American consumers have been trained to wait for one-day sales at certain designated holidays -- Labor Day, President's Day, Black Friday -- in the annual shopping calendar indicating when to grab a bargain. Shoppers love these one-day sales because they give them permission to splurge and justify indulgent behavior. It's an emotional, impulsive and rewarding day -- and it's ripe for branding. Unfortunately for retailers, these sales have also become a crowded mess that frequently results in disappointing revenue as brands scramble to offer earlier and earlier deals and deeper discounts.
Last week, with Prime Day, Amazon made the smart move to step off the annual sales treadmill and brand a new holiday for itself. In spite of some consumer disappointment expressed on social media, the event was largely a success. It drew a huge amount of attention to their Prime membership program, garnered loads of press and saw the day's sales rise 80 percent in the U.S.
And while much of the attention that was given to the event centered around the 90 day counter-sale that was launched in response by Walmart, few connected the dots between the timing of both sales and the looming launch of another Amazon competitor -- one that could prove to make Walmart, and possibly even Amazon look like a relic of the past in a few years.
That competitor is the freshly minted Jet.com, which launched this week. The company has combined innovative retail technology and a creative business model to build an online marketplace that promises to beat Amazon's pricing on a selection that includes millions of products. The thing that makes Jet special is that unlike Amazon, or most retailers really, Jet doesn't make money by selling products. Operating as a marketplace for third party sellers, it makes money by charging customers a $50 per year membership fee. Then, it takes the money it would make if it kept commissions on sales and passes it on to the consumer as savings.
Jet isn't just some upstart that came out of left field. It's run by Quidsi founder Marc Lore -- a man well known for having engaged in a previous price war against Amazon with Quidsi's Diapers.com. While he didn't win that battle, he didn't exactly lose either... Amazon bought his company for $550 million. Having spent two years working inside Amazon itself, Lore knows the company's strengths and weaknesses. And clearly, Amazon knows that he poses a real threat to their business.
Some may have taken the lesson from Prime Day's success that launching a one-day sale outside the traditional sales calendar is a good move, and in many ways, they would be right -- most companies could benefit from smartly branding a sale outside of all the noise of the holidays. But these days, that alone isn't a solid marketing strategy.
If you look deeper, you will see that Amazon and Walmart were playing at a longer game than just offloading a bunch of product on the cheap. Prime Day was billed as a 20th anniversary treat for Prime members, but its true purpose was to bolster a locked-in, devoted consumer base by getting more people to sign up for Prime. As their new, membership-based competitor was about to begin the chase, the timing and the distraction of a big, flashy, branded event was no mere coincidence.
Whether Jet will prove to be the Amazon-killer it's set out to be remains to be seen, but there's already much we can learn from the bold ideas of the brand and its founder. The take away for retailers is that one-day sales may draw customers in the short term, but that's not enough. Innovative new business models will be offering more saving to consumers through smart pricing technology, helping them to build loyal membership bases that will pose a threat to the way today's retailers do business. Brands need to think outside of traditional models and strategies to identify new ways to keep prices low and consumers committed every day of the year. Soon, the razzle-dazzle of a one-day, or even a 90-day sale won't be nearly enough.