THE SELLER'S GUIDE TO AMAZON PRIME DAY

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1 THE SELLER'S GUIDE TO AMAZON PRIME DAY Best Practices for Taking Full Advantage of Amazon Prime Day

2 Table of Contents Introduction Seller Fulfilled Prime & FBA Inventory & Pricing Promos, Discounts & Lightning Deals Advertising Reviews & Rating Final Takeaways

3 3 Introduction What is Amazon Prime Day? Amazon Prime Day is a global shopping event held annually around mid-july and is likely be one of the biggest sales days of the year for a majority of sellers. Exclusively for Prime members, the sale offers more deals than Black Friday on a variety of products including electronics, toys, video games, movies, clothing, patio, lawn and garden, sports, outdoor items, and more. The shopping event provides special offers including Lightning Deals and Deals of the Day on products to new and existing Prime members as often as every 10 minutes. Last year, Amazon Prime U.S. memberships grew by 47% offering thousands of deals to its database of an estimated 54 million members. But the success of Amazon Prime Day really depends on who you talk to. For consumers, there was a strong social media lash out against Amazon for not providing enough discounts on coveted big box items. Many consumers were disappointed by the selection calling Amazon Prime Day a flop featuring offbeat or items at random.

4 4 But for sellers, Amazon Prime Day was a great way to spike numbers as they entered Q3. Additionally, it was a chance for sellers with inventory sitting on FBA shelves to liquidate and make room for their Q4 inventory investments. Regardless of your take on Prime Day, there was definitely a steep increase in traffic. The con is that many sellers experienced a dip in the ratio of overall traffic to qualified traffic due to the fact that many shoppers were engaging in more browsing than actual purchases. Also, there was a higher advertising cost of sale (ACOS) in Sponsored Products, as many competitors sought to capitalize on the interest of purchase hungry consumers. In the following white paper, we will showcase the best practices sellers can implement to ensure a successful selling experience on Amazon Prime Day this year.

5 5 Seller Fulfilled Prime & FBA

6 6 Seller Fulfilled Prime & FBA Consider Seller Fulfilled Prime Late last year, Amazon announced they would be extending their Prime privileges to merchants who store and ship their own inventory through the Amazon Seller Fulfilled Prime program. This was exciting news for both sellers and consumers invested in Amazon s widely successful free two-day shipping service. PRO-TIP: We ve seen that sellers who opt into Seller Fulfilled Prime experience an increase in sales, typical for Prime eligible products. The objective of the Amazon Seller Fulfilled Prime program is to provide Prime shipping privileges to Amazon sellers that have established their ability to ship merchant-fulfilled orders and meet Amazon s high performance levels (through FBA). Sellers accepted by the program are permitted to tag products with the coveted Prime eligible label and ship directly from their own fulfillment centers. A big benefit to this program is that it avoids the tax nexus issue typically associated with using FBA. So large-scale sellers who also happen to have ecommerce sites can avoid having the entire business taxed by using Seller Fulfilled Prime.

7 7 FBA is incredibly powerful because of how it can be wielded as a strategic sales lever just as much as a fulfillment solution for an online retailer s business. In addition to the benefits of getting in front of Prime customers and knowing your products are going to be shipped and delivered on time, FBA is the most potent lever a seller can deploy to help them win the coveted Buy Box. - Pat Petriello, Head of Marketplace Strategy CPC Strategy This year, Amazon has extended benefits through their Seller Fulfilled Prime program so that Amazon sellers will have access to the same privileges that FBA listings have for Buy Box eligibility during Prime Day. Sellers will also be using the new API to postage their shipping through Amazon. This postage will qualify sellers for Amazon s negotiated rates and service levels including two-day shipping, delivery options on Sunday, and same-day delivery. How Will Amazon Seller Fulfilled Prime & FBA Impact Merchants on Prime Day? 1. Avoid Split Inventory In addition to Prime eligibility and access to free two day shipping, one of the other major benefits to the implementation of this program is that it will help sellers avoid having to split up their inventory.

8 8 Previously, sellers had to select which items would be shipped to Amazon s Fulfillment Centers while the remaining products were distributed through the seller s website or other marketplaces. This type of decision making was confusing to sellers as it can be difficult to determine which products belong in FBA. Now sellers can avoid having to slice and dice their inventory among FBA and other channels (if they choose). 2. Easier Return Handling Unfortunately, when it comes to returns FBA sellers have encountered a number of problems. One of the most obvious issues is how to identify which units are linked to which product returns. This has led to an increase in customer fraud within FBA. Now, through Amazon Seller Fulfillment Prime sellers can directly handle returns on Prime purchases which we anticipate will make it easier for sellers to track and identify product returns. 3. Benefits Merchants with Large / Heavy Products Previously, merchants had to pay a cost to ship their products from their own facility or location to an Amazon fulfillment center. Now, thanks to Seller Fulfilled Prime, merchants no longer have to pay the additional fee and can ship the product directly to their consumers. This also benefits the customer. Because merchants are saving on the cost of shipping they are able to provide the product to their customers for a cheaper price (or increase their margins).

9 9 4. Reduce Cost For Building New Amazon Fulfillment Centers Amazon itself is likely to benefit from the program as well. By allowing sellers to handle their own shipments, this will reduce the need and costs associated with the build of new fulfillment centers. According to reports, it s estimated each FBA building and the surrounding infrastructure can cost up to a billion dollars. Due to the popularity of Prime, for both the consumers and merchants, Amazon cannot build these centers fast enough to keep up with the demand. By allowing merchants Prime eligibility through their own infrastructures this helps to alleviate the pressure for Amazon to expand and invest in their own fulfillment warehouses While there are many pros to using Seller Fulfilled Prime, it s absolutely critical that all of the seller s services including delivery guarantees, returns and turnaround time must meet the same standards as FBA services (see next page).

10 10 Program Requirements for Amazon Seller Fulfilled Prime According to Amazon, to be eligible, sellers must satisfy the following criteria: 1 Account Type Sellers must have an account with a professional selling plan, and the account must be active and in good standing. 2 Premium Shipping Sellers must be enrolled in Premium Shipping (Same-Day Delivery, Two-Day Shipping, or both. 3 Carrier Pickup Time At least one of the approved Buy Shipping Service carriers (currently UPS, USPS, and FedEx) must pick up at the seller s location at or after 4:00 p.m. local time.

11 11 Performance Requirements 1 Customer Feedback: 4.5 stars or higher 2 Performance Metrics (for the trailing 30 days) That Meet or Exceed: A valid tracking ID provided for at least 94% of Premium Shipping orders An on-time delivery rate of at least 96% for Premium Shipping orders A cancellation rate of less than 1% on Premium Shipping orders Sellers whose performance metrics fall below required levels are no longer eligible for Seller Fulfilled Prime, but may continue selling those items on Amazon without Prime badging. Sellers whose metrics improve may be eligible to re-apply for Seller Fulfilled Prime. PRO-TIP: Many sellers may need to temporarily increase their staff (for shipping and customer services) especially during Prime Day to keep up with Amazon s standards and meet increasing demand. How Product Bundling on Amazon Can Reduce Your Competition on Prime Day Aside from the fact that product bundles on Amazon provide value to shoppers, they are also a unique strategy for sellers to reduce their Buy Box competition.

12 12 As seen in the example below, product bundling is offering several products for sale as one combine purchase, typically at a discounted price. There are many different types of bundling techniques including: 1 Mixed Bundling: Offering products that can be sold both as bundles and separately. 2 Cross Industry Bundling: Offering products from more than one company that complement each other. 3 New or Lesser Product Bundling: Combining a newer product or less successful product with another more popular product to help gain awareness.

13 13 PRO-TIP: For Prime Day, we recommend focusing on bundling different products together to create a unique ASIN rather than multi-packs of the same products. Prime Day could also be an excellent opportunity to try out a promotion. Especially on aged inventory that isn t selling. Consider bundling that in as a gift or discounted offer with purchase of one of your more popular items to help those slower-moving products get some attention on Prime Day, too. - Jeff Coleman, Director of Account Management CPC Strategy PRO-TIP: If the bundle is actually a multi-pack of the same product, then Amazon sellers should not list it as a bundle. Use the options for displaying items with different package quantities. Example: A 10-pack of socks is a multi-pack not a bundle. PRO-TIP: If the bundle is actually a variation of a parent product, then do not list it as a bundle. Use the options for displaying variations based on the relationship criteria for the specific category, such as the variations of a single parent product. Example: (A small + green ball)

14 14 Why is Product Bundling on Amazon Prime Day Important? Bundling is a competitive tactic for sellers not only because of it s increased sales opportunity but because it is difficult for competitors to track and compete against your ASIN. On Amazon, bundled products may be listed in all categories except Books, Music, Video, DVD, and Video Games. Bundles are only allowed when the primary product in the bundle is not a BMVD (combined category) or Video Games product. For example, you can list a bundle composed of a pair of boxing gloves (the primary product), a boxing DVD and a boxing book, but you cannot list a bundle composed of a boxing DVD and a boxing book.

15 15 Bundles must consist of items that are highly complementary and provide a value to the buyer when compared to the individual items purchased separately. All bundles are subject to Amazon for review of appropriateness and relevance. If Amazon determines a bundle is not compliant with their policies, they can removal the bundle listing without notice, impose an account suspension, or both. The main benefits of product bundling is it provides the reseller with a unique ASIN that increases your chances of Buy Box ownership. Essentially, when a reseller creates a bundle pack, they become the brand for that specific ASIN. For more on Amazon Product Bundling guidelines, check out our recent blog post.

16 16 Inventory & Pricing

17 17 Inventory & Pricing Two of the biggest factors that will impact the success of a seller on Prime Day are inventory and pricing. Sellers should stock-up on inventory and treat it similarly to Q4 holiday sales. Especially for imported goods, you want to make sure you are prepared and allow enough time for FBA shipments. Effective inventory management will ensure you don t run out of products to sell when customers are looking to buy and your cash is properly invested in the right products so you can keep turning inventory over for a profit. A big piece of inventory management is accurately incorporating lead time. Many sellers don t incorporate lead time in the right fashion that is when stockouts occur. For example, if you think your lead time is going to be 30 days and it s actually 45 days then you have a high likelihood of having a 15 day stock out- which can be very expensive for a seller. Inventory is a leading component, so if that isn t correct then every strategy after that point is going to be flawed.

18 18 Another Factor to Consider Carefully is Pricing Before jumping the gun and offering the lowest price on the market, sellers should take a step back and factor in a holistic view of their total costs. Discounts and promotions are encouraged but it s important to remember Prime Day isn t a race to the bottom although many sellers have made the mistake of offering pricing well below what they could offer leading to a disruption in overall revenue. A lot of high volume sellers and resellers will be using repricers to their full effect on Prime Day, so if you aren t using one, closely monitor your hero ASINs.

19 19 Promos, Discounts & Lightning Deals

20 20 Promos, Discounts & Lightning Deals Lightning Deals and Deals of the Day Amazon Prime Day features two discount specials including Lightning Deals and Deals of the Day. An Amazon Lightning Deal is a promotion with a limited number of discount offers on an item for a short period of time. These premium deals can be found throughout Amazon.com, including the Gold Box page and are available one per customer, until either the promotional period (typically 4 hour blocks) for the deal expires or all the available promotional discounts are claimed. Amazon markets these deals through daily subscriptions, the Amazon mobile app, Twitter, Facebook advertising on Amazon s page, and a link from Amazon.com.

21 21 Products that are featured in Amazon s Lightning Deal spaces typically enjoy a significant bump in sales throughout the duration of the deal. According to CPC Strategy s Amazon Team, although the seller sacrifices profit in the form of the discount, it's a great marketing tool for raising awareness around a product and/or brand. When a Lightning Deal is Available, Sellers Will See: The item featured in the deal Any available variations of the item (for example: different sizes or colors) The promotional discount amount and final price A status bar indicating the percentage of deals currently in customers carts or purchased A timer showing how long you have to add the item to Cart & claim the promotional discount An Add to Cart button if there are available promotional discounts Whether or not Prime members get early access to the deal

22 22 What Are the Amazon Lightning Deal Requirements? Proposed Deal Price is at least 20% off current buy-box price ASIN does not have an Amazon Retail offer (Third Party unique ASINs) ASIN with a sale price must be greater than or equal to $10 (US) ASINs in hardlines or consumable product lines only Seller instock units is more than 20 units No Add-On Items (if the product is in FBA) Over 3.5 review stars (if no stars, then it will be monitored during the deal) Item condition is new High quality image, good title and complete detail page Product must be in FBA At least 10 (or more) reviews on the ASIN Must have at least 30 days worth of inventory in FBA Must have at least $5,000 in current inventory value Third party offers only (no vendor applications) For products with variations, all variations must be discounted and participating in the deal Some categories may require a charge for Lightning Deals including: Apparel Watches Shoes Jewelry Luggage

23 23 When all the promotional discounts for a Lightning Deal are held by other customers, shoppers will see a Join Waitlist button and the status bar will show that 100% if the promotional discounts are currently being held in other customers Carts or have already been used to purchase the deal. How to Apply, Important Deadlines for Lightning Deals / Deals of the Day This year, Amazon sellers no longer have the ability to submit their own deals to be featured. Instead Amazon has pre-selected which sellers and which products are eligible for deals on Prime Day. Amazon is curating their offers on the front end to make sure they are getting the best deals on already popular products to make the day even more of a success than last year. Though sellers will not have control, ultimately this will be best for everyone as it elevates the quality of the deals making Prime Day even more important to the market and Amazon even more of a destination for ecommerce. - Nick Sandberg, Marketplace Program Management Developer CPC Strategy This year, many sellers will (or have already) received s about which products they can offer. PRO-TIP: Since some sellers do not use their business for these generic types of notifications it is very possible that these messages were missed.

24 24 If a seller wants to find out if they were approved for a Lighting Deal, they can log into their Seller Central and follow the steps below: Reports > Amazon Selling Coach > Communication Scroll through date received column to 4/14/16 and open the message titled You re invited to Prime Day If there is no message, then the seller was not invited to Prime Day. Amazon isn't just limiting submissions & increasing oversight for no reason. We have a close relationship with the Lightning Deals team at Amazon and they identified 2 core weaknesses with Prime Day last year. First, there were deals that ran out of inventory within minutes because they were so popular. Second, there were deals that received very little traction and ultimately took visibility away from other more qualified deals. Both of those things ultimately hurt the customer experience. - Nick Sandberg, Marketplace Program Management Developer CPC Strategy This year, Amazon is attempting to work out some of those kinks by being more proactive with selecting the products they want to be featured. There s still an application process and being selected to apply doesn t guarantee acceptance, but this is their attempt to ensure their customers get the best experience possible.

25 25 Ultimately this is good for all sellers as it elevates the significance of Prime day and increases Amazon as the #1 destination for online retail shopping. It s important that sellers understand just because the products in the attached document were pre-selected this does not mean that meeting the minimum requirements guarantees acceptance. Minimum Requirements For Sellers to Submit Deals for Prime Day Prime offers only (FBA or Seller Fulfilled Prime) Deal prices must offer customers a 20% or greater discount from the average price listed on Amazon.com over the last 90 days Deal prices must also be lower than the lowest price since January 1, 2016 $5,000* minimum deal size (number of units multiplied by deal price) Product rating of 3 stars or higher No listing defects on the ASIN detail page Adult products, suggestive images, and products of a controversial nature will not be promoted in Lightning Deals Deal submission does not guarantee approval. Amazon reserves the right to reject or discontinue any deal in its discretion *$2,500 minimum for products in the categories of Health and Personal Care, Grocery, Beauty, Baby PRO-TIP: There are a limited number of spots for each category so there will be competition for featuring the best deals. If there are multiple sellers selling the same ASIN as you, you will be competing with them to submit the best deal as well. We should make these deals as competitive as possible. Additionally, every seller s detail page content will be screened to make sure it does not violate the Amazon Terms of service and meets the category style guide.

26 26 Advertising

27 27 Advertising How Sellers Should Approach Sponsored Products for Prime Day As competition continues to grow on the Marketplace on Prime Day, sellers will need to tap into high level resources and marketing tactics to ensure they are optimizing and utilizing the most sophisticated practices to stay ahead. Without the right tools and strategies their products are likely to be trumped by advanced advertisers. In our experience as an agency managing a variety of product verticals for many sellers, we ve seen consistent success from using Amazon s dynamic advertising platform Sponsored Products. Because of its controllable, scalable, and very measurable performance, we consider it one of the few pillars of marketplace strategy that every Amazon seller should strive to master. By now, we can assume you are aware of Sponsored Products and the direct impact it can have on your product Discoverability and Buyability cycle. The goal of Sponsored Products is to create an advertisement that is compelling enough to capture the attention and convert a shopper. The more customers that discover your products, the more sessions, clicks, and purchases are likely to occur.

28 28 And, of course the more volume you sell the more your organic ranking will improve and the higher up they will show in the Amazon SERP. This leads us to a question many sellers are now asking: On Amazon Prime Day Should I Bid Up to Leverage Higher Traffic? On the PPC side, we consider breaking out separate Sponsored Products and AMS campaigns specifically for that Amazon Prime Day with elevated bids on key items. That way the variation in data you re likely to see doesn t throw off the data for your other campaigns. - Jeff Coleman, Director of Account Management CPC Strategy Depending on your goals, Amazon sellers can build out campaigns to launch a new product(s) or to feature product(s) that are seasonal or in demand. With Sponsored Products, sellers will have to determine how much they want to spend, what time period they want to advertise for and which products they want to feature. To best leverage your presence with Sponsored Products we recommend utilizing the phase approach including: GET THE PDF 1 2 Phase 1: Creating Automatic Campaigns Phase 2: Creating Manual Campaigns Check out The 2016 Guide to Amazon Sponsored Products for tips on how to optimize your Sponsored Products strategy.

29 29 Reviews & Ratings

30 30 Reviews & Ratings Impact of reviews and ratings on Prime Day You might think that having a good amount of product reviews is just a general ecommerce best practice, and this is true, but product reviews on the Amazon Marketplace play a significant and multifaceted role in overall sales performance. In the scope of Amazon selling strategy, feedback management is going to be an area where you can differentiate yourself on the ultra-competitive Marketplace. In this case, product reviews will affect both your product Discoverability and product Buyability. If you think of product Discoverability as Amazon SEO, the goal is for your products to receive better exposure on the Amazon SERP and show up for relevant search queries. A Given ASIN Will Become Less Discoverable If: 1 Does not have any product reviews 2 If it doesn t have a positive review rating

31 31 Sellers should aim for an approach that will gain as many product reviews as possible. Once a seller has built a solid foundation of reviews, then they can transition to a drip campaign. Sellers should base their strategy off of keywords and research what kind of review volume they need to compete on the first page. While reviews are not the only component sellers should base their strategy off of, they do help sellers gauge how many reviews they should aim for to compete within their market. For example, if the first page items have 200 reviews sellers should implement a strategy to obtain or exceed that amount. Sellers should put aside certain amounts of inventory to roll out for campaign purposes to help boost reviews. They should also implement a follow-up strategy to maximize their customer engagement opportunity through each and every sale. Head here for more on how to gain Amazon Product reviews in preparation for Amazon Prime Day.

32 32 Final Takeaways

33 33 Final Takeaways Amazon is being much more selective this year with the products they ll promote on Prime Day so that they can work on providing a better customer experience this time around. However, Prime Day is a little like Christmas in July in that there are going to be more shoppers on the platform which can boost sales for everyone. Despite Amazon s best efforts, there are going to be plenty of stock outs on promoted items and plenty of opportunities to attract new customers that come to the site after the item they want has stocked out, or that come just looking for a deal. Amazon has already trained their customers to look for the best value, and Prime Day will be especially deal-focused, so consider providing additional discounts or promotions on key items to attract deal-conscious customers. To identify the optimal discount for Prime Day, use the period leading up to it to test out price drops on key items and measure the impact on profit. Does the price drop lead to an increase in volume that boosts profit? If so, keep going until profit stops rising and use that price as your Prime Day Sale price. There are going to be a lot of extra shoppers browsing Amazon on Prime Day, so be prepared to take advantage of the increased activity. Jeff Coleman Director, Account Management CPC Strategy

34 34 It s no secret that Amazon received a fair amount of PR blowback for the shortcomings of Prime Day 15, which included a lack of deals on high-demand products and inventory which sold out in seconds. Despite this feedback, many Sellers still experienced their highest volume selling day of the entire year on Prime Day. Sellers can harness the learnings from last year to be better equipped to have a successful Prime Day in 16 by 1) including their best-selling products in Prime Day sales and promotions and 2) ensuring they have appropriate levels of inventory in FBA. Instead of viewing Prime Day as a liquidation sale to move those low-demand products, instead leverage the massive traffic opportunity to increase visibility to your best-selling products. These products are more likely to convert on the additional traffic of Prime Day and will provide the most value in the long run by getting a boost of sales history which impacts organic search rankings. Pat Petriello Head of Marketplace Strategy CPC Strategy It can t be emphasized enough that all sellers, whether they are participating in Prime Day promotions or not, should anticipate a higher level of orders than usual and should adjust their inventory levels appropriately. Most sellers we worked with last year during Prime Day saw a boost in total volume even if they didn t have a Lightning Deal or other type of promo going on at the time due to the massive bump in overall Amazon traffic. That s not to say that orders will double or triple, but the difference should be noticeable for most sellers as traffic levels spike that day. David Cooley Marketplace Channel Analyst CPC Strategy

35 What Now? Your Complimentary Amazon Evaluation CPC Strategy s Amazon Vendor Audit is a complimentary 60-minute analysis and assessment of brand's existing Vendor Central account, advertising programs, product order (PO) volume, and profitability metrics. Schedule My Evaluation Note: We typically look for at least $40,000 in monthly sales to conduct your evaluation. This is so we have enough sales performance data to analyze and make accurate, actionable recommendations. We Turn Browsers Into Buyers