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Amazon rivals react to ‘Prime Day’ with big July sales

Anniversary promotion has competitors rolling out their own special deals in a bid to attract shoppers

A research firm estimates Amazon had 41 million Prime members in 2015’s first quarter.Getty Images/file

Retailers have run out of holidays to take over.

Each year they interrupt Thanksgiving dinners, the day after Christmas, and other times with deals that are said to be too good to pass up. Now, they want to create another retail frenzy with doorbusters on random days in July.

Last week, Amazon.com Inc. announced "Prime Day," a first-of-its-kind, one-day sale on Wednesday. To celebrate its 20th anniversary, the e-tail giant is offering 32-inch LED televisions for $75, taking $60 off the Kindle Fire HD 7, and making other Black Friday-like deals exclusively for Amazon Prime members.


Wal-Mart Stores Inc. responded quickly with a plan to reduce its minimum order for free shipping from $50 to $35 for the next month. The retailer said it would also offer steeply discounted goods online Wednesday and took a shot at Amazon, saying that it won't charge customers $100 (about the annual cost of Prime) to take advantage of the sale.

Meanwhile, Best Buy Inc. is promoting its "Black Friday in July" sales event. Target recently completed its own sale.

"You're watching the birth of yet another retail commercialized holiday," said Marshal Cohen, chief retail analyst at NPD Group in New York.

Specialists said that many retailers are offering sales as a defensive tactic, afraid of losing market share to Amazon. A major promotion in July also serves as a way to boost sales in an otherwise slow month and clear out leftover inventory.

Amazon dreamed up its sales event to increase the company's Prime membership, customers who pay $99 a year for a service that includes free unlimited two-day shipping, access to video and music streaming, photo storage, e-book titles, and other perks.

Amazon had 41 million Prime members in the first quarter of 2015, according to estimates by Consumer Intelligence Research Partners. The market research firm said Prime members spend an average of $1,100 annually on the site, $400 more than other Amazon customers.


Prime Day "is not a reward to existing Prime members, and it's not a general sale," said Christo Wilson, a computer science professor with a focus on Web personalization at Northeastern University. "It's all contingent upon Prime membership. In the end, it's about bringing people into the Amazon ecosystem."

But the service isn't cheap for Amazon to provide. Free Prime shipping costs the company more than $1 billion a year, according to estimates by Forrester Research.

Steve Osburn, a supply chain expert at the consulting firm Kurt Salmon, said the one-day sale encourages customers to buy all of their goods at once, which allows Amazon to save money on shipping. The sale also serves as a Black Friday-like test run for the e-retailer and helps it prepare for other high-volume days, he said.

And by launching its sale ahead of competitors, Amazon had more time to plan and secure deals on sale items.

"One of the added benefits is that their competitors have been forced into throwing together something at the last minute," Osburn said.

"Everybody is trying to react to it. When you react at the last minute is when you're typically going to make decisions that cost you money."

Walmart's one-day deals include an Apple iPad Mini 2 for $265, a $250 discount off a Toshiba laptop, and other electronics sales. The company is also launching 2,000 additional promotions on Wednesday that will last up to 90 days, said Ravi Jariwala, a spokesman for Walmart.


"This is an opportunity to remind customers that if you really want to save, you don't have to pay $100 bucks to get in and you don't have to do your shopping on a single day," Jariwala said.

A research firm estimates Amazon had 41 million Prime members in 2015’s first quarter.SAM MIRCOVICH/REUTERS

Target and Best Buy said their "Black Friday in July" sales were offered in the past, although both companies pointed to additional deals available this week.

Cohen, of NPD Group, said the July retail holiday has positive and negative impacts on the industry. Another major sales promotion further teaches shoppers to wait for steep discounts to make purchases, which creates deep shopping lulls between holiday periods. But it also gives customers a reason to buy.

Cohen said that retailers participate because of the potential for increased sales, along with the hype and attention it draws to their businesses.

"Christmas in July is not going to be new next year," Cohen said. "It's going to be repeated and embraced by more and more retailers."

Globe correspondent Jessica Geller contributed to this report. Taryn Luna can be reached at taryn.luna@globe.com.