Amazon Prime Day 2023 – The Mystery Unveiled: The Strategy Behind Unprecedented Discounts in E-commerce

 July 11 and 12, 2023, as Amazon Prime Day 2023

It’s truly surprising, isn’t it? The incredible discounts of 70% or more on branded products that were unheard of in the past. What’s the real secret behind this phenomenon?

Companies like Amazon, Walmart are attracting billions of dollars in investments from around the world. These companies adopt a unique approach to offer such discounts: they subsidize the prices of items sold on their websites, absorbing the discount costs. This ensures that the sellers are not affected at all, as they receive the full cost of the product along with a profit mark-up. Ultimately, customers benefit from the availability of cheaper goods through these e-tailers.

Now, you might wonder why these firms engage in activities that seem to result in losses, and why investors continue pouring billions into such businesses. The answer lies in the hope of future profitability and market consolidation. These companies aspire to achieve a dominant position and become leaders in the market. Let’s explore the compelling reasons behind their optimism:

1. Low Cost: Compared to brick-and-mortar stores, operating an online store is more cost-effective due to integrated and streamlined business processes such as supply chain management, billing, shipping, and procurement. This allows firms to avoid stocking up on products in large quantities and adopt the Just-In-Time (JIT) method of management, which translates into substantial profit margins.

2. Global Market: Having an online store means that businesses can reach customers globally. The boundaries and borders have shrunk, eliminating the need for physical stores in every desired location, which comes with greater risks and financial constraints. Unlike retail formats, online stores can cater to potential buyers from any part of the world. In contrast, retail stores have to wait for customers to visit their premises, leading to stock depletion and potential unsold goods. This results in losses for the sellers, as they are unable to bring in new stock or introduce the latest products on time, particularly in the fast-paced fashion industry.

3. Blue Ocean Strategy: E-commerce offers uncontested market space with immense profit potential. It provides firms with opportunities akin to an expansive ocean, where they can explore new strategies and tap into unlimited growth and earnings. While many e-commerce sites have emerged, none have fully captured the global market and harnessed its full potential. As a result, every new entrant can find opportunities, and continuous innovation and disruption ensure that online commerce is still in its nascent stage.

4. 24/7 Business: Traditional brick-and-mortar stores are limited by operating hours, which can hinder their efficiency and effectiveness. In contrast, online businesses operate round the clock, allowing sales to happen at any time and location worldwide. This advantage gives firms an unparalleled edge in the global market, enhancing their superiority.

5. Customer Satisfaction: Armed with resources and the internet, businesses can handle customer requests and provide information round the clock, resulting in enhanced support and increased customer satisfaction.

But here comes the major reason behind heavy discounts: inducing online shopping addiction. Companies aim to make consumers aware of the benefits of their websites, highlighting their reliability, cost-effectiveness, and safety. By offering various options compared to brick-and-mortar stores, they target millennials, who spend significant time on the internet and are prone to developing an addiction to online shopping. These companies strive to create a positive attitude towards e-commerce by offering the latest style dresses from around the world at discounted prices. Their inbound marketing tactics aim to fulfill consumers’ cognitive needs, providing them with the necessary knowledge and information to consider them genuine and authentic.

Furthermore, through brand positioning, prompt delivery, quality packaging, excellent customer support, and easy returns, companies can develop a positive attitude among customers. This results in a competitive advantage, which heavy discounts play a crucial role in achieving. As the market grows and the brand image strengthens, companies gradually reduce the magnitude of discounts and offers while continuing to tap into and expand the market segment.

The online shopping experience offers convenience, sparing customers the hassle of traveling in heavy traffic, visiting multiple stores, and facing potential disappointments. Instead, everything they need is available online. Although it may not be immediately profitable, it represents a significant investment with a promising future in mind. As offline channels gradually fade away and continuous funding fuels online commerce, only the best will sustain while the rest perish. It’s a matter of survival of the fittest, which is why investors are pouring billions of dollars into this field.

In conclusion, the strategy behind heavy discounts in e-commerce is unveiled. It is driven by a long-term vision that focuses on cost-efficiency, global reach, market potential, customer satisfaction, brand positioning, and inducing online shopping addiction. By creating a positive attitude towards online shopping and offering irresistible discounts, e-commerce companies are positioning themselves for ultimate success in the future.

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