2020 has been a year of firsts, and a lot of learning. Few, if any, knew the full extent of the COVID-19 pandemic’s impact back in April or May. While many best practices of selling on Amazon have remained constant throughout, other areas have required significant adjustments. These adjustments are true as it relates to preparing for Prime Day and subsequent Amazon shopping events.
We recently held a panel discussion specific to Amazon Prime Day to discuss how our brand manufacturer clients can optimize the event’s non-traditional occurrence in mid-October as opposed to July. Ideoclick’s Andrea Leigh, Clarke Heyerdahl, Devon Minsk, and Juan Botero all weighed in on the challenges sellers are facing this year, as well as opportunities to best leverage Prime Day 2020, while considering opportunities for the additional upcoming Amazon holiday shopping events.
The Good News
A recent study by McKinsey showed that 75% of U.S. consumers have changed brands during the pandemic—a potential opportunity for upcoming brands to take a larger share within a space predominantly controlled by bigger brands.
An additional benefit this year is that ecommerce has accelerated so rapidly; some say a five-year growth in a matter of months. As a result, this year’s Prime Day is expected to see an increase in both first-time Amazon customers and new-to-brand shoppers.
Prime Day’s proximity to the Black Friday-to-Cyber Monday span of days, or “Turkey 5” (T5), presents favorable circumstances but also a few detriments. It’s important for brands to value the exposure they’re getting on Prime Day and continue targeting consumers, and building brand awareness, all the way through to T5 and beyond. “It’s a really good time to capitalize on the traffic that’s visiting the site and use it not only to promote your items but also to take advantage of that halo effect,” notes Botero.
However, being so close to T5 also requires a creative and thoughtful approach to deals and promotions. Ideally, the discounts given during T5 compared to Prime Day should be noticeable. Another consideration is inventory: Botero advises paying close attention to warehouse inventory (Amazon inventory + off-site company inventory) as well as inbound inventory from manufacturers.
6 Key Areas of Prime Day Focus
Strategies the Ideoclick team set forth surrounded the overarching process of “plan, execute, and analyze,” with the extra factor of adjusting for T5. Specifically, Amazon sellers need to look at:
1) Product Selection. Focus on high-velocity items. Make sure products have a healthy status (financial/retail ready) and that they are relevant to the promotion’s timing. You may also want to consider newer items that missed out on traction with a March or April launch as well as “giftable” products that might be more desirable this close to the holidays.
2) Competitive Analysis. How competitive is the landscape? How often is the competition running promos/deals? Track competitors’ ASINs and their performance during promos. (If you don’t have software to accomplish this, reach out to us.)
3) Budgeting. Set a budget and then review after promotions end. Ensure you allocate enough budget for both Prime Day and T5, and don’t neglect allocating for increased keyword bids. Remember, Prime Day is only 48 hours… Plan your spend on the scale of “I want to play” to “I want to win.”
4) Inventory. Check inventory position 3-4 weeks prior (which now applies to T5 and holiday). Work with VM/ISM to increase inventory position on key items. If you’re positioned to drop ship should Amazon warehouse inventory run low, make sure your warehouse is prepared.
5) Layer AMS & DSP. Increase traffic, awareness, and consideration with ads on and off Amazon, re-targeting consumers that have seen but not purchased your products and/or competitors’ products.
6) Off-channel Support. Amplify the audience using your own managed media, such as emails, social media, influencers, text, etc.
New Promotional Tools Available (for FREE)
Amazon is also testing a few new promotional support tools like Amazon Posts and Amazon Live. While Amazon Live is currently only available in iOS, it likely won’t be long before the service extends to other operating systems.
These programs are currently offered at no cost—a great opportunity for brands to start experimenting with them risk-free. Both platforms allow for more of an “emotional” feel versus the traditionally transactional experience shoppers encounter when browsing. Brands can even duplicate content they’re already posting in other social media channels (like Instagram, Facebook, Pinterest).
Ready, Set, Go
Prime Day is less than two weeks away, but there’s still much companies can do to optimize their efforts. The growing pains of the last six months have been, at times, a necessary wake-up call to certain shortcomings. We can all take what we’ve learned to further improve (and monetize) next year’s Prime Day, and the years after that.
At the conclusion of the presentation, the panel opened up the virtual floor for additional questions about strategy. We’ve recapped an “in short” version of the answers, but for more extensive explanations, you can view the panel presentation HERE, with the Q&A portion beginning at minute 31.
Q&A topics included:
- Q: When should I launch my DSP campaign and how much budget should I put against it?
- A: Companies that are new to DSP or that are already running campaigns should start this ASAP. Budget really depends on goals and potential audience size.
- Q: I’ve missed a deadline for a promotion, what can I still do to drive traffic?
- A: Discounts should still be available. Even if they’re not as visible, you’re leveraging the volume of traffic generated from Prime Day. Ramp up social media exposure. Another tactic for brands that sell via other retailers is to offer discounts in those stores and Amazon will match the price.
- Q: What would be an appropriate split across paid search versus DSP?
- A: Monitor the performance of each. If you’re running highly efficient campaigns that don’t run the whole day and they’re not out of budget, ramp up AMS before pivoting dollars to DSP. But, if you’re seeing diminishing returns on AMS, start leaning into DSP where you can do more advanced targeting and also capitalize with remarketing.
- Q: What kind of CPC increases should clients or advertisers expect to see on Amazon on Prime Day?
- A: This depends on category (e.g. electronics vs. grocery), as well as what the competition is doing. If companies are tightening budgets and not using Prime Day as a driver, that may lower CPCs; a is a great time to capture market share. It really rests on how aggressive companies decide to be.
- Q: Should I (and how much) increase my AMS bids before Prime Day starts?
- A: If you’re looking to build out relevance, capture market share, you’ll want to increase your bids more (e.g. 4x). Alternatively, if you’re just looking to defend your space, you won’t need as much of an increase (maybe double). In this case, competitors aren’t going to be increasing their budgets and bids against your branded terms as they would against category terms.
- Q: How should I prioritize Prime Day versus [T5]?
- A: The million dollar question! Brands that are able to test the waters on Prime Day and double down on T5 create an opportunity to see what the T5 volume can be. Of course, it also depends on inventory position.
- Q: What do I do if I can’t get my inventory to Amazon in time?
- A: Receiving channels are jammed and all inbound shipments are heavily delayed; it’s just the sign of the times. Consider backup offers as dropship, direct fulfillment—if you are able.
“If there’s anything COVID has taught us, it’s that we need contingency plans for getting our products to customers. Diversification in manufacturer fulfillment models is vital.”