In the style of summer action movie blockbusters – a summer battle went down between Amazon and Walmart. Both retail giants offered discounts and promotions to rival those only seen during traditional Black Friday sales. These sales created the kind of hype associated with summer blockbusters and put the marketing punch for the new Terminator to shame.
Why all the hype?
Holding huge summer sales in July isn’t exclusive to Walmart and Amazon. And, it’s not a new concept. Target has held a “Black Friday in July” event since 2010. This is also the third year that Best Buy is holding a Black Friday sale in July.
Looking further back, American advertisers began using Christmas in July themes to promote summertime deals and sales as early as 1950 – stemming from the fact that most retailers tended to sell Christmas goods around July to make room for new holiday inventory.
Show me the Innovation!
If we know that mid-summer deals aren’t anything new, then what’s the crux of all the buzz? It’s more about shifting business models than rock bottom prices. And that’s where the topic of innovation comes in.
For Amazon, the July deals were offered exclusively to Amazon Prime members (and of course to attract new Prime members wanting to get in on the deals). Amazon Prime, provides free two-day shipping on retail purchases, on-demand video streaming, free music streaming, and free access to the Kindle library, all for an annual $99 fee. What Amazon has seen is that customers spend as much as *150% more at Amazon after they became Prime members. They not only ordered more often, but they started buying things at Amazon that they probably wouldn’t have in the past – saving themselves a trip to the store for necessities like batteries and coffee beans.
The Prime business model changes how consumers shop as a whole.
For Walmart, deals were offered to all customers at an extended 90-day discount with lower free shipping minimums $50 to $35 for an extended 30 days. Not to be outdone, Walmart is piloting its own service similar to Prime, known as ShippingPass, which costs $50 per year for unlimited three-day free shipping. Although ShippingPass is presently in testing it is expected to launch by fall.
This isn’t about mindless discounting. These sales are really a play for customer acquisition, and adoption of (or testing of) new business models.
So what are the deeper driver behind them? It’s pretty simple, and complex at the same time.
According to consumer psychologists, the allure of a bargain speaks to human nature. A study in the Journal of Organizational Behavior and Human Decision Processes, states there is evidence that men and women navigate shopping situations in ways consistent with the hunting and gathering behaviors of our savannah ancestors. Sales create a sense of urgency and the limited-time-only nature of Black Friday triggers an instinctual fear of scarcity that drives people to buy.
It goes even deeper when we get “free” two-day or three-day shipping. Waiting a few days for a product is painfully long when compared to getting it real-time in a store. But when it’s perceived as free, there’s little downside. So urgency plus free equals click or tap. And there are lots of clicking and tapping happening these days.
In the case of our summertime deals – pair our instinctual leanings with recent research suggesting that warm weather impairs our decision making, and summer sales revenues may rival their holiday season counterparts.
If you’re selling something, anything, couple a sale with something “free” and you have a winning formula. Connect it to a program like “Prime” and you might just find a winning business model.
Learn more about the reasoning behind Why We Buy here.