Welcome back to a brand new Ask Ash blog post, where I ask WatchMojo Founder & CEO Ashkan Karbasfrooshan about various things, ranging from what is going on in the news, to career advice for students and entrepreneurs.
Today is the 2nd day of Prime Day in the United States, as Amazon is seeing major profits from its deals. For those who are unaware of Prime Day, it is a 2-day event from Amazon in which its Amazon Prime subscribers get exclusive access to special deals from its store. Think of it as its own version of “Black Friday”. During the first day of Prime Day, it was the most money spent in one day online in 2021 so far, with profits close to $6 billion.
More of that article can be found here: https://www.cnbc.com/2021/06/22/first-day-of-amazon-prime-day-draws-most-online-spend-in-2021-adobe.html
I wanted to get Ash’s thoughts on Prime Day, and some of the effects that it has on Amazon Prime, and Amazon as a whole.
1) Besides generating a massive profit, would you agree with the fact that because Prime Day is only for subscribers to Amazon that Prime Day is a way to gain more subscriptions?
Last year I read about how Costco makes all of the profit from the membership fees and largely sells goods at cost plus a slight margin. In other words, for Costco‘s model, it’s all about the membership revenues and the goods are ironically a means to an end. Well, in Amazon’s case, we can certainly make the case that Prime Day is ultimately all about gaining subscribers, retaining subscribers, and if they lose subscribers, getting them back on. So when it is said and done, the Prime Day is more of a marketing gimmick for Amazon and a way to bolster subscriptions, and yes: having a recurring base of consumers who pay you each month without having anything to buy is a great business model!
2) How do you think Prime Day compares to holidays like Black Friday and Cyber Monday? Is Prime Day more profitable?
Well granted I am not American, and I’m not a crazy conspicuous consumer so, from a strict consumer mindset, I’m not sure I’m the best to speak. However, I will say that for many younger audiences who are native to the web usually buy online by default and rarely go to malls and seldomly stop at stores. Prime Day is racing itself to be bigger over time because Amazon is not just a store that sells books or tissue paper or watches, they are about everything. Therefore, over time it should become bigger than anything else people may score for that idea. But if in 2000 or 2010 I told you that Amazon would be this omnipresent people would’ve also scarfed at the idea.
3) Would you recommend buying Amazon Stocks during Prime Day?
I would not recommend buying Amazon stuff during Prime Day. I would recommend buying Amazon stock any other day. The company is well positioned in multiple markets, it is omnipresent, and the reality is it will only grow in the years to come as Covid accelerates all the trends that made Amazon successful to begin with
Disclosure: Ash owns shares in Amazon.