What To Make Of Amazon’s Prime Day

Wednesday, July 15 is a big day for Amazon. In celebration of its 20 years of being one of the biggest internet success stories of our time, the company is having a Prime Day.

For 24 hours, it will have "more deals than Black Friday," many cycling through every ten minutes. But there’s a catch. Only Prime members can participate. For a company that has 40 million Prime subscribers, this is a big deal. But what’s the reasoning behind it? There seem to be a few speculations. Let’s discuss a couple.

Fortifying Against the Competition

What Amazon wants to do is to show consumers that they treat their most loyal customers right. This is increasingly important as rivals like Walmart and eBay are becoming more and more able to compete with Amazon on a larger scale.

But one new competitor that analysts are pointing to as the main reason for Amazon’s bold move is Jet.com. According to Money, Jet.com, which is set to launch to the public later this year, offers members items at 5%-6% lower prices than can be found anywhere else online. They can score even bigger discounts if they pony up their email address, pay with a debit card, or agree not to return the item. Users will pay $50 annually to get access.

So, if Amazon can get enough people to sign up for Prime and really see what value it offers, it’s hoping that they’ll stick around and decide that paying $50 somewhere else isn’t worth it.

Pure Marketing

Amazon has been struggling to turn a profit lately. While some may feasibly argue that it’s simply a matter of investment and management can turn on the profit spigot at any time, it still has an effect on how investors view the company’s value. So what can it do?

It’s well known that Prime is one of Amazon’s flagship products. It’s the first step to becoming a part of its customer’s everyday lives. Jeff Bezos has done everything he can to make Prime more attractive, introducing Prime Now, Amazon Dash, unlimited music, a Kindle lending library and unlimited access to music.

So though it may scare some to see Amazon doing yet another major sale at the cost of its bottom line, the underlying idea is solid—gain more Prime members and give them a reason to stick around.

Walmart won’t go down quietly

Who could have thought that we’d have a Black Friday-like event in July? Not willing to let Amazon have the final say, Walmart has jumped in, promising more than 2,000 online exclusive deals. And the genius of it? In a blog post slated to go up Monday, Walmart plans to say that it is "standing up for our customers and everyone else who sees no rhyme or reason for paying a premium to save."

"We just don't believe you should pay a fee to get a better price," said Walmart spokesperson Ravi Jariwala.

Regardless of how this all ends up for either company’s bottom lines, this is a great day for customers to take advantage of major deals. I, for one, am excited.