The real reasons why Amazon's bringing back 'Prime Day,' its biggest sales day of the year
Last year's inaugural Prime Day brought in an additional $400 million in revenue, according to JP Morgan. This year's event is expected to be even bigger in terms of revenue and the number of deals offered, making it by far Amazon's largest single-day sales event in history.
But according to a note published by JP Morgan on Thursday, the implications of Prime Day are much bigger than the single day's additional revenue.
It's important to Amazon for a lot of other reasons, too:
Critical peak-day test: Prime Day is a good way to gauge customer demand for the rest of the year. It also lets Amazon test its fulfillment and shipping capabilities ahead of the holiday period to make sure it doesn't face the same type of shipping delays it experienced in previous years. Last year, Amazon saw 34 million items ordered, or 398 per second, setting a new record, according to JP Morgan.
Big event during typically slow summer period: Prime Day offers a big spike to Amazon's revenue in the summer, a period when sales typically slows down. It could also pull forward some back-to-school sales. Last year's Prime Day was the largest day for international sales up to that point, JP Morgan notes.
More incentive for third-party sellers to join Amazon: Amazon wants to become a marketplace for as many third party sellers as possible because it drives more customers and sales to its site. Prime Day is a great way to attract more third-party sellers, as last year's event was the biggest sales day ever for third party sellers.
Brings in new Prime members: In order to take advantage of the Prime Day offers, you must be a Prime member, Amazon's paid membership program. Amazon wants to add as many Prime members as possible because they tend to spend more than non-Prime members. Last year's Prime Day brought in hundreds of thousands of new Prime members worldwide, more than any single-day event, JP Morgan notes.
Drive Amazon hardware device sales: A lot of the Prime Day offers will include Amazon's own hardware devices, like the Kindle and Fire TV. Amazon expects to sell more of its hardware devices during Prime Day, as it sold the most number of Amazon devices on last year's Prime Day, according to JP Morgan.