Why Amazon Prime Day Works & How Your Credit Union Can Capitalize
posted by Eric Schurr on Wednesday, July 19, 2017
Amazon has outdone itself once again. (And that’s a pretty sizable accomplishment for a company that captured 53 cents of every dollar U.S. consumers spent online in 2016.)
This year’s Prime Day, a fabricated shopping holiday designed to inspire even greater numbers of e-commerce shoppers to spend money within the fast-growing online marketplace, was the best one yet.
Not only was it the best-ever Prime Day. CNN reported it was Amazon’s best day of all time, beating even its best Black Friday and Cyber Monday numbers – combined.
So what’s the deal with Prime Day? Why does it work, and why now, especially when consumers are enjoying a healthy increase in income but haven’t demonstrated a willingness to spend that extra money?
There are a couple of obvious weaknesses exploited by Prime Day and other manufactured shopping holidays:
- We love a bargain (and that extends to free shipping).
- We can’t resist “limited supply” taunts.
- The rabbit hole of Internet shopping actually activates rewards pathways in our brains.
But beyond the obvious, there is another reason Amazon has so successfully tapped into the buyer’s psyche. From “Day 1,” Jeff Bezos and crew never underestimated the negative influence of payments friction on a consumer’s path to purchase. Shopping cart abandonment, while a massive problem for many online merchants, is an apparently unacceptable circumstance for Amazon. Their engineers know full well that if you make paying easy, you get the sale. It’s that simple – and of course, that complicated.
If we accept that Amazon has become something of an impenetrable merchant of choice, perhaps the question becomes how credit unions can seamlessly integrate with the digital shopper’s paradise. In other words, how can your credit union’s credit card become the card of choice? What are the strategies you can deploy to enable frictionless, one-click purchases on Amazon and any number of other “set it and forget it” card-on-file environments?
Three ideas come to mind:
- Evolve your card portfolio to include rewards-based products that offer 2x, 3x, or 5x rewards points for e-commerce spend.
- Create a seasonal or holiday-centric “spend and get” promotional calendar. Execute campaigns that reward cardmembers for digital purchases during those high volume periods, such as Black Friday, Small Business Saturday, Prime Day – and if you’re really feeling trendy, Alibaba’s Singles Day (Don’t think they’re of interest to a U.S. marketplace? Maybe not yet. But interesting things are afoot.).
- Offer insurance or other value-added products and services that encourage recurring payments to providers, such as cell phone protection insurance.
The Amazons of the world and the friction-free, invisible payments experience they offer are here to stay. For the time being, however, those payments continue to be authenticated and enabled by the card networks. Consumers have other choices, to be sure. But, consumers love rewards, and ACH, debit and prepaid providers are not doing a terrific job of keeping up in the rewards department.
Amazon is big and getting bigger. But don’t fret. Activate. You have a terrific opportunity to enable even greater experiences for the online shoppers in your membership. With the right strategy, your credit card portfolio could have its own best year ever.
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