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How Amazon’s Second-Ever Prime Day Played Out

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Not long after Amazon’s made-up shopping holiday, Prime Day, kicked off in the early hours of Tuesday morning, reports of technical difficulties started to surface, with shoppers venting their frustration on social media using the hashtag #PrimeDayFail.

Glitches aside, the second annual event seemed to be a success.

The e-commerce giant has not yet released official sales figures, but told Bloomberg that Prime Day sales from third-party merchants were up 30 percent as of 3 p.m. Eastern time Tuesday, compared with a year earlier. This increase was largely driven by international demand.

“We are expecting a record day for small businesses and sellers on Amazon,” the company said in an e-mail.

ChannelAdvisor, a North Carolina-based e-commerce software company, said same-store sales from third-party sellers as of 5 p.m. Eastern time were in line with Prime Day 2015 in the U.S. and up 12 percent in the U.K.

“We saw reports that consumers were having issues with Amazon’s ‘add-to-cart’ functionality, which could have slightly slowed things down this morning,” Scot Wingo, executive chairman of ChannelAdvisor, wrote in a blog post Tuesday evening, noting that as the e-tailer had spread out more of its deals this year, it was too soon to tell how Prime Day 2016 stacked up against 2015.

Ahead of the one-day online shopping event, Amazon announced that Prime Members in North America and Europe could expect more than 100,000 exclusive deals across nearly all departments and categories, with new deals released as often as every five minutes throughout the day.

Notably, last year’s event was Amazon’s biggest day for sales internationally up to that point, as shoppers ordered 398 items per second worldwide.

“When a retailer that already has very low profit margins cuts prices even further, such as Amazon with Prime Day, the strategy is clearly long-term focused,” stated Moody’s lead retail analyst, Charlie O’Shea.

Prime members pay $99 per year for a service that includes such perks as free two-day shipping on most items plus digital content. According to Consumer Intelligence Research Partners in Chicago, Amazon Prime had 63 million subscribers as of June 30—43 percent more than a year earlier.

“This investment in its Prime members, both in recognition of past and, ideally, future loyalty, is key to Amazon’s retail growth, with the continued challenge of improving profitability,” O’Shea continued. “From an investment perspective, Prime Day is really no different than brick-and-mortar retailers, such as Walmart, that make periodic investments in price to extract market share. The key issue from our perspective continues to be the overall impact on margins and profitability.”

“Amazon likely continues to lose money on its Prime customers early in their relationship and steeper price discounts could have compounded the negative impact,” SunTrust analyst Robert Peck wrote in a note, adding that the higher sales per Prime customers “spins the flywheel faster.”

In addition, Amazon is collecting valuable data on user behavior, product selection and price sensitivities, which will benefit its business going forward, he said.

Even so, Amazon shares (AMZN) were down 0.68% in early trading Wednesday.

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