 "Amazon uses sale to get customers on Prime")
The two-month free trial for Prime has ended and Amazon is asking people to pay a fee of Rs 499 (down from Rs 999) in order to get access to the service during its sale. Amazon's push to get people on Prime comes a day ahead of sales by rivals Flipkart and Snapdeal.
“People in metros, high spenders will sign up for Prime, but those who do not shop online regularly will stay away. We see a lot of first-time buyers come in during the festive season and they are definitely not going to sign up for Prime,” said Anil Kumar, CEO of RedSeer Consulting.
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Amazon wants high-spending customers to sign up for Prime before the sales of Flipkart and Snapdeal. The company hopes the lure of free one- and two-day deliveries will help it compete against its rivals. For the first day of its sale, Amazon said it had received 1 billion hits during the first 12 hours, with more unique visitors in half a day than over the five-day sale period last year.
The firm added that it sold over 100,000 items in the first 30 minutes of the sale, while smartphones showed the healthiest growth during the day, with orders for devices exclusively available on Amazon surging seven times.
While Amazon might get a few hurried sign ups for Prime during its sale, the benefits of this service are largely long term as customers tend to stop purchasing from rival platforms. In the US, where half of all households have at least one Prime member, customers spend double the amount on an annual basis compared to those who have not signed up.
Flipkart has gone slow on its Flipkart First subscription service within a year of its launch and is instead focusing on Assured, a promise of quality products and faster delivery.
“Price is not the only thing, it is about quality products made affordable,” Flipkart co-founder and chief executive Binny Bansal said in a recent interview.
Amazon declined to comment on Prime with a spokesperson saying it was still early days for the service.
“I believe people are seeing the end of the rampant discount era in e-commerce and are ready to start paying for quality, reliability and faster delivery,” said Mahesh Murthy, partner at Seedfund. “If you have already paid for Prime you are then more inclined to save on delivery by going there regularly,” he added.
E-commerce sales in India fell during the first half of the year, yet Amazon has been able to keep up its growth momentum at the expense of rivals Flipkart and Snapdeal. While its rivals struggle to raise fresh funds, Amazon has replenished its war chest with another $3 billion to continue beating them on prices. However, with the government keeping a close eye on discounts offered by e-commerce companies, Amazon realises that it cannot compete on price forever.