• by Michael Sands , Columnist, July 20, 2015

Amazon’s widely publicized Prime Day event is a celebration of the retail giant’s 20th birthday in the form of a Black Friday-style flash sale designed to drive sales during the traditionally slower summer season.

And while it’s too soon to say if the big anniversary promotion will be a success or a flop, it’s evident that the goal of Prime Day is not just about generating revenue, but even more about driving Amazon Prime subscriptions.

For two decades, Amazon has led a digital revolution in the retail industry with innovations like product reviews, recommendations, and free shipping. But Prime, the $99-a-year service that bundles deals and perks along with lifestyle offerings like streaming music and video, is arguably one of Amazon’s most successful innovations.

 Research has found that Prime members spend nearly three times more than the average consumer on Amazon. So why are Amazon Prime subscribers so valuable to the e-commerce innovator, and such loyal customers?  It boils down to the power of first-party data.

Through Prime, Amazon learns not only about its customers’ shopping preferences but also the movies, books and music they like, the photos they upload and the devices they use throughout the day. This allows Amazon to fine tune the highly predictive product recommendations that they’re known for, and to create a personalized service offering that is far more engaging to consumers. 

Prime subscribers buy more from Amazon because they spend more time on the site and with its related services than the average shopper.

While Prime Day may be the industry’s highest profile effort to collect and leverage more first-party data on consumers, it’s definitely not the only one. Other Internet titans are rapidly integrating first-party data and sales offerings.

For example, Google and Twitter have each recently launched buy buttons for their search and social media platforms. First-party data works in this context because it empowers brands to create personalized experiences that consumers enjoy, and that ultimately lead to purchases.

By using their troves of customer engagement data to provide relevant offers and information to their users, marketers are providing value to consumers and overcoming the arguably innate skepticism towards the use of their personal information online. 

No one complains that Netflix’s movie recommendations are too accurate, or that Google Map’s traffic information is too detailed, for exactly this reason.

Today’s always-on consumers are demanding better brand experiences and

Amazon’s many innovations since 1995 are a key reason why that’s so.  Adept at utilizing its proprietary data on customer needs and preferences, Amazon is now well-positioned to succeed in the new data-driven Internet economy in which first-party, rather than third-party, data will be the driving force in understanding what consumers want and when they want it. 

While Prime is the most notable example of an online retailer successfully evolving into a lifestyle offering, and a first-party data powerhouse, many e-commerce merchants are taking heed.

We should expect to see other retail marketers becoming less dependent on third-party data in the coming years, while looking to the data they already own for unique ways to engage and convert today’s increasingly demanding and fickle consumers.