By Jim Tompkins
CEO, Tompkins International
I like the idea of Christmas in July. July is a slow sales month (after the summer season but before the Back-To-School season) and often retail supply chains are slow. So, boosting sales in July is a good idea and a July promotion may not only increase sales, but also offer an opportunity to clear out merchandise before products begin to arrive for the holiday season, leveling supply chain operations. But, Holy cow! If you Google "Christmas in July" you get:
- Over 100 clip art designs (Santa on the beach, Christmas stocking by the pool, sand castles of snowmen, palm trees with Christmas lights, and more)
- Decorating ideas
- Party ideas
- Movie/Video promotions
- SALES, SALES, SALES
Therefore, it is not surprising that, just like everything else, eCommerce is jumping on this band wagon. But wait a minute, Christmas is five months away! I understand that in the southern hemisphere, July is the middle of winter, and in order to preserve the "winter feel" of Christmas you find big celebrations in Australia, New Zealand, South Africa, and South America. This is not the case here in North Carolina. It is 95 degrees outside and there is no "winter feel". I believe that is the point - to some they get a sense of relief from the heat by thinking about winter and Christmas. Here I sit in my Santa hat on my boat with Christmas lights, listening to "Frosty the Snowman" while eating my Reindeer Crunch ice cream. My boat is anchored in the Massonboro Inlet. Apparently, this is appropriate according to Wikipedia. The earliest known use of the term "Christmas in July" took place in 1933 at a North Carolina girl's summer camp, Keystone. Then, in the movies in 1940's, church services, advertising campaigns, WWII celebrations for service men and women overseas, and then in the 1950's in retail sales.
Given this history, one could wonder why I am writing about this now. Well, I had not planned on it. In fact until a week ago I had never really given the topic a thought. On July 6th, when Amazon announced that it would celebrate its 20th birthday by having Amazon Prime Day, with "more deals than Black Friday", "Christmas in July" definitely came to mind.
A few details:
- Starting at midnight on July 15th Prime members can shop thousands of deals starting as often as every ten minutes.
- The savings will be available to Prime members in US, UK, Spain, Japan, Italy, Germany, France, Canada, and Australia.
- Shoppers who are not yet signed up for Prime but want to participate in "Amazon Prime Day" may take advantage of a free 30-day membership available only on July 15th.
- Purchases made on July 15th will be eligible for free shipping.
- Amazon's promotion of Prime Day has been omnipresent on social media and on television.
Amazon does not use "Christmas in July" but frequently mentions "Black Friday" as the single most important day for retailers in the US. In most people's mind Black Friday is associated with Christmas and, so the Christmas in July handle is not a stretch. Of course, since Amazon Prime Day is a self-created selling holiday, the comparisons to Alibaba's annual Singles Day promotion on November 11th have begun as have the comparisons to the JD.com Anniversary sale on June 18th.
What made this really interesting is that on July 13th Walmart entered the game by announcing that they will also offer thousands of discounts for online purchases, as well as some "special atomic deals" on July 15th. Next, Fernando Madeira, the Chief Executive of Walmart.com, wrote in a blog, "We've heard some retailers are charging $100 to get access to a sale. But the idea of asking customers to pay extra in order to save money just doesn't add up for us. We're standing up for our customers and everyone else that sees no rhyme or reason for paying a premium to save." Then, to really double down, Walmart announced that customers will receive free standard shipping with online purchases that cost a minimum of $35, instead of the usual $50. The shipping change will be in effect for at least 30 days and typically Walmart's discounts last for 90 days. This is Walmart's attempt at leveling Amazon.
Wait, it gets better. Shortly after the Walmart punch, Amazon Prime's Vice President, Greg Greeley, took a counterpunch by saying, "We heard some retailers are charging higher prices for items in their physical stores than they do for the same items online. The idea of charging your in-store customers more than your online customers doesn't add up for us, but it's a good reminder that you're usually better off shopping online."
Of course, several other retailers are offering "Christmas in July" type of promotions, but it is not about the promotions, it is about the level of intensity between Walmart and Amazon. The question that comes to mind is, "is there more to this than the usual competitive nature of major corporations fighting for their turf?" The answer is clearly "YES". In fact, I suggest we all look at the deals on Walmart and Amazon on July 15th. Whatever the deals were going to be as of Sunday night, the deals will have gotten a lot better by the time the clock hits midnight on July 14th. In fact, I think the deals will get better as we move through Wednesday. Neither Amazon nor Walmart want to finish in second place on July 15th. But, herein lies one of the important facts about the Walmart and Amazon Black Friday promotions in July: I believe the Amazon and Walmart measures of success for July 15th are drastically different. Walmart wants to win the crown as having the best deals and selling the most. Amazon wants to win the crown as having the best deals and signing up the most new Prime members. So, the fact is neither Walmart nor Amazon will be in first place. The customer that shopped on July 15th will be in first place. There will be some very, very good deals. Then there will be a tie for second place with both claiming a victory over the other, but I doubt either Amazon or Walmart will have a very profitable day.
Understand, the 2015 version of "Christmas in July" has less to do with leveling the supply chain and more to do with attempts to level the competition. Neither Amazon nor Walmart will come close to matching the one day online sales of Alibaba on Singles Day (11/11/2014 at $9.3 Billion) but they both will advance their strategy. I believe Walmart's July promotion strategy is to be a significant player online and I believe Amazon's Prime Day strategy is to grow Prime. Both will do this, but at a cost. So, as we get into next week we will see the results of July 15th and as we begin the next quarter, we will see the impacts of July 15th on the bottom line. Then we will reflect on the bigger picture and see the intensity between Walmart and Amazon continuing to grow as the importance of supply chain continues to grow and the future of retail continues to evolve.
All of the information is the result of Tompkins International's research of public information. There is no information being presented today that comes from any proprietary source. Tompkins International does not discuss information about their clients unless that information has been published.