment by Amazon program, meaning the items are held in Amazon warehouses and shipped from there to buyers. Customers have to be offered the deal at a 20 percent discount or more to the 90-day average and below the lowest price since Jan. 1. Items must have minimum ratings of three stars, and “adult products, suggestive images, and products of a controversial nature will not be accepted.”
(Friendly reminder: beware of counterfeits.)
Shareholders are counting on Prime Day to deliver, but how much further can the stock run? While 89 percent of analysts tracked by FactSet still recommend buying the shares, the average price target is just 10 percent above the close on Friday.
Look for Amazon to promote plenty of its own products come Tuesday morning, especially considering that seven of the top 10 best-selling items on Amazon’s electronics page are homegrown. The top seller is the Amazon Fire TV stick, with the Echo third, Fire tablet fourth and Kindle Paperwhite fifth.
The opportunity to cross-sell is one of the key benefits of Prime Day, Piper Jaffray analyst Gene Munster wrote in a July 7 note. Munster recommends buying the shares.
“Hardware is a key piece of Amazon dominating automated consumption,” he wrote.