The Psychology of Amazon Prime Day: Insight for eCommerce Retailers

For retailers looking to increase revenue and boost average order value, an exciting discount could be just the thing your customers need to make their decision. Have you ever wondered why this method is so popular, and how it works to inspire customers and push them over the edge? 

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Promotional pricing strategies are an ancient, tried-and-true method for encouraging customers to make a purchase. For retailers looking to increase revenue and boost average order value, an exciting discount could be just the thing your customers need to make their decision. Have you ever wondered why this method is so popular, and how it works to inspire customers and push them over the edge? 

With Amazon Prime day around the corner, we wanted to take a look at how scarcity, or fear-of-missing-out (FOMO), uses psychological triggers to influence your choices, and the long-term implications for retailers. Last year, Amazon Prime Day generated $14.2 billion in revenue, an 11% increase from 2023. With the expansion of the event timeframe, that number is expected to grow even more in 2025. If you're looking to get involved, or tackling an eCommerce integration and need help, contact Virid today.

In 2012, J.C. Penney switched to an “everyday low price” pricing model. This system was proposed to put an end to “fake prices” that only pushed the illusion of a good deal when in reality, many items were discounted almost immediately after they were stocked on the shelves. Though you might think that this act of transparency would have been received well by consumers, it actually resulted in a 25% reduction in revenue and a significant drop in J.C. Penney’s stock. It’s safe to say that J.C. Penney never recovered, but we did learn something about consumer psychology that has changed the way we shop forever. 

At this point, consumers have come to expect discounts, and many are often not willing to make a purchase unless they feel as though they’re getting a deal. Amazon takes the “deal” to the next level, and adds an element of time and the perceived limit of inventory, creating a sense of urgency so customers feel as though they have to act quickly or they will miss out and essentially leave money on the table. Flash discounts like Amazon Prime Day trigger something in us that we don’t know is there, and this psychological phenomenon combined with heavily targeted advertising makes it incredibly easy to buy. This year, Amazon has extended their sale across four days, with even more sales and even deeper discounts. They can’t just continue to extend it every year, though, so how can retailers continue to capitalize on consumer psychology to grow? 

Many retailers have found themselves in quite a predicament, as consumers started to notice when products seemed to always be sold at a discounted price. If eCommerce retailers take it too far, customers will start to expect a discount and will refuse to purchase products at full price. This can also lead to consumer distrust and a negative brand image. There’s an irrefutable response many of us really enjoy when we feel like we’ve won something, this is a major component of Amazon’s strategy and has evolved to include tactics like gamification, that make shopping fun and instantly gratifying. You can’t win however, if you don’t feel like you’re getting a bargain. Amazon has basically taken the concept of Black Friday or Cyber Five, and all of the anticipation of an exclusive, annual shopping event, and decided that once a year wasn’t enough. 

The future of promotional pricing is unclear, as we continue to extend sales events and run more and more promotions, where does it end? Target has announced a similar model with their Target Circle Week, following a considerable drop in sales as a result of consumer backlash, while Walmart has also announced their extended summer savings event, both of which occur at the same time as Amazon. Though these events may seem exciting, it's important to remain aware and ask yourself, “would I want to buy this if it weren’t going on sale?”

If you’re an eCommerce retailer looking to join in on the fun, hopefully your eCommerce platform can handle the boost in traffic. Seamless eCommerce integrations, smooth inventory management, maximum website availability, and super fast load speeds are essential for an optimized eCommerce store. That might be enough to get you started, but our team of expert support specialists combined with our award winning platform are the key to help you grow. Schedule a consultation today to get started and learn about how our eCommerce platform marketAgility could help you unlock eCommerce success.

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