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As Amazon Prime Day expands, so does opportunity for credit unions

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The biggest shopping day of the summer is about to get even bigger, increasing credit unions’ opportunity to push their credit and debit products.

July 15 marks the start of Amazon’s fifth annual Prime Day, and the online retail behemoth has expanded this year’s event across two days.

While credit unions already keep a close watch on the event for its ability to help push their institutions’ credit and debit cards to top of wallet, broader retail trends are taking place that could spike e-commerce sales well before the traditional boom surrounding the holidays.

“If Prime Day is a trigger, Amazon’s highly visible profile will expand the impact to the entire retail sector rather than just a single retailer,” said Greg Portell, lead partner in the global consumer and retail practice at A.T. Kearney, a strategy and management-consulting firm. “It will be a very active day for online shopping, potentially rivalling Cyber Monday. Competitors will look to siphon off demand and ambush Amazon’s traffic.”

With Amazon having already redefined consumer expectations well beyond the retail sector, many competitors are following suit with their own take on Prime Day. eBay will hold a July 15 “Crash Sale,” while Best Buy is set to launch Big Deals Day at the same time, and Target and Walmart will both offer their own limited-time-only deals – all plays to capture some of the shopping frenzy surrounding Prime Day.

Portell called the event the “Cyber Monday of July,” adding that retailers have clearly seen an opportunity to hop on to Amazon’s coat tails.

“There's certainly an opportunity for FIs to think more broadly about their business and become a more active participant in Prime Day besides being top-of-wallet,” said Portell.

Some CUs are taking note.

Michigan State University Federal Credit Union is repeating an offer it ran for the last two years, offering a $250 Visa Gift Card to two members who use the CU’s credit or debit card for Prime Day purchases. But this could be the last year for that incarnation of the promotion.

“This year in particular, so many other retailers seem to be coming out with competitive offers since they too want to be a part of it, so I think going forward we would probably expand our offers to include not only purchases made on Prime [Day], but any purchases made on those two days,” said Deidre Davis, VP of marketing at the $4 billion-asset institution.

Data reflects that the promotion is working. Last year the credit union saw a 67.7% lift in the number of Prime Day debit card transactions compared to the year before, along with a 49.6% hike for credit card transactions.

Plenty of other credit unions are hoping to replicate that success. Both Evansville Teachers FCU and Goldenwest CU – in Evansville, Ind. and Ogden, Utah, respectively – are offering additional rewards points for all Prime Day purchases made with the CU’s plastic, while ETFCU will also give away five Amazon Prime memberships, similar to what it has done in the past.

Amazon driving online purchase volumes

Amazon says that this year’s Prime Day will feature over 1 million deals across the globe and analyst projections echo that claim. Coresight Research has predicted $5.8 billion in total sales, a 48.7% increase over last year's rough estimate of $3.9 billion in sales.

But the experience isn’t just about shopping – as part of its lead-up promotional efforts, Amazon even engineered an exclusive streaming Taylor Swift concert that was only available to Prime members.

“As Prime Day becomes bigger and bigger and bigger, we’re seeing a lot more of those credit card transactions with our credit union clients,” said Kaitlyn Summitt-Nelsen, senior portfolio advisor and card marketing strategist at CO-OP. Last year’s event resulted in a 41% year-over-year increase for Amazon purchases for CO-OP credit unions.

But top-of-wallet status is important for credit unions well beyond Prime Day, and in the hopes of spurring that, CO-OP has partnered with SmartGrowth Consultant Services to launch a rewards campaign inviting credit union members to designate their institution’s cards as a default payment at e-commerce retailers other than Amazon. The campaign directs participating institutions to create tiered rewards programs designed around reaching specific goals, as well as emphasizing the importance of issuing real-time rewards during the transaction process.

Being a part of the online shopping experience is crucial for credit unions, insisted Norm Patrick, VP of Advisors Plus Consulting, a division of PSCU.

“The biggest growth segment within the card space is within remote – specifically with transacting online with the cards not present,” said Patrick. “We're seeing a fair amount of growth coming from that segment and according to e-marketers, when you look at all of the online-based type of merchants, Amazon is driving about half of the volume for online merchants.”

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