Amazon put services In the Spotlight During a two-day Prime Event that ended on Wednesday, Amazon consumers were able to nab savings on food delivery, travel, and healthcare. These deals highlight the potential for development in services at an online retailing giant that has traditionally focused on goods.
According to Adobe Analytics, the 200 million U.S. Prime members of Amazon made purchases totaling $12.7 billion in goods. This is a record number that represents year-over-year increase of 6.1%. Many of these members took advantage of discounts to stock up on back-to-school supplies.
Although the company’s bottom line may not have been much impacted by the selling of services and experiences up to this point, Amazon may be hopeful that this will change in the future.
“Amazon has extracted all of the value that it can from merely being a pass-through of goods, and is trying to move up the value chain,” said David Klink, an analyst at Huntington National Bank, whose bank holds $160 million in Amazon stock.
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“(It’s) a decision that we’re also seeing with Walmart with its own decision to offer various services like Paramount+ with the Walmart+ offering,” said Klink. “(It’s) a decision that we’re also seeing with Paramount+ with its own decision to offer various services.”
A request for Amazon to comment on the expansion to include services did not elicit an instant response from the company.
PRICELINE, GRUBHUB, AND ONE MEDICAL IN FOCUS are in the spotlight today.
Customers who shopped on Prime Day received not only discounts on popular categories like clothing and electronics, but also unique deal codes and discounts for services like hotel bookings through Priceline, restaurant delivery through Grubhub, and Amazon’s membership-based telemedicine service One Medical.
According to Klink, the relationships that Amazon has formed with Grubhub and Priceline are a “extension of their existing advertising strategy.” He explained that Amazon’s unconventional collaborations are an effort to “make retail cool again.”
“If the Amazon site is where the people are at, then brands like Grubhub or Priceline want to meet the consumers there,” said Klink. “They want to be where the people are.”
Prime members are eligible to receive a free one-year subscription to the food delivery service membership program Grubhub+ as part of an expanded relationship between Amazon and Grubhub that was announced in July 2022 and expanded in June 2022.
Priceline, an online travel agency that is a subsidiary of Booking Holdings (BKNG.O), is participating in a Prime Event for the very first time. As part of this event, Priceline is offering an additional 20% discount on its Hotel Express offers, which already include a discount of 60% on hotels.
U.S. Prime members who subscribed to Amazon’s One Medical service before the conclusion of the Prime Day event were eligible to receive a discount of 28% off the cost of a yearly membership to the program.
EVENT A BOOST TO SALES AND ADVERTISING
Amazon announced on Thursday that the first half of its sales event was the most successful in the company’s history. The increase in the number of independent sellers was cited as a contributing factor in the success of the event.
Despite the fact that consumers’ spending in the second quarter of the year was slower than usual due to tighter budgets, the event brought in record sales.
“Amazon is seeing slower e-commerce growth, in large part because consumers are just shifting away from certain categories that Amazon is strong in,” said Andrew Lipsman, a lead analyst at the market research firm Insider Intelligence.
According to Lipsman, enhancing Amazon’s advertising capabilities by experimenting with more Prime Day promotions on discounted memberships and discounted services could be beneficial. Amazon receives payment from retailers and companies selling consumer goods in exchange for promoting their products on the website.
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Amazon’s advertising income for the first quarter was reported at $9.51 billion, representing a year-over-year rise of 20.7%. According to the data provided by Refinitiv, investors anticipate that advertising revenue will reach $11.2 billion during the third quarter, which will include data related to Prime Day.
According to Lipsman, the data that Amazon acquires through its agreements with other businesses such as Grubhub and Priceline might assist the retail giant “fortify advertising” with other businesses operating in those industries.
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