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Amazon Introduces Prime Day

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Amazon Introduces Prime Day

July 7 2015, 07.22am GMT


All eyes are on the announcement by Amazon (AMZN, -0.38%) that it would be offering amazing deals on 15 July in a massive sale that in the words of the announcement “would be bigger than Black Friday”.

This in celebration of Amazon’s 20th birthday.

The first Friday after Thanksgiving is traditionally the first day of the holiday shopping season with all kinds of deals on offer which has become known as Black Friday and Amazon hopes to cash in on the similarities.  

The caveat with the Amazon offer is that it is only open to Amazon Prime members and could well be a disguised drive to increase the number of Prime members. The annual cost of becoming a Prime member is $99 with members entitled to a large range of benefits from the e-tailer. These include reduced delivery costs and in some cases, free delivery, special offers on Prime products ranging in diversity from videos and Kindle to Prime Pantry, where low price groceries and other household needs are available.

Amazon has never revealed the size of the Prime membership, but growth on a year to date basis for 2014 was 53%. According to a MarketWatch report, analysts estimate the membership at 40 million. Ross Sandler, a research analyst with Deutsche Bank, said in a July report that, “Prime is arguably the most important trend at Amazon. It should be the first retail membership club to reach 100 million members in history if the growth continues - a huge loyal support base of customers.”

“Members tell us every day how much they love Prime and we will keep making it better”, said Greg Greeley, Amazon Prime vice president, in a statement. “If you’re not already a Prime member, you’ll want to join so you don't miss out on one of the biggest deal extravaganzas in the world.”

A study by Millward Brown Digital revealed that Amazon Prime enjoys a conversion rate of 74% of members becoming buyers, compared to a 13% figure for non-members. This underscores the importance to Amazon of attracting new Prime members.

Meanwhile, Sucharita Mulpuru-Kodali, vice president and principal analyst at Forrester Research, had this to say, referring to Prime Day, “Think of it as Amazon’s gift to customers … and itself.”

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