By the time you’re reading this, Prime Day is in full swing, with some incredible deals and some “meh ” stuff. Some retailers are following suit by offering deals of their own, while others are ignoring the event.

I tend to take a somewhat contrarian view of Prime Day, and got into a bit of trouble with Amazon after writing a piece last year for Forbes about the event. This year, rather than debate the merits of the deals or the quality of the products being sold, I thought a look back into ancient history might be useful. Is there any kind of history around big retail clearance sales in July? The answer is an emphatic yes. This is not an Amazon invention, though the hyper-promotion of it certainly is. In the following paragraphs, I’ll try to explain the logic behind it.

Frequent readers know by now that I am the child of an independent retailer who operated an “outlet ” apparel store on Long Island, New York for over 50 years. As a child, I used to go buying with him in New York so I got to know the business pretty early. My father glommed onto the “Official Camp Outfitter ” business (many of us Boomers went off to “sleep-away camp ” every year), and made good money buying and re-selling everything that a camp would ask its campers to bring, including customized flocked tee shirts and shorts, duffel bags, canteens and all sorts of other cool stuff (hey – we were city and suburban kids – cool was a relative thing).

By July, the sales were done, the kids were off enjoying themselves in the Poconos or Catskills, and my father would basically close the store for the second half of July. It was a dead season, after all. In New York City and most of Long Island, school started (and still does start) after Labor Day. That put back-to-school clothing shopping in August, skewing towards the second half, and September was school supply shopping season, once the kids knew what they needed. So, July was a nothingburger.

That was a long time ago, before large retail chains, outlet malls, earlier school starts in many parts of the country, and the madness of holiday shopping that begins… whenever.

In the 1980’s I worked for a now-defunct retailer named Morse Shoe. They operated a chain of shoe stores named “Fayva ” and were in some other businesses as well. I learned an interesting lesson from their head of marketing (first name Dave, last name lost to me now). We were talking about the sell-thru of spring product, and I was sort of disappointed with the 70% rate we’d just had.

Dave was far more upbeat. He said, “You need clearance product to drive traffic in the summer months. A retailer needs a reason to get people off of the beach and into your stores, and close-outs make for a great opportunity to drive traffic. ”

And there it was! Unlike my father, a retail chain couldn’t afford to just close up shop for a couple of weeks, so clearance sales were a great idea.

Now Amazon has this rather unique opportunity – they don’t even have to bring people in off the beach. With their mobile app, they can lure shoppers right into their “store ” while they’re ON the beach! So it’s actually a brilliant move to drive revenue. Profits? I’m not so sure. Prime memberships? Definitely. And that may be the core of the strategy.

I checked the site on Saturday, and Amazon was already offering a free trial of Amazon Fresh – their delivery service of perishables – and all kinds of Prime only deals from beauty and grooming, to household supplies and whatever else. In fact, the ONLY rule for Prime Day was stated as:
What are must-does? Become a Prime member with a 30 day free trial. Students were offered a SIX month free trial. Get ‘em while they’re young.

I don’t believe Prime Day is a money-maker for the company. My recollection is their losses were greatest in this quarter last year. But if it adds more Prime members, gets action going, and maybe even more importantly, gets other retailers to respond, it’s probably worth the profit hit. Sooner or later those new Prime members will become loyal customers, and those other retailers will have to drop out of the race to the bottom.

I’m grudgingly agreeing that Prime Day is a good move. The more Prime members Amazon gains, the merrier. Prime members tend to be more loyal and Prime (along with Prime Now) can be very addictive.

And it’s actually a long standing retail tradition to run a big sale if you’re open. It makes sense historically and in the present.