Here's how Prime Day makes you trust Amazon's competitors less

Tuesday marks the second annual Prime Day, Amazon’s biggest sales day of the year that involves hundreds of thousands of special discount deals.

Last year’s inaugural event is reported to have produced $400 million in revenue for Amazon. This year’s event is expected to be even bigger, with Citi Research estimating single-day sales will reach $1 billion.

That’s a huge chunk of sales Amazon’s competitors aren’t getting. But there’s something worse they need to worry about losing: customer trust.

According to Boomerang Commerce CEO Guru Hariharan, Prime Day is a “big trust driver” for Amazon because it establishes itself as the low price leader while showing off its dynamic pricing technology, something traditional retailers may lack. Amazon has promised to have special deals as often as every 5 minutes throughout Prime Day.

“These are the times that traditional retailers become super vulnerable and not only lose market share, but start to lose trust on their low prices,” Hariharan told Business Insider.

Hariharan, who spent nearly 6 years at Amazon before launching his own e-commerce pricing startup, stressed that some of the traditional retailers simply don’t have the technology to adjust pricing in real-time, the way Amazon does. That weakness will only become more apparent on a big shopping day like Prime Day, when most customers go cross-shopping on other sites to make sure they’re getting the best offer, Hariharan said.

“During cross shopping, if customers find somebody like JC Penney is 25% more expensive than Amazon, it will have a pretty big impact in terms of trust,” he said.

And although there have been early reports of technical glitches, some data suggest Prime Day is already leaving a positive impression on the customers.

Brandwatch, a social media monitoring startup, says nearly 82% of Prime Day mentions have been positive as of Tuesday afternoon, a significant increase from last year’s 53%.

Meanwhile, Amazon’s competitors are mostly not receiving much mentions, despite running similar big sales events to compete with Prime Day this week.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

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