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The Secret Behind Amazon’s Unrivaled Success

Which powerhouse company has the heft to create its own holiday and completely revamp the retail shopping calendar? Amazon, of course.

2019 marks the fifth year of Amazon Prime Day, which was initially created to preempt the Black Friday sales extravaganza that falls after Thanksgiving. Unlike commercially driven “Hallmark Holidays,” such as National Secretary’s Day and Boss’s Day, Amazon’s festival of consumption has a noticeable impact on the economy. As reported by Bloomberg, 2018’s Amazon Prime Day delivered an astounding $4.2 billion in retail sales.

Amazon Is Leading the Pack

U.S. News & World Report included Prime Day on its 2019 list of top 15 shopping holidays alongside perennial staples like President’s Day and Memorial Day. (Notably, Amazon was the only brand on the list.) Amazon’s competitors, including Macy’s, Target and Walmart, have been forced to keep up by creating their own mid-summer sales, which have been dubbed “Black Friday in July,” a trend that only reinforces the impression that Amazon is leading the pack.

This year, Amazon Prime Day falls on two days: July 15–16. That’s only a month after Kantar released its 2019 BrandZ report, which named Amazon “the world’s most valuable brand” at $315 billion, leapfrogging Google into the top slot for the very first time. So what does the Amazon team do to celebrate their success? They hire Taylor Swift to perform a live concert (July 10), presented by Amazon Music exclusively for Prime members. They host a series of Twitch Prime celebrity gaming events in Las Vegas and London (July 11-13), complete with video game partners from Apex Legends and EA Games. And they offer huge discounts, including slashing prices on their Echo Input—just in case you haven’t already integrated Alexa into your home.

Clearly, Amazon Prime Day is a marketing feat. But what actually powers its success?

Unrivaled Use of Artificial Intelligence

Behind Prime Day’s splashy exterior is a mighty and innovative technological hub, one that harnesses artificial intelligence to market to consumers faster than the competition. While you are shopping, Amazon is collecting data and leveraging machine-learning algorithms to figure out why you bought every item you did. These algorithms then apply this knowledge to help “sell” the next customer.

Amazon owns the marketing funnel from end to end, with advertising data on one end and purchase data on the other. As a result, Amazon poses a serious threat to the Facebook-Google duopoly. That’s because Amazon can connect the dots between ad dollars spent by marketers and consumer dollars spent at Amazon.com. In marketing terms, we call this attribution, as in, “To what ad can we attribute this purchase?” For most marketers, attribution involves some guesswork. But not at Amazon. This is an area where its digital platform excels.

Solving the Attribution Problem

Amazon’s algorithms use machine learning to recommend products and adjust ad campaigns—all in real time—to maximize the likelihood that you will buy, based on data that reveals what triggered other consumers like you to buy. This is possible because Amazon owns the transaction data; they are the cash register.

Google and Facebook don’t have this luxury. They have to rely on third-party partnerships to harvest transaction data and attempt to pair that data back to online advertising to complete their attribution analyses. They aren’t as sure whether this ad or that one led to a purchase, and that hampers their ability to compete with Amazon.

Amping Up Sales via Voice Commerce

Amazon has also deftly applied artificial intelligence to crack the riddle of voice commerce. A branch of AI known as natural language processing (NLP) provides the technological layer inside Alexa that translates human speech into meaning for the computer, and, in turn, allows the computer to respond with appropriate answers. Amazon’s shoppers are no longer restricted to what they see on a computer screen (the GUI, or graphical user interface); they are now able to interact using a hands-free, voice user interface (VUI), powered by the ease and simplicity of human speech. The average person can talk at a rate of 150 words per minute, but we can only type at around 50 words per minute, which means we can spend money faster with our mouths than our fingers.

According to a recent report from Juniper, voice commerce is forecast to climb to an $80 billion market over the next five years. Despite the presence of other voice assistants like Siri and Google Assistant, Amazon holds a dominant position in the race because of the popularity of its Echo line, which represents about 70 percent of the entire smart-speaker market.

On the surface, Prime Day is about concerts and gaming events and big discounts for consumers. But behind the scenes, Prime Day is the public face of artificial intelligence hard at work solving the problem of marketing attribution, enabling voice commerce, and making it easier for consumers to buy and buy and buy.

This article was originally published on Thrive Global on July 15, 2019

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