This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Tuesday, June 22, 2021
You get a sale, and you get a sale — and you get a sale.
Conceived in 2015 to commemorate the company's 20th birthday, Prime Day has become a summer clearance event for electronics, household (almost) needs, appliances that seem useful — at least at first — and Amazon-branded hardware. Falling in the second or third quarter of Amazon's fiscal year, the event can help boost sales during a seasonally weaker part of the calendar.
But the Prime membership itself and the Prime Day "celebration" held for these members is not about Amazon's business, or at least not exclusively. Because while Prime Day will no doubt augment top-line growth in the current quarter, what Amazon really gets out of throwing a dart at the calendar and declaring it a consumer holiday is that it makes competitors bend to its will.
Target (TGT) is offering "deal days" while Best Buy (BBY) runs the "Bigger Deal Savings Event" through today. Walmart (WMT) has "Deals for Days" running through Wednesday. At J.Crew, where sale items are an extra 50% off, they just call it Tuesday.
The Jeff Bezos quote most business strategy types will break out to sound sophisticated is the old line that "Your margin is my opportunity." Pithy, sure. But also proven true enough across Amazon's different businesses.
Amazon now owns a production studio, grocery stores, and delivery vans dropping off small deliveries on porches across the country. Where Bezos and his team had been paying someone for a product — food, entertainment, delivery services, cloud services, and so on — the company sought to simply do it themselves, an opportunity against your profit source. Prime Day is no different.
This year's Prime Day is notable, however, in that it marks the final iteration of this event under Jeff Bezos' leadership at Amazon. In a few weeks, Bezos will step down as CEO of the company he founded and then, later next month, will get launched into space.
What Amazon shareholders should hope doesn't leave with Bezos is the culture that drove Amazon to development units like AWS, products like the Prime membership, and the entire "flywheel" Bezos talks of so often in his annual shareholder letters.
Prime Day no doubt accomplishes many of the aforementioned goals, like inventory management and pressuring competitors. But Prime Day also makes the Amazon flywheel spin a little faster. More consumers spending more money in more places online, and on more days, means Amazon gets more chances to capture a slice of that activity.
"If you want to be successful in business (in life, actually), you have to create more than you consume," Bezos wrote in his most recent letter to Amazon shareholders. "Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out."
Upgrade now to stay ahead of the market with Yahoo Finance Plus.
Yahoo Finance Highlights