Amazon's Prime Day Shifts Focus from Goods to Services
Amazon (NASDAQ: AMZN) leveraged its two-day Prime Event, which concluded on Wednesday, to spotlight an impressive range of deals in service areas like food delivery, travel, and healthcare. While Amazon has traditionally focused on goods, these offers marked a potential growth area for the online retail titan.
Despite the sale of services and experiences not having a significant impact on Amazon's bottom line yet, the company seems to anticipate a shift in that trend. Analyst David Klink from Huntington National Bank suggested that Amazon has maxed out its value from being a simple pass-through of goods and is now attempting to climb the value chain.
Prime Day Partnerships Bring Exclusive Discounts and Codes
During the Prime Day event, shoppers not only availed discounts on popular categories like apparel and electronics, but they also enjoyed exclusive deals and discounts with Priceline for hotel bookings, Grubhub for restaurant deliveries, and Amazon's own One Medical telehealth service.
Amazon's partnerships with Grubhub and Priceline were seen as an extension of their existing advertising strategy, and a move to make retail more appealing. Additionally, Prime members received a free one-year subscription to Grubhub+.
Prime Event: Catalyst for Record Sales and Advertising Revenue
Prime Day proved to be a monumental success for Amazon. Despite a slowdown in consumer spending in the second quarter, the event recorded the highest sales in the company's history, particularly benefiting independent sellers.
The inclusion of more Prime Day deals on services and discounted memberships could provide a boost to Amazon's advertising services. Amazon reported a 20.7% increase in advertising revenue in the first quarter, with predictions for the ad revenue to hit $11.2 billion in the third quarter, which includes the Prime Day data.
The data Amazon gathers through partnerships with companies like Grubhub and Priceline could bolster its advertising with other firms in those sectors, helping to secure Amazon's position as a dominant player in online retail and advertising.