Amazon.com's (AMZN +3.49%) much-hyped Prime Day was supposed to be a celebration. The e-commerce giant was throwing the bash in honor of its 20th anniversary, offering members of its Prime loyalty program an array of Black Friday-like deals.
Source: Amazon.com.
Unfortunately for Bezos & co., the boys in Bentonville smelled blood. Wal-Mart Stores (WMT 1.60%), which has stepped up its efforts to grab a greater piece of the online shopping pie, saw an opportunity and nosed in on Amazon's turf.
On Monday, Wal-Mart began advertising its own massive sale to begin the same day as Prime Day, offering "rollbacks" on more than 2,000 items. Wal-Mart even took a direct swipe at Amazon, as Walmart.com CEO Fernando Madeira said in a blog post, "We've heard some retailers are charging $100 to get access to a sale. But the idea of asking customers to pay extra in order to save money just doesn't add up for us."
Amazon took the bait, responding:
We've heard some retailers are charging higher prices for items in their physical stores than they do for the same items online. The idea of charging your in-store customers more than your online customers doesn't add up for us, but it's a good reminder that you're usually better off shopping online.
Wal-Mart denied those claims, saying it will match any competitor's as well as its own online prices, but the spat seemed to accomplish Wal-Mart's goal as media attention mounted in the intervening days. Not to be outdone, other retailers like Best Buy piled on, offering their own last-minute sales.
For Amazon though, it's a mistake to even acknowledge Wal-Mart's presence in the e-commerce space. Amazon is light years ahead of the competition in online sales, with e-commerce revenue six times that of No. 2 Wal-Mart last year. By engaging Wal-Mart and responding to its taunts, Amazon is giving unneeded attention to Walmart.com and giving the impression that it's a legitimate rival deserving of shoppers' eyeballs.
The result is a marketing coup for Wal-Mart, giving it a spike in traffic as it makes a big push for its online platform with its new Shipping Pass -- a Prime-like program that offers unlimited free three-day shipping for a $50 annual fee -- and its announcement this week that it would lower its minimum for free shipping to $35.
And the winner is...
Not only did Wal-Mart win the war of words in the run-up to Prime Day, but the media consensus seemed to be that Wal-Mart had the better deals. An independent scorecard gave the brick-and-mortar champion the win 14-8. Meanwhile, several Prime customers took to social media to criticize the event.
#PrimeDay is like when grandma says "help yourself to the candy jar!" but it has nothing but raisins and sugar-free salt water taffy
— Dera Luce (@DeraLuce) July 15, 2015
Congratulations @amazon! Thanks to #PrimeDay, The Phantom Menace is no longer the most disappointing thing in my lifetime.
— Robert Zimmerman (@robzimm) July 15, 2015
With all the sweet deals on 55-gallon trash bags and duct tape, #PrimeDay has been great for the serial killer community
— Wonderella (@wonderella) July 15, 2015
Many shoppers seemed to conclude that the Prime Day deals were more like a garage sale, as Amazon cleared out clutter like old smartphone cases and even a VHS rewinder, rather than the implied "doorbuster" sales on items like TVs. Amazon even responded to the backlash, insisting that the event was not a flop. It said the "peak order rate" had surpassed last year's Black Friday, though the figures were vague (in typical Amazon fashion) and don't offer definitive evidence that sales, the key figure, actually topped Black Friday's number.
If you have to issue a press release claiming an event wasn't a flop during the actual event, then it probably was. While sales did indeed spike for Amazon, the onslaught of criticism for Prime and its deals makes it a bust.
The market didn't seem to care, as shares of both Amazon and Wal-Mart were relatively unchanged during trading. For Wal-Mart's part, it called the day a success, saying that orders increased triple digits and that it was a record day for the year for in-store pick-up.
Considering the attention heaped on the event, I'd expect to see more such "Black Friday" sale days from these companies the future. Wal-Mart won round one, but Amazon is proud of its commitment to innovation and its willingness to try new things and sometimes fail. Expect another Prime Day next year, with better execution and selection of deals.
