Why the first day is important for Amazon

Amazon has successfully invented a new shopping party, and it will capitalize on the rewards.

The fourth Prime Day (and a half) will start at noon Monday PT, extending over 36 hours. hours. This year's savings event is running longer than previous years, available to buyers in more countries, and Amazon promises a million more transactions – even more – for core members.

This is also the first Prime Day with Whole Foods, the most expensive acquisition of Amazon, integrated under the aegis of Jeff Bezos.

E-Commerce Guide by CNN Underscored: What's wrong with Amazon Prime Day

Prime Day means a lot more for Amazon than an annual marketing game from one day. Of course, Amazon is coming to flex its muscles on the retail industry and juice sales figures. But, more importantly, Amazon uses the savings event to put forward its own products and attract new members to a subscription program that more than 100 million people around the world consider. as an indispensable part of their shopping life.

Booting the Pump

Amazon does not reveal previous Prime Days revenues, but it is expected to reach $ 3.4 billion this year, according to the think tank Coresight Research.

Event sales are expected to shatter last year 's total of 40% and become Amazon' s new day 's record, breaking off with its launch Cyber Monday 2017.

But Monday will be irrelevant to Amazon's financial situation, noted Michael Pachter, an analyst at Wedbush Securities. Sales should only be six times a day, about 2% of Amazon 's annual business revenue. The company achieved a total business turnover of $ 177.9 billion last year across its retail and web services division.

Prime Day has a longer-term significance for Amazon by attracting new members in its annual $ 119 free shipping program and by tightening existing relationships with customers in the ecosystem of the company. 39; company. More than half of Americans said they lived in a household with Prime, according to a Cowen survey in December.

Prime is the "most critical driver" for Amazon's e-commerce in the long run, argued John Blackledge, an analyst at Cowen.

Prime has added about 10 million new subscribers a year over the past three years, and Mr. Blackledge believes that Amazon has even more leeway to convert non-members who buy on Amazon into loyalist . The Prime model adds monthly and annual fees to Amazon's vaults, and Premier members spend more on the site than non-subscribers.

Members spend $ 1,400 a year, compared to about $ 600 a year for non-members, according to market research firm Consumer Intelligence Research Partners. "From Amazon's point of view, Amazon Prime members are improving with age," said Mike Levin, co-founder of the firm. "As the first members reach their third, fourth or even bigger birthday, average spending is expected to increase."

"The Pace of Black Friday"

Amazon tested its first inaugural day in July 2015 to celebrate the 20th anniversary of the company. He designed the day to replicate Black Friday for Amazing die-hards, but has touted more offerings than the November shopping tradition.

"No Black Friday – Meet Prime Day," said Amazon in a press release unveiling the event.

Amazon recorded $ 900 million in sales in the first year, according to Coresight. The chief financial officer of Amazon Brian Olsavsky called it "Christmas in July".

The company decided to bring it back for a second year with more offers. Sales reached $ 1.5 billion, according to Coresight 's estimate.

In 2017, Prime Day "really got a lot more weight … especially internationally," Olsavsky told analysts last October. The company has recorded a record number of free premium trial listings, and its Echo Dot smart speaker has been the best-selling product.

"Amazon bets on long-term voice trading," said Magid's business analyst, Matt Sargent, last year.

Prime Day forced Amazon's rivals to adapt to the frenzy.

"The day is creating a short-term emergency," said Barbara Khan, a marketing professor at Wharton, who is studying retail. "People get engaged just to make a purchase, to enjoy the business."

He became the shotgun for the start of the new school year, the second busiest shopping season of the year.

"Prime Day has changed the summer pitch for retailers," said Taylor Schreiner, director of Adobe Digital Insights. "Retailers need an effective strategy to fix it, the only way to lose the game is to ignore it."

Rivals are not sitting on their heels: Walmart ( WMT ) For example, launched new apps and online tools for back-to-school shopping school, including a 3D virtual experience called "Buy the Room", and deals with school supplies. Target ( TGT ) also announced a one-day sale to his rival Amazon Tuesday for " everyone – no subscription required . "

The Beginnings of Whole Foods

Amazon will once again offer offers on Alexa compatible devices such as Echo, Echo Show, Fire TV and Fire.

He highlights discounts on his growing lineup of private labels such as Stone & Beam, Rivet, Presto !, Wickedly Prime and Goodthreads.

Despite the strong promotions, the sale of its own products to Prime Day is expected to help the company's profit margins, as it can cut the sellers of first and third parties.

Whole Foods will be the biggest change to the 2018 issue.

Amazon offers a $ 10 credit to Premier members when they spend $ 10 or more at Whole Foods between the 11th and the 11th. July 17th. Whole Foods also offers offers on grocery items such as boneless chicken breasts and will double the discount premium of 10%. 5% for holders of an Amazon Prime Rewards Visa Card.

Related: Whole Foods Announces Prime Day Offer

"This year seems a bit more ambitious as they have completely integrated Whole Foods into the mix," said Wedbush's Pachter.

Whole Foods recorded nine consecutive months of same-store sales growth of 2% to 3% since the acquisition last year, according to Mark Mahaney, an RBC Capital Markets analyst. Amazon is driving traffic to Whole Foods by lowering prices and increasing Prime Discount benefits.

Monday will be the biggest opportunity for Amazon to lock more Whole Foods customers into core members.

CNNMoney (New York) First published July 15, 2018: 7:28 AM ET