Amazon's Prime Day event is marketed as a summertime version of the Black Friday shopping holiday, but it also serves as a proving ground for the retailer's most experimental ways of selling its products.
The July 12 event is more than a big sale; it is targeted to members of the Prime service, who would already have payment and billing details on file — but who may not yet have allowed Amazon into every aspect of their lives. The build-up to this year's sale provides certain deals only to those who use Amazon's newest gadgets such as the Alexa voice assistant and the WiFi-connected Dash buttons, which extend the e-commerce site's influence into customers' bathrooms and bedrooms.
"I can tell you that Prime members are using Dash buttons at a growing rate and, over the last three months, Dash button presses have grown by 70%," said Amazon spokesperson Katie McFadzean. "Today, orders using Dash buttons occur twice a minute," selling snacks, soaps, toilet paper, condoms and even Nerf darts through the use of small adhesive buttons placed around customers' homes.
The buttons' popularity is set to grow, with a slew of new brands coming on board in the lead-up to Prime Day and Amazon offering a discount that drops the buttons' price to 99 cents while still maintaining the $4.99 rebate offered on the buttons' first use.
Consumers who have shelled out for devices such as the Amazon Echo and Tap, which provide access to the Alexa voice assistant (Amazon's version of Siri or Google Now), can get a $10 discount on certain orders they place by voice.
None of these new channels would work without Amazon's seamless handling of payments, said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
He likened it to the way ride-sharing services like Uber and Lyft shot to popularity by making the payment process almost invisible to the end user. "Imagine if you take out the integrated payment aspect of Uber and Lyft; do you think it would change their value proposition? Yes it would, and other retailers know this," he said.
Amazon's one-click payment system set a standard that has been adopted by the biggest influencers in payments, including Visa, MasterCard and PayPal, which each offer their own streamlined digital wallets. By removing friction from the payment, Amazon removes friction from the entire sale.
"Payment will be facilitated in a way that makes it easy for the user to purchase one more recommended item," Crone said. "That is the beauty of the one-click payment sequence in that it takes away from inputting 16 digits, an expiration date and CVV code as part of the payments credential for each transaction."
Amazon's Prime Day event is designed to extend this philosophy even further by removing the need to log on to the website to access these deals. If Amazon can convince shoppers that it's even easier to shop by voice than to shop by Internet or smartphone, it will have successfully created a new sales channel that it controls.
Through it all, other retailers and payments technology providers are watching Amazon's moves closely. Sometimes, Amazon opens its services to third parties who may be able to duplicate any successes they observe on Prime Day. Other times, it sets expectations that other retailers may feel pressured to surpass.
One of those retailers would be Walmart, fresh off its national rollout of Walmart Pay last week and just as ambitious about weaving its mobile capabilities into other channels.
One of Walmart's biggest assets — and differentiators — is its army of retail stores, giving it a strong presence in the one channel that Amazon does not fully reach, Crone added.
"Their competition is Amazon," Crone said. "Expect them to offer Dash-type buttons and other smart replenishment features in the near future to the app, all enabled by Walmart Pay."
Even if none of these experiments pan out, Amazon still stands to benefit by inventing a retail holiday during a time of the year that is notorious for slow sales.
When the sales for Prime Day in July topped those that Amazon had on Black Friday, the company "was astounded" and knew it was onto something big, said Amazon spokesperson Julie Law.
"Suddenly, there is another peak selling season in the middle of the summer, as we put more more products and more inventory behind the deals," Law added.
At the same time, Amazon continues to promote its digital payments capabilities, which could come into play in other areas of e-commerce. Most recently, the Bureau of Fiscal Service added Amazon Payments as an option for consumers making online or mobile payments to the government.
While Amazon may concentrate on the sales numbers for Prime Day, which is what the event is designed to deliver, there is little doubt they will come up with some "creative bundling" that occurs as part of the shopping and customer checkout experience of Prime Day, Crone said.