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Amazon Invents Another Holiday for Shoppers

By Danny Vena - Dec 26, 2017 at 7:39AM

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Amazon has found a number of innovative ways to keep shoppers spending. Investors should take note.

Earlier this year, Amazon.com, Inc. (AMZN -4.95%) released the results of its third annual Prime Day, saying it was the biggest shopping day in the company's history. The company also revealed that the event produced more sales than last year's Black Friday and Cyber Monday combined.

The company debuted the shopping event in 2015 on the eve of its 20th anniversary, exclusively for members of its Prime loyalty program, and "offering more deals than Black Friday." The event was a smashing success, prompting the company to make the global online shopping day an annual event. Since its inception, each Prime Day sale has become more successful than the last.

Amazon isn't one to let an opportunity slip by. If one fabricated holiday produced such extraordinary results, why not initiate another?

A woman's hand hovers over a keyboard while the other holds credit card.

Amazon created another holiday to boost its online sales. Image source: Getty Images.

Digital Day

Last year, the company introduced another shopping day, this one geared specifically toward digital content across its e-commerce site. Called Digital Day, the shopping event offers "the biggest savings of the year on digital content across Amazon," according to the company's press release. "Customers will be able to access more than 5,000 deals over eight categories including movies, TV shows, mobile games, apps, eBooks, and more."  The company also said it will be offering 40% more deals than last year.

This year's sale will take place on Dec. 29, with the company promising "an amazing time to shop for deals on digital content." Some of the more compelling offers include 60% savings on Wonder Woman on Amazon Video, 33% off on video games, and an 80% discount on a number of best-selling Marvel graphic novels like Civil War II, House of M, World War Hulk, and Star Wars.

Shoppers will also find significant savings on e-books for Kindle and discounts on select PC software.

What a difference a day makes

Amazon didn't experience the same success that it had with Prime Day -- or it would have revealed as much in a press release. Even so, a successful event can play a positive role in the company's financial results.

Investors cheered when Amazon released its third quarter 2017 earnings report. The company exceeded the expectations of analysts and its own forecast. Net sales of $43.7 billion increased 34% year over year, exceeding the high end of the company's own lofty estimates. Even factoring out the contribution by Whole Foods and a favorable foreign currency translation, net sales increased by 29%, still better than expected.

When asked to explain the catalyst for the impressive results, CFO Brian Olsavsky said, "I wouldn't point to anything other than the Prime Day pickup, but stronger than -- it was stronger than probably I anticipated." 

Lightning never strikes twice... or does it?

Investors shouldn't expect Digital Day to produce the same blowout results as Prime Day. It does illustrate that the online retailer continues to come up with novel ways to increase sales.

Amazon's digital assistant Alexa, which serves as the foundation for its Echo family of smart speakers, is also driving sales. A survey found that 17% of Amazon customers use the devices to order products from its e-commerce website, according to RBC Capital Markets. 

Amazon Prime is also spurring additional sales, as members tend to spend an average of $1,300 per year, compared to about $700 for non-members, according to a report by Consumer Intelligence Research Partners.

Taken individually, these initiatives may not mean much, but taken together they show that the online retailer has developed a talent for getting consumers to spend more, which is a great deal for investors.

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