Amazon Thanksgiving vs Walmart Thanksgiving
Despite strong holiday market showings from some of Amazon’s biggest competitors such as Wal-Mart, the Amazon is expecting potentially historic earnings this holiday season.
Amazon is projected to beat even Wall Street’s sales expectations for Amazon this holiday season, according to a recent CNBC report.
Daniel Ives of GBH Insights said in a research note that he believes Prime customers, those signed up to Amazon’s subscription service, are estimated to spend 20 to 25 percent more this holiday season from last year. This, coupled with growth in the number of U.S. and international Prime members is “setting the stage for a blowout holidays season,” he said.
Earlier reports predicted that Amazon would account for nearly 50% of all online holiday sales this winter, and the report above only heightens the anticipation for what should be a terrific two months in sales for Amazon.
Wholefoods and Amazon Prime Subscriptions
Prime itself is gradually becoming more popular as Amazon continues to add benefits for its subscribers. The recent purchase of Whole Foods and the introduction of a wider selection to its television streaming service are driving more people to buy Amazon Prime subscriptions.
Speaking of Whole Foods, Amazon is also helping out customers who are planning to shop physically for some of their holiday needs. Amazon is reportedly lowering prices for Thanksgiving-related grocery products at Whole Foods in anticipation of the Thanksgiving rush to grocery stores. But there’s a catch: only people with Amazon Prime subscriptions will be able to reap the benefits of a cheaper shopping experience on these items.
For Whole Foods customers, organic turkeys are $3.49/lb, and non-antibiotic turkeys are $2.49/lb. Prime members can get a bigger discount: $2.99/lb for organic turkeys and $1.99/lb for non-antibiotic turkeys. (In the future, Prime membership will act as Whole Foods’ reward program.) The turkeys can’t be ordered for delivery, but they can be reserved online.
The discounts on turkeys are just one example, but the price difference between those who have Prime and those who don’t is pretty generous. Whole Foods is one of the more expensive national food outlets, but if Amazon can use Prime to drop the prices on food, it can make customers more enticed to shop there. It will also allow Amazon to remain competitive with other companies who have physical food stores.
Some people aren’t fans of Amazon’s Thanksgiving discounts, though.
Amazon has big plans for Whole Foods, where it’s already selling Amazon Echoes and building out Amazon Lockers, among other things. The company has yet to explicitly outline how Prime fits into those plans, but it makes sense that Amazon would use discounts at Whole Foods to generate new signups, particularly when Amazon CEO Jeff Bezos has called it “irresponsible” not to be a Prime member. Amazon could effectively move Whole Foods to a Costco-like model, where a Prime membership is, if not the price of admission, a prerequisite for the best services and deals.
The trouble is that people don’t like feeling excluded, especially from things they’re used to being able to access. Whole Foods was always pricey but, in its pre-Amazon life, sales were for everyone. Asking people to pony up $99 for Prime to save a couple bucks at Whole Foods could be a tough sell. And especially at Thanksgiving, discounting turkeys only for those already in the club doesn’t feel like much of a thank you. It feels cheap.
Rather than offering discounts to everyone, Amazon is funneling them towards Amazon Prime members. While it may result in an increase in memberships, it could also serve as some bad PR for the company. As Alison Griswold of Quartz mentions above, Thanksgiving is about just that: giving. It’s not about asking for things to be given.
However, I doubt many people will view it that way. Amazon is simply taking this opportunity to improve business. Whole Foods is still selling turkeys and other food products to everyone, but they’re simply making them cheaper for those who have been loyal Amazon customers in the past. Anyone who would expect differently from a company that’s in the business of turning a profit is kidding them-self.
Did Wholefoods help Amazon’s long-term goals?
In terms of business, it’s a smart move. The discount will cause some people who don’t have Prime memberships already to sign up for them. And once Amazon can get someone signed up for a Prime membership, they’ve likely reeled them in for a long time.
The inclusion factor shouldn’t be that worrisome either. According to a recent study conducted by Consumer Intelligence Research Partners, around 85 million people in the country already have Prime memberships. That’s more than a quarter of all Americans. Most shoppers know someone or live with someone who has access to those discounts, so there aren’t as many people missing out on these discounts as some may think. Those that don’t know anyone with a membership will sign up for one if they can afford the convenience.
What is Amazon trying to achieve?
Amazon is hoping that by branching out the benefits of Prime to capture more subscribers, it can take hold of the people who might be drifting towards Wal-Mart or other outlets that are becoming strong competitors for the company. If someone has a paid-for service like Amazon Prime, they’ll feel more obligated to utilize its benefits.
The increase in Prime memberships coupled with Amazon’s sales through Whole Foods and its other companies should result in a pretty fruitful holiday season. And if Amazon really is garnering this much traction on its website, that can only mean good things for third-party sellers who use Amazon as a platform.
Amazon Thanksgiving vs Walmart Thanksgiving
It’s pretty evident that Amazon is using both its physical and online stores to get a leg up on its competition in the holiday shopping market. The payoff is expected to be potentially historic for Amazon in 2017.
