Amazon's annual Prime Day sale once again gave it its "biggest day ever" last week. But Sense360, a digital research firm, wanting to see what impact Amazon’s big numbers had on the foot traffic in its rivals' physical stores, decided to track shoppers who did and did not use the Amazon app.
The results showed a 7% drop in foot traffic during the Prime Day promotion among those who didn’t have the Amazon app and a 32% drop among those who did have the app. Sense360 tracked the behavior of 1.1 million shoppers who use a variety of apps from companies that partner with Sense360. Sense360 CEO Eli Portnoy wouldn’t identify those apps or say how many were used, beyond that it was “more than 50 and fewer than 100.”
More than a million is enough people to give a pretty decent sense of the impact on a wide variety of retailers. Some chains fared worse than others. Sears saw a 36% drop, JCPenney 34%, Kohl’s 31%, Target 28%, Home Depot and Lowe’s 24% each, and Walmart 23%. Best Buy dropped 19%, Barnes & Noble fell 11%, and Macy’s took a 9% hit.
It's worth noting that these figures don’t tell you anything about the effect of Amazon Prime Day on its rivals' online sales. Sense360's results certainly suggest that the sale kept people out of physical stores, but if those people were instead on their desktops and mobile devices checking out Amazon's offers, who's to say that they didn't at the same time compare prices across sites, possibly deciding to order goods from Amazon's competition?
But what’s most interesting in the results is that big gap between those who did (a 32% drop) and did not (a 7% drop) have the Amazon app installed. At a glance, this would seem to suggest that mobile apps are great for business and that they drive loyalty. And yet it might mean little more than that Amazon’s most loyal shoppers are the ones who download the app. In that case, it's hardly surprising that Amazon’s most loyal shoppers tend to partake in its sales and steer clear of its competitors' physical stores when an Amazon sale is on.
Well-designed apps help business
Most likely, it’s a bit of both. Amazon’s app is also quite well-designed, making purchases far easier than with the mobile web. The takeaway there is that well-designed apps help business, which is also hardly a revelation.
Exploring a bit deeper, though, brings forth some interesting takeaways from this data. Loyal Amazon shoppers are more inclined to check out the Amazon sale. But if these shoppers frequently walk into Sears or JCPenney normally—which is the premise here—then why would that change during the sale? This is especially a key question for the two DIY chains mentioned here. Compared with Target and Walmart, Amazon typically impacts Home Depot and Lowe’s far less, given the awkward size of many DIY products. If I need a new toilet, I’m far more likely to drive to a local DIY store than to ask Amazon to ship it.
These stats suggest that this sale was so impactful that it stopped its customers from visiting their favorite brick-and-mortar locations. Here’s why this is unexpected: Even the most loyal Amazon shoppers still, to varying degrees, shop in-store for some items—items that they find more convenient or compelling to purchase in person. It seems unlikely that even a huge Amazon sale would materially change that. I asked Portnoy about any grocers in his company's list, and he didn’t provide an answer. That would have been illuminating, since grocers are the classic example of stores that offer a highly differentiated value proposition compared with online. Some people simply like to choose their own apples and select bananas at the exact stage of ripeness they like. Alas, no such numbers were made available.
The overall app-versus-mobile web issue, at least here in the middle of 2017, is fairly irrelevant. No shopper is going to download an app for every retailer she ever expects to use. The only retailers even in contention for that coveted mobile desktop space are, at best, the top five in a user's preferences. Realistically, it’s going to be more like the top two for most shoppers.
That said, it’s critical to provide your top customers—your most loyal shoppers—with a mobile app that delivers far more functionality and convenience than your mobile web version. Beyond auto-populating all payment information—I have yet to see an app that gets close to Amazon’s app in terms of making purchases effortless—offer either special deals or at least faster access to regular deals. Make tracking deliveries automatic and meaningful. Make returns super easy, in that shoppers can select from a list of recent purchases. Make re-orders a single click.
If the Whole Foods acquisition deal goes through, suddenly the Amazon app will have the potential to use geolocation—or simply Wi-Fi detection—to make a series of conveniences possible from within its stores. Walmart, Target and Costco: Would it really kill you to make your app extra useful in your stores?