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If you’re listening to this in 2020 and it’s October 13 or 14 2020, you’re in the middle of Prime Day. I’ve got a question for you – do you think Prime Day matters anyway?
We’ll explore this question in this show.
First a little history…
Amazon Prime Day started on July 15, 2015, as a celebration of Amazon’s 20th anniversary.
For 24 hours, Amazon offered Prime members exclusive deals on a wide range of products. The day was such a success that Amazon made Prime Day an annual tradition and has expanded the holiday to numerous countries including Spain, Japan, Austria, Mexico, and more.
Amazon has also expanded the duration of Prime Day.
In 2017, Amazon Prime Day lasted for 30 hours, whereas in 2018 Prime Day lasted for 36 hours. In 2019, Prime Day ran from July 15 through the end of July 16 making the 48-hour sale the longest in its history. Prime Day 2020 will mimic last year’s run time, offering two days of deals, beginning October 13.
Prime Day Stats (from Statista)
Number of Items purchased by Amazon Prime members during Amazon Prime Day 2018: 100M; 2019: 175M
Do you plan to purchase anything during Amazon Prime Day 2020?
Y, know what want 6%
Y, don’t know what want 48%
N, 47%
But is this all relevant? Does it mean anything to YOU?
Let’s find out…
Reason no 1 why Prime Day DOESN’T matter: You’re not selling on Amazon yet (or you sell online eg via Shopify or eBay but not on Amazon)
This is the case – but the point is that watching how much money people make on a peak day may be exciting – but it’s only meaningful if it gets you off the fence one way or another. It’s either when you REALLY decide to start selling or stop fantasising and actually do something else that your life moves forward…
REASON No 2 Prime Day doesn’t matter: You’re selling to the wrong kind of buyers. (symptom: poor gross profits)
Now, on Amazon, buyers are the ghosts in the machine. We know they’re there as every so often, they besmirch out listings with 1-star reviews or they email us to complain about something.
But we don’t know anything about them.
Doesn’t mean they’re not there. It means we have to infer things about them from their buying (and communication) behaviours.
But there IS still such a thing as attracting the wrong kind of customer.
People who expect a lot for a little; overfussy consumers; people who don’t value quality and just want a low price – these may make our sales, but none of these help make us profits.
That shows up in poor pricing power; low gross profit margins.
REASON No 3 Prime Day doesn’t matter: Your Business is broken (symptom: Company/ Business is making a pitiful profit)
Everyone talks about Revenue. At least, that’s my experience in public in the forums and in private in the mm groups I run and others I’m a member of.
Newbies bandy about averages they’ve heard from others in other FB groups. Professional sellers will talk about actual gross profit margin in the confines of a mastermind.
But it’s the rare seller who knows and is willing to share their operating profit (aka pre-tax profit or even EBITDA if you will).
Btw yes I know those are not the same thing.
But honestly, if your EBITDA is 4%, you’re rearranging deckchairs on the Titanic.
So does Prime Day matter at all?
Why yes – if you have an Amazon business, you have profitable products; which attract quality buyers AND you’re keeping your overhead in check such that your BUSINESS is making a profit (operating profit).
Certainly, it matters as a wave matters to a surfer. If you miss the big wave, you’ll have to wait a while to make up for it.
You need to ride the wave and you need the tactics and execution logistics in place.
I’ll talk about that in a few minutes.
First I want to talk about
The real meaning of Prime Day?
There are many interpretations. Here are a few:
- You can use anything as an excuse for a special sales day. A birthday is a good excuse. An anniversary is another.
- Notice that it turns out, once it’s established, the day doesn’t matter.
- Talking of day, turns out that it doesn’t have to be a day either.
- What could YOU create in your business to make your own prime day equivalent?
Prime Day is a spike in sales, just like Cyber Monday and Black Friday. You’ve got to prepare for it sales-wise and stockwise.
What DOES Matter
I noticed today a total ABSENCE of discussion of Prime Day in one particular place.
The otherwise active FB group for the original 10K collective mastermind.
Collectively those guys must be doing WELL north of a $15M a year run-rate.
What they are obsessing about is operations to deal with Brexit at the moment; how to stay in stock and project it accurately; the latest trends, not on the Amazon platform, but in the market for Amazon businesses.
In short, they aren’t making it all about one day (which is, in fact, two days, obviously).
Really what matters, in short, is the overall processes in your business.
If you have poor sales projections, poor stock projections and no cashflow projections, no individual day will save you.
This is about business intelligence and FORECASTING.
Sort out your operations
But more than just forecasting, you need to get your OPERATIONS in control in response.
If you have good marketing but poor stock control, you’ll run out of inventory and miss out on sales.
If you have plenty of stock but poor marketing, you’ll miss out on sales and end up overstocked. (and Amazon FBA will not be very forgiving of overstocking in their warehouses, given the massive pressure on their warehouses this Q4).
Profit and Loss do not equal Cashflow!
If you get both right but you forgot that P&L is NOT AT ALL the same as cash flow, and that, while buying inventory is just exchanging one form of current asset( cash) for another (stock) – and thus does not affect the P & L – it DOES cost cash…well you might just be trading yourself broke.
Advertising is an expense (which affects both the P& L/balance and your cashflow) but it’s easier to see that coming. (You did see it coming, right?)
Only if you have all of those in place, are you in a place to ride the rough but profitable seas of Amazon.
If you do have them in place, you’ll be able to surf the peaks and survive the troughs.
These are the kinds of things the serious sellers I work with are obsessing about.
Operations aren’t enough
By the way – if you’re really smart – you’ll have spotted that those are OPERATIONAL excellence aka execution. They are essential. Sadly though they are not enough.
They are NOT going to substitute for a strategic error like trying to sell a me-too product with inadequate capitalisation in a large established market.
In the end, what I’m trying to say today is simple: the results of a quarter matter, not the results of a Day (even if it’s two days).
And those results come from getting business processes right.
And even then, you have to get the strategy right first. Sell original products or be the first mover in a market- and then dominate it. That’s not the same as just following others and accepting crumbs.
You can’t work on Prime Day. You can only use it as a test of your processes. You only get to WORK on your business’s processes.
Set your Sails; set your Strategy
While Prime Day’s boost to sales is exciting, you can’t bank sales on Amazon as a whole 3rd party market. You can only work on your strategy to make sure you try to grab a slice of the market for your company- those are the only sales you get to bank yourself!
In the end, while it seems like the excitement and opportunities and answers are “out there” in the market, more and more, my experience tells me that this is not so.
First of all, the worthy, exciting challenges and opportunities are in the market that is COMING, not already here. It’s not about getting excited about today; it’s about seeing around the corner into the next quarter and seeing the challenges that are coming.
External opportunity vs Internal Competence
The real opportunity though, as I learn more gradually about how the dynamics of business work, is in your creative response to those challenges and opportunities – in other words, your ability to strategically choose your battleground, and then, ahead of time, to put in place marketing, stock control and financial tactics. Only when the waves of the market hit your business – the peaks of opportunity, the troughs of challenges – will you find out whether you’re going to make a killing or take a drubbing.
There’s a reason that companies originated in the days of global sea voyages by merchant adventurers. It may be a metaphor but it’s a more apt one than clicking on a mouse and expecting a result. Leave that sort of thinking to the impulse-driven consumers of Prime Day (which may, of course, include you and indeed myself today- I do need a new monitor, at least that’s what I’ll be telling my wife…)
If you like sitting and clicking, this may be a shock. If you like a more bracing challenge, then you’ll find yourself in the rarer company of true adventurers. Such are the people of the masterminds I’m proud to be convening.
If you want to join the ranks of the business adventurers, it helps to enjoy a bracing squall with the confidence you have a shipshape craft and a well-trained crew. If you’re not there yet, stop worrying about the opportunity and start getting your ship in order. It will be time and effort that should pay off next time there’s a wave to catch…
