Shulou(Shulou.com)11/24 Report--

Beijing time on October 12 morning news, This week, Amazon will hold the second time in a year "Member Day" promotion event, To boost its e-commerce platform sales, Reverse sales decline situation.

Amazon is looking to recruit new users to its Prime membership service in a saturated market while increasing the value of its membership service to existing users. In some markets around the world, Amazon membership prices have risen more than 40 percent this year.

Under new CEO Andy Jassy, Amazon's online store business experienced two quarters of declining sales in 2022. This is in stark contrast to the outbreak period. At the time, consumer demand was at an all-time high and sales were up about 40 per cent from pre-pandemic levels.

The "Prime Early Access Sale" campaign will start Tuesday and run for 48 hours in the United States, Canada and 13 European countries, including Turkey. It's only been three months since Amazon's "Member Day" promotion. Amazon launched its annual "Member Day" promotion in 2015.

Lesley Hensell, who advises Amazon merchants, said the new promotions give Amazon an opportunity to take early action to capture this year's holiday consumer market. "Amazon was thinking: You know what, let's get in early and earn our share. Amazon is trying to dig a piece of the pie out of every company's Black Friday and Cyber Monday promotions. "

Analysts at brokerage Jefferies estimate the promotion could add $4.1 billion to Amazon's total fourth-quarter profit. The previous forecast was for earnings of about $158 billion, up 14 percent from a year earlier.

Amazon said: "We are always looking for more ways to help members save money throughout the year. The effect of this activity is to save a lot of money by shopping early for the holiday season. "

Over the past two years, Amazon has faced a series of headwinds, including the New Crown virus epidemic, supply chain pressures and inflationary pressures, leading to a sharp rise in operating costs. Amazon shares are down 1/3 this year. However, Amazon shares did not fall further thanks to strong performance in cloud computing business AWS and rapid growth in advertising business.

However, the poor performance of the e-commerce retail business prompted Amazon to abandon aggressive logistics expansion plans. Amazon has closed or canceled at least 50 distribution centers in the United States, according to logistics analyst Marc Wulfraat. Just a few months ago, Amazon warned that the lack of willing and capable warehouse workers was one of its biggest challenges and relaxed recruitment for front-line employees in regular positions.

Amazon is prioritizing revenue for the rest of the year. From this perspective, holding a membership promotion event for the second time this year can bring short-and long-term boost.

First, the cost-of-living crisis appears to be driving American consumers to search for deals. A Jefferies survey of about 1000 U.S. Prime subscribers before this week's promotion showed that 82 percent of paying subscribers intend to shop during the promotion, with most planning to spend at least $50. In contrast, only 59% of paying users were interested in the Membership Day promotion in July.

Second, Amazon has raised the price of paying members in several markets, so additional promotions are thought to further increase the value to members and attract new paying users.

Andrew Lipsman of Insider Intelligence, a market research firm, says: "A big question is how to stay competitive in an increasingly competitive paid membership market. Member exclusivity is key. Amazon understands the need to provide high-value services that consumers can't live without. "

According to Kantar, the average American currently uses two paid membership services. However, from April to August this year, this number showed a slight decline.

Amazon is tight-lipped about the number of Prime members. The company last updated this figure in April 2021. At the time, Amazon CEO Jeff Bezos said the Prime membership service had more than 200 million paying customers. That's lower than Disney and Netflix's latest paying subscribers.

Analysts point out that Amazon's strength lies in the breadth of its services. In addition to free same-day or next-day delivery, Amazon is adding more perks to Prime members, such as discounts on the takeout app Grubhub and entertainment products, especially Prime Video. In addition, another service called Buy With Prime allows sellers on other platforms to use Amazon's warehouse and logistics facilities to deliver to Prime members in one to two days.

However, Amazon is paying increasingly high costs to keep Prime users happy. Prime Video's Lord of the Rings series, for example, became the most expensive series ever produced. When it debuted last month, it received mixed reviews, but Amazon spent as much as $1 billion to buy the rights and produce it.

Amazon is also investing heavily in sports. Amazon is spending an estimated $1 billion per season to become the national broadcaster of NFL Thursday Night Football, according to Enders Analysis. The company also added the Champions League and Premier League to its content library. As a result, Amazon's annual spending on sports rights totals an estimated $1.6 billion.

Amazon Chief Financial Officer Brian Olsavsky said during the quarter's earnings release that Amazon's investments in digital content for Prime membership services and AWS will offset $1.5 billion in savings from logistics network cost optimization in the quarter. That could mean operating income will fall again compared to last year.

However, this is a long-term strategy. Amazon said that the first broadcast of Thursday Night Football created Prime membership service "the highest number of new registered users in the United States for three hours," attracting an average of 13 million viewers.

In the U.S., Prime membership growth is expected to slow to less than 3 percent annually, according to Insider Intelligence estimates. About 70 percent of U.S. households are expected to pay for Prime by 2025, up from 67 percent this year.

Further expansion also means that Amazon will reach different populations. Last week, Amazon launched a platform dedicated to heavily discounted goods and relaunched Prime Access, offering low-cost Prime membership services to users eligible for government subsidies such as food stamps.

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