Why should brands participate in Amazon Prime Day?
Since its inception in 2015, Amazon Prime Day has grown to become one of the biggest eCommerce shopping days of the year; in 2019 nearly 20% of Americans shopping Amazon Prime Day planned to spend over $300. Not only has there been an increase in Amazon shoppers, but also the potential to increase new-to-brand customers by as much as 57%. This creates an opportunity to drive brand awareness and adoption during the annual shopping event, which will be held this year on October 13th and 14th.
Furthermore, while Prime Day deals may create a spike in sales during their promotional period, that spike can extend beyond the deal timeframe through a “halo effect” with some vendors experiencing sales growth the month after running a deal for both the featured product and the rest of their brand catalog.
What’s different about Prime Day This Year?
The COVID-19 pandemic has driven shoppers from traditional brick and mortar buying experiences to eCommerce. As a result, Prime Day 2020 will likely see more first time Amazon customers than in previous years. It’s important that brands make it easy for these new customers to find their products through optimized Detail Pages that drive search relevance on high volume keywords. Conversion to sales can be achieved through concise and informative titles, imagery, bullet points, A+ content, and descriptions.
The transition of customers to eCommerce has brought a willingness to try new brands out of necessity and the sudden availability of alternate options. This has led to 61 % of US consumers having changed brands during the COVID-19 pandemic. With many brands moving to Amazon to replace brick and mortar losses, competition for share of the digital shelf has become fiercer than ever. It’s important for all brands to implement a robust Amazon marketing strategy that focuses on both protecting their own brand keywords and gaining market share through targeting competitive brand keywords.
Throughout Q2 many brands found their products were deemed non-essential by Amazon. This transitioned 2-day Prime delivery promises to up to 30 days. As a result, inventory turnover slowed leading to low capacity in Amazon Fulfillment Centers as we approach Prime Day. In response, Amazon has introduced Q4 inventory restrictions based upon inventory performance. This will limit many brands from sending new inventory to Amazon in preparation of Prime Day deals. Brands facing this challenge should turn to their items currently in Amazon Fulfillment Centers with high volumes of inventory as top candidates for Prime Day Deals. Alternatively, if the infrastructure is in place for Direct Fulfillment brands should consider dual listing in which Amazon will pay shipping costs to fulfill orders directly from the vendor’s warehouse or 3PL.
Prime Day’s proximity to Black Friday and Cyber Monday creates several key considerations for brands. Some may decide not to participate in Prime Day in order to focus more budget and bandwidth on holiday shopping campaigns and promotions. This creates an opportunity for competition to run compelling Prime Day deals and gain market share. However, it is unknown if brands will be allowed to run the same deals for Prime Day and Black Friday or Cyber Monday. It’s important for brands to proactively create backup plans for the holiday shopping season in case they are not able to repeat the same deal or ship inventory to Amazon in time.
Retail has faced many challenges throughout 2020 that make a strong eCommerce presence more important than ever. However, a strong Q4 strategy and flawless execution present the opportunity to recover from Q1-Q3 declines in sales. Consumer conversion will be driven by brands’ focus on value, availability, and convenience.
Jamaal Hackett-Cook is a Sr. eCommerce Strategist at Ideoclick, where he drives the creation of innovative strategies for brands to own more of the digital shelf. A 5 year former employee of Amazon, he worked on the launch of Amazon Home Services, innovations to the Vendor Contact Support Process, and has partnered with dozens of brands to improve their marketing and supply chain strategies.
We have multiple Amazon updates for sellers (both Seller Central and Vendor Central) we wanted to make sure you’re aware of this week.
Prime Day
Although an official date for Amazon Prime Day has not yet been announced, communication from Amazon Vendor Central explains that POs for approved Prime Day deals will begin in August. Our estimation is that Prime Day will be held during the first or second week of October.
For Seller Central clients, plan to start increasing your inventory position on FBA four to six weeks prior to October 1st.
For Vendor Central clients, Amazon stated that you should expect to receive POs for approved deals in two phases starting at the beginning of August.
FFP/SIOC Chargeback Grace Period Extension
Amazon has announced that it will extend its grace period on the SIOC minimum dimensions chargeback. The SIOC exemption rule will now be effective 1/1/2021. For visibility to which ASINs are likely to be eventually affected, you will notice them under “waived” status in Vendor Central chargeback notices. The main point is that the baseline SIOC requirements have not changed, meaning that an ASIN with packaging larger than 18″ x 14″ x 8″ or greater than 20 lbs will require SIOC FFP certification.
This is a highly detailed and confusing subject, and we are here to help you navigate it. If you need assistance, please reach out to your client success manager or contact us if you’re not already a client.
Upcoming Warehouse Limits
Please be aware that in preparation for holiday and due to the COVID pandemic, Amazon intends to apply storage limits to sellers using FBA . The limits are expected to extend to all product categories. Starting today, Amazon is removing its inventory removal fee to accommodate the new standards. This is expected to alleviate some supply chain constraints, but we don’t have information on how long the new inventory regulations will apply.
Seller Central Visibility
Along with other Amazon updates for sellers, the company has announced that U.S. based 3P sellers must now disclose contact information publicly. The decision should help brand manufacturers identify and shut down the sale of counterfeit or unregulated goods as well as identify unauthorized sellers.
As a brand manufacturer selling on Amazon, your approach to the holiday season may be tried and true. However, Amazon and the competitive landscape continue to evolve – and a basic refresh of last year’s approach may not yield the results you’re projecting. Therefore, it’s important to consider lessons from Prime Day in planning for Holiday on Amazon.
The holiday season has many things in common with Prime week. Amazon puts significant efforts into sourcing deals and driving traffic to the site. As the marketplace becomes crowded and more competitive, driving success and sustainable growth require a laser focus on the correct strategy for your business. At Ideoclick, we have distilled several critical Amazon Prime Day (July 15th & 16th) takeaways into applicable strategies to help prepare your brand for the holiday shopping season:
1. You must have a winning and coherent strategy
This is not the time to throw things at the wall and see what sticks. The difference between client success and failure during highly promotional times depends on the effectiveness of the strategy. Identifying goals and setting tactics to meet them is critical, as is ensuring that your approach addresses other eCommerce players and their reactions, pricing or otherwise.
For example, a robust promotional calendar isn’t effective if downstream pricing implications aren’t considered, and products end up back on Amazon in third party, creating pricing compression and headaches for months. A strategic Amazon Advertising plan won’t be successful if demand forecasts aren’t addressed and Amazon runs out of stock. An ad campaign focused on differentiation is less effective if your competition is focused on the same message. Work with your team, agencies, and/or solutions providers to create a plan that incorporates a cross-functional and cross-retailer approach.
2. Ensure rock-solid inputs (boring but essential!)
Your products must be retail-ready to have a chance at success: Properly and accurately set-up, financially viable for both you and Amazon, and in-stock and buyable. Regardless of the promotions you run, if your products will not be adequately in-stock, for example, your ASIN will be suppressed and sales will suffer.
Retail-ready includes:
Products in-stock
Search optimized titles in product listings
Optimized bullets, listed in order of most important product features
Robust images that highlight selling points and product variations, including a hero image that calls out the core differentiator of your product –
Large number of product reviews with favorable ratings
Ensuring products are profitable for Amazon, so they can be advertised
3. Get your marketing budgets approved early to cover pre-holiday, during-holiday, and post-holiday season advertising
Use share of search data to develop a cohesive strategy. What keywords do you need to win, and how often? What role will DSP play in your strategy? Other Amazon media?
Create an Amazon Advertising Pro-forma to assist in budget planning
Create buzz and interest in your products before the holiday season. This is when people are putting together their wish lists and when competition for ads is lower
Ensure your items show up in search (both on Amazon and in search engines) during crucial holiday shopping dates
Continue increased spend levels well after the promotional period. Other advertisers begin to dial down spend so the inventory can be less expensive
4. Remember that deals create sales growth and juice the Amazon flywheel
The most successful products selling on Amazon during the Prime Day period were those that sold via Lightning Deals, Vendor Powered Coupons, and Deals with a significant discount. By significant, we mean over 20%. It’s not a surprise that the 41 – 50% discount range created the best boost in unit sales during Prime Day. Also, bigger budget items with discounts sold better than smaller ticket items with discounts.
In deciding the items most likely to succeed in this environment, start with products that are already top sellers (unless you plan to launch a new product, see below). We observe that regardless of the discount, if an item is less desirable, it just won’t move as well on Amazon. Essentially shoppers want their choice items, but at a discount.
Speaking of discount, a key observation of Prime Day activity is that shoppers will look both on and off Amazon for the best deals on items they want. Which leads us to:
5. Leverage the off-channel stratosphere to direct traffic to your deals
Inspire and capture your shopper regardless of where they’re shopping or spending their time online. Many of our clients saw increased success with this strategy. Also, this approach is likely less expensive!
Leveraging off-channel traffic and bringing those shoppers to your deals on Amazon can improve your sales velocity – and you won’t be competing (or paying the price tag) for the finite traffic on Amazon. Consider Google sponsored products, temporary campaigns on your branded web sites, and advertising on social media – all directing customers to your Amazon deals.
Prior to Prime Day, many of the top-selling products participated in affiliate programs with the “Products you Don’t Want to Miss During Prime Day This Year” type articles. Affiliate marketing with influencers also created steady traffic on Amazon during Prime week. At the least, consider social media and Google ads that will lead people to Amazon for the likely conversion.
Amazon’s DSP (Demand Side Platform) campaigns prove to be a highly successful approach as well, targeting shoppers that have shown previous interest and bringing them back to your product detail pages.
6. Get creative
During Prime Day, those brands that had new product launches (Lady Gaga’s HAUS Labs, for example) or unique stories and offers (LifeStraw gifted a year of clean water to a student in need for every LifeStraw purchase) experienced impressive sales. Consider an exclusive offer, a new product bundle or launch, or tell a story associated with how your product is the ideal gift.
This is the time to consider your products’ differentiators and fully promote them. And, if your product does not have a “hang your hat” worthy differentiator, you will want to develop one or create a product-adjacent activity or lifestyle angle that enables your brand to stand apart.
As an Amazon managed services firm advising over 200 clients on Amazon strategies, operations, and marketing, we are here to help. Reach out to your client success manager to discuss holiday planning. Or, if you are not already an Ideoclick client, contact our business development folks to discuss how we can help.
Ideoclick Helps Brands Understand the Data that Creates Interactions and Drives Transactions on Amazon
On The Move, the Yahoo Finance digital streaming news segment that looks at top headlines and in-depth analysis of what is moving the markets, reported on Amazon Prime Day and sought insight from Ideoclick’s CEO Justin Leigh. In this segment, Leigh discusses Amazon Prime Day changes over the years from the brand participation standpoint, how Ideoclick helps brands navigate the Amazon platform, and customer behavior data that drives the Amazon recommendation engine. You can view the news segment here.
Now that the Winter King has been slayed, it’s safe to say that Summer is coming. Of course, with Summer upon us, it’s time to get ready for Amazon’s Prime Day. If you not aware of Prime Day, we will let you on a secret – it’s a big deal and is expected to be even bigger this year. While Amazon has not announced the date, based on prior years we can expect Prime Day to he held on the second Tuesday of July. Here are some things to consider as you plan for this event:
Promotions: Last year we observed a wide performance mix for clients that ran Lightning Deals. Categories such as Toys, Electronics, Luxury, Kitchen, Soft Lines, and Gifts did well. Others like consumables experienced less than stellar sell-through in most cases. If you are planning on running a Lightning Deal, keep in mind that all deals must be run at a minimum of 20% off and all ASINs in the deal must have 3.5 stars or better. On top of the discount you give to the customer, Amazon will charge you a merchandising fee of $500 for deals that run on Prime Day and $300 for deals that run during Prime Week. For those choosing not to run Lightning Deals, we recommend running coupons to help drive conversion during this high traffic period, especially if your product is a good fit for Subscribe and Save.
Marketing: As with promotions, how you choose to set your AMS strategy should be dependent on the category of products you sell. The same categories that are a good fit for Lighting Deals are also a good fit for an increased AMS budget on Prime Day. Other categories should instead focus on leveraging the increased traffic on Amazon both pre and post Prime Day and set budgets accordingly. Additionally, incorporating a cross-channel marketing strategy in order to drive traffic to your Amazon deals from other digital channels is a best practice that proved to perform well for clients during Prime Day last year.
Operations: Even the best promotional and marketing plans will if the right amount of product is not in stock on Prime Day. We are advising our clients with Seller Central promotions to ship the needed inventory four weeks prior to Prime Day. On the Vendor Central side, Amazon’s inventory planning system will automatically consider the impact of all approved promotions and order accordingly.
At Ideoclick, our marketing services team are expert strategists and help our clients efficiently leverage the increased traffic around Prime Day. If you are not already a client, reach out to us at info@ideoclick.com to learn about how we can help.
