12 Jul You’re getting screwed on Amazon Prime Day
No doubt, you’ve already seen ads for Prime Day, Amazon’s two-day shopping event for Prime members only, July 15 and 16. Perhaps you even caught the live-streamed Taylor Swift concert that kicked off the festivities. And like Amazon’s other 101 million Prime customers, you’re probably thinking about hitting the sale for new Bose headphones, Toshiba TVs, or Instant Pots.
Don’t do it. Amazon, one of the most cutthroat retailers around, has stacked the deck against you. The company has spent years trying to create an irresistible honeypot so consumers overspend in the middle of July—typically a dead season for shopping—and entrench themselves deeper into a single retailer rather than shop competitively. “If everybody had unlimited resources, who cares, but the thing is, we don’t,” says Kit Yarrow, psychologist and writer of Decoding the New Consumer Mind and Gen BuY. “It’s pretty much a disastrous equation for the budget-minded shopper to be presented with all of these, let’s call them, ‘opportunities.’”
A long con
Yarrow attributes the entire phenomenon of deal days to the recovery that got underway around 2009, after the Great Recession. “So many retailers went out of business, those still alive became much more competitive,” Yarrow says. “When retailers are competitive, they’re enticing you to spend. It becomes exciting to consumers.” Out of the recession, and connected with a new suite of tools like targeted ads, email, and Twitter, retailers could promote a one-day sale over a slow crescendo. Amazon did all of the above.
When we buy something during a sale, our brain gives us a rewarding dopamine rush similar to sex. And during sales, the bigger the perceived savings, the larger the dopamine rush (even if that savings is just an illusion of a deal). From then on, we associate any special sale with a reward.
“This is how we end up going crazy for Black Friday. It’s the same thing [with Prime Day],” says Yarrow. “If you were successful one year, we’re Pavlovian in that way. ‘I need more rewards! We’ve had a good decade now to get conditioned to get excited about [these] sales.” It’s a long con; a sort of societal conditioning that we’re hardwired to accept. If that assertion sounds paranoid to you, know that one famous behavioral economist declined an interview for this article citing a conflict of interest with Amazon.
An invented holiday
Prime Day is particularly insidious because it’s a shopping event invented entirely by, and for, a company, much like Sweetest Day was born out of Cleveland’s confectionary industry. Amazon has packaged the members-only sale as an annual celebration that started in 2015 for its 20th birthday. In today’s marketing, the company describes it as a “two-day parade.”
This framing has worked to make Prime Day seem less transactional than it is: Several media outlets unironically use the word “holiday” to describe it. And research demonstrates that consumers are particularly likely to splurge when shopping for a special occasion like Mother’s Day, Christmas, or a birthday. The holiday label helps us justify “exceptional purchases” that fall outside the norms of mental budgeting.
It’s reasonable to wonder if Amazon invented Prime Day in part to jump-start traditionally waning summer sales, much like QVC introduced “Christmas in July” sales many years ago. After the Christmas season, the retail market cools off for nearly eight months, until August 1, when Back to School season has typically begun. “Amazon is actually changing our selling seasons in that they’re pushing up the Back to School shopping season earlier than it’s been before by having Prime Day now,” says Yarrow, who points out that Back to School is actually the second largest shopping season of the year. Last year, Amazon tells us that it sold millions of pens and pencils for Prime Day alone.
That’s right, just as Christmas shopping starts before Thanksgiving these days, Back to School shopping has moved up, too. Walmart and Target have both responded to Prime Day with promotions of their own. Yarrow points out that about half of all consumers like to get their shopping done early, so knowing you can buy a new backpack or computer for the fall in midsummer can provide a small sense of relief. Many of us seize the opportunity to shop far in advance to avoid anxiety.
Why we can’t just say no
These extended sales holidays mean that more of our lives are spent with the white noise of deals in the background, like pop-ads on the news site you visit every day promising 20% off shoes, or the email promotions offering 50% off some bookshelf you glanced at once. “It’s psychologically exhausting to continuously say no, and to be presented with more options,” Yarrow says. “It’s sort of like we’ve shifted as consumers who are targeted shoppers, saying, ‘I need this, where should I get it, I’m checking prices . . . ‘ to very opportunistic shoppers, where we’re perpetually open to suggestion.” In other words, the sheer availability of deals has turned us into perpetual window shoppers, until we eventually give in and hand over our money, whether we need something or not. “For people on a budget this is somewhat of a disaster,” Yarrow says.
Are any of the deals worth it?
Of course, some things really will be cheaper than they normally are during Prime Day. But there’s a difference between buying something you need at discount and buying something that you don’t need because it’s discounted. Yarrow’s research has found that sales-obsessed shoppers ultimately end up spending more than non-sale shoppers, because they’re lured by a discount into buying things that aren’t truly satisfying. And when they feel unsatisfied, they keep shopping.
So what if you find something you actually need on sale? Jim Wilcox, technology reporter at Consumer Reports, advises people who are shopping on Prime Day, or any deal day, to always use a price-tracking site like camelcamelcamel. Prices are often artificially raised before events like Black Friday only to be dropped to create the “discount.” Historically speaking, the best Amazon sales tend to be on Amazon’s own items, like Echo speakers and Kindles.
What’s really in it for Amazon
Just how much money Amazon makes on Prime Day is up for debate. Amazon doesn’t disclose revenue or profit figures, but a spokesperson told us that, “in 2018, sales surpassed Cyber Monday, Black Friday, and the previous Prime Day when comparing 36-hour periods, which made it once again the biggest shopping event in Amazon history.” A third-party analyst reported that Prime Day revenue was up 74% between 2017 and 2018, making the shopping event a $4.19 billion business.
But for Amazon, Prime Day may represent an even bigger play. “The real goal isn’t selling you a ton of stuff [on Prime Day],” Wilcox says. “It’s getting people to become Prime members, then they have a daily relationship with that customer,” which allows Amazon to sell you more goods over time, he argues. Using Prime Day to sell you Amazon devices is a large part of that. (You can even unlock special Prime Day deals by asking Alexa for them.) Amazon has effectively leveraged Prime Day to sell you a product to get you to interact with Amazon in a new way to get you another deal. It’s a particle accelerator of behavior modification.
And the more entrenched Amazon becomes in our lives, the more likely we are to shop there—and shop there indiscriminately. “One of the things we know about how people shop is that once they make a commitment to buy in a particular location—store or online store—all of a sudden the floodgates open and they’re open to [making more] purchases,” says Yarrow. Which is why Prime Day is a holiday indeed. A holiday for Amazon.
Source: Fast Company