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How Mastery of Data Collection and Analysis Contributes to the Success of Amazon Prime Day

By   /  July 21, 2017  /  No Comments

Click to learn more about video blogger Hamaad Chippa.

Amazon just completed its third-annual Amazon Prime Day (APD), a 30-hour online shopping extravaganza that offers deep discounts on popular items until quantities run out. What started as a celebration to commemorate Amazon’s 20th anniversary has quickly become a popular on-line shopping appointment, much like Cyber Monday. According to a statement released today by the e-commerce powerhouse, sales from this year’s APD grew by more than 60 percent over last year, which held the record as Amazon’s biggest sales day ever. For reference, APD 2016 surpassed one-day totals from Black Friday, Cyber Monday and the first annual Prime Day. To give you an idea of how much merchandise “flew off the shelves” last year, APD accounted for sales of:

  • Two million toys
  • One million pairs of shoes
  • 90,000 TVs
  • Hundreds of thousands of Kindles

To pull off an event with such staggering numbers, Amazon must place immense and constant rigor on its supplier, product, consumer and even competitor data. This ensures that any analytics sourced from this trove of information is accurate, helping provide insights into suppliers that can meet demands, products to include, consumer preferences, and potential competitive responses.

The 2016 edition of APD saw a 60 percent worldwide increase in sales as compared to the inaugural event, as Amazon invited additional third-party vendors to take part. Sharing data between Amazon and the vendor must be seamless and, more importantly, real-time. When purchases are made, consumer, product and shipping data flows to either Amazon’s fulfillment centers or the vendor’s distribution warehouses to be shipped. Data errors, such as incorrect pricing or inaccurate inventory resulting in stock outs, may result in orders not being satisfied and can create a customer success nightmare. APD is a high-profile event and consumers are not shy about taking their frustrations to Twitter and other social media outlets, as evidenced by the hashtag, #PrimeDayFails.

When planning for APD, Amazon must ensure that suppliers can meet demands before they are allowed to participate. Therefore, it’s vital to understand past supplier performance on key metrics, such as fill rate (orders taken / orders shipped) and on-time shipping. Historical top performers will likely offer better service to consumers vs. vendors with spotty or inconsistent performance. Leveraging supplier data to understand and manage this during the planning phase can reduce risk of surprises.

One of the strict requirements of Prime Day is that, to participate, one must be a Prime member. With the wide variety of products and the sheer convenience of having products shipped to your door, the notion of free shipping, along with unlimited online storage, streaming TV and movies, and book rentals, Amazon Prime has attracted over 80 million subscribers. Using product and consumer data from previous purchases on Amazon’s marketplace, as well as historical purchase and browsing data of members, Amazon can curate the type of deals to offer on APD, predicting with great accuracy the demand for products. This also includes using pricing history to understand the consumer’s willingness to pull the trigger on products that may be of interest, but require the right deal before they will actually buy something.

Ironically enough (well, more by design), the products with the steepest discounts on Prime Day are Amazon’s own products: Echo, Fire Stick and Kindle e-readers. These devices proliferate Amazon’s many services, making it easier to order products using a voice-activated assistant, stream video content on your TV, or buy / borrow your favorite books from Amazon’s marketplaces. This also allows them to collect more data that can then be used to market even more relevant products, eventually predicting products you’ll need before you yourself will even know. With sales figures for Echo-family speakers expected to be three times greater than in 2016, it’s likely Amazon will be generating even more customer data in the coming year.

As you can see, a convergence of supplier, product and consumer / member data in an extremely coordinated manner is vital to the success of Prime Day.

  • Accurate data is necessary to understand product descriptions and quantities available.
  • Timely data is critical to update consumers on current stock and time remaining to allow for real-time purchasing decisions.
  • Historical data is integral to determine product promotions and pricing.

While APD created more than half a billion dollars of revenue last year, the main goal of Prime Day is to attract new members who don’t want to be on the outside looking in as members partake in this exclusive “holiday.” More members mean more data for Amazon to collect, analyze and use as it continues to reign dominant over retail competitors, while also identifying new markets to disrupt.

About the author

Hamaad Chippa is part of Informatica's Industry Consulting practice, responsible for identifying data management challenges, trends, and best practices in the manufacturing and retail, and CPG verticals. He also helps organizations understand the value improved data can have to important revenue, cost, and efficiency drivers. Prior to Informatica, Hamaad spent 10 years as a management consultant, specializing in providing leading-edge insights to help clients transform their businesses and attain high performance capabilities. He employed various methodologies to help clients with complexity / cost reduction, product development strategy, and manufacturing operations strategy, improving operational efficiency and effectiveness. Hamaad graduated from the University of Illinois at Urbana-Champaign with a bachelor degree in math & computer science and has an MBA from the University of Chicago, Booth School of Business. He's based out of Washington, D.C. by way of the Windy City. In his free time, he enjoys biking around the historic D.C. neighborhoods & trails, sports photography, and spending time with his family, particularly teaching his son about the Star Wars universe.

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