With Amazon announcing on Wednesday that the 2023 Prime Day sales event will take place July 11-July 12, now’s an especially good opportunity for sellers to ramp up promotions.
This year, there are some new deal offers Amazon is trying out, including exclusive deals on fast-selling items for Prime subscription club members, as well as Prime Day deals that will be available on third-party retailer websites, backed by Amazon’s inventory and shipping infrastructure.
Every year, there are various planning steps sellers should be taking ahead of Prime Day, including reviewing the sales strategies they will use, from temporary, deep discounts known as Lightning Deals, to coupons and social media promotion codes. Which options sellers choose can depend on many factors, including their product, budget, social media following, and intended timing. That means careful strategizing to get the most bang for your buck and the ultimate rewards — more devoted customers and increased sales not just during Prime Day but throughout the year.
“The goal of doing any deal is to get more products into more hands because you want people to become loyal customers. If you’re not achieving that, you’re just wasting your money,” said Phil Masiello, chief executive of digital marketing company CrunchGrowth.
Here are ways small businesses should be thinking about promotions to propel sales on Prime Day and beyond:
The cost of selling on Amazon can eat into profits
The cost to sell on Amazon can be considerable and varies depending on factors such as a merchant’s selling plan, product category, fulfillment strategy and other variables. E-commerce entrepreneurs can use Amazon’s Seller Central online calculator to estimate the cost and profitability of selling a product on Amazon. They can then factor in the cost of the promotion to help determine what to run so as not to eat too deeply into profits, said Troy Evans, product manager at Skai, an omnichannel marketing platform.
Often it can be a judgment call. A promotion might not be the most profitable, but it could be worth doing anyway because of the sales spike it generates, Evans said. “That’s the trade-off.”
Sellers also need to be aware that consumers on Amazon are extremely price-conscious and factor that into their pricing decisions, said Gia Ching, managing director at GCC Consulting, a digital marketing and design company. “Even 50 cents can move the needle significantly. It can make or break your product.”
You can learn a lot from Lightning Deals
On Prime Day, Lightning Deals are exclusively for Prime Members, but this type of promotion can be offered more broadly at other points of the year. While it’s likely too late to have a Lightning Deal approved in time for this year’s Prime Day event, sellers should think ahead to see whether the strategy can be used effectively at another point.
“I’ve seen just as much success for Lightning Deals at other times of the year,” said Nick Mattar, founder and chief executive of Digital Detroit, a digital marketing company.
Lightning Deals tend to generate excitement because they are only available for a short time. Customers can view available offers by clicking on the link on Amazon’s homepage for “Today’s Deals” or “Prime Day.” But there are downsides too. Sellers pay a non-refundable fee per deal that could run between $150 and $500 per deal, depending on the time of year and the day of the deal, Masiello said.
Offering the deal isn’t a guarantee of success, and Amazon takes its fee regardless. Sellers also need to meet Amazon’s inventory threshold and there are eligibility requirements. For instance, a professional seller must have an overall rating of at least 3.5 stars. Additionally, a product must have a sales history in Amazon stores and at least a 3-star rating. The product also can’t be offensive, embarrassing or inappropriate. Additional criteria on how to make products eligible for deals is available from Amazon.
Before deciding to offer a Lightning Deal, sellers should seek to understand how competitors’ items perform with similar promotions. However, that is information a business will most likely need to pay to access. Subscription-based tools help sellers determine this type of information and prices can range from $50 to $1,000 a month, depending on factors related to data, sources, tool functions, and whether the audience is large or small sellers, said Masiello, whose firm offers this type of market research. Some tools scrape whatever information they can and provide estimates, while others integrate with Amazon directly and use precise data.
And timing matters. For Prime Day, sellers should focus Lightning Deals on products people want year-round, not seasonal items, Masiello said. Categories that have sold the most in the past include electronics, household appliances, premium brand skin care and personal care, technology products, and fashion items.
Coupons can increase sales as much as Lightning Deals
Sellers could also choose to offer a coupon to customers for a certain dollar amount or percentage off. Customers can search for coupon deals from Amazon’s homepage, or filter for them, or they can see the deal on an individual product listing.
“Any sort of coupon or promotion on Prime Day, generally has a similar percentage increase in sales as a Lightning Deal does,” Mattar said.
There is a cost to sellers — a 60-cent fee each time a customer redeems a coupon — so that’s something to consider. And sellers need to plan ahead — though the lead time isn’t as much as it is with a Lightning Deal. Evans suggests sellers give Amazon at least one to two days to approve a coupon. “If you’re trying to get something in for Prime Day, submitting it the morning of is too close for comfort,” Evans said.
Use Amazon Seller Central for promo codes
In addition to offering the revenue calculator and details on how to make products eligible for deals, e-commerce businesses can create discount codes through Seller Central, Amazon’s management portal for third-party sellers. They can then promote the code on social media and through email.
This avoids the coupon fee; however, consumers have to take an additional step to redeem the code, Evans said. Also, to make a noticeable difference in sales, sellers “need an established and engaged social media following,” Mattar said. They can also work with an influencer that has a larger and engaged following; it doesn’t have to be a celebrity. “Influencers can be expensive, but if you can accurately project what the uptick in sales could be, you can stand to profit from working with one,” Mattar said.
Putting items on sales won’t make them stand out on Prime Day
Discounting can be a viable tool in a seller’s toolbelt, but simply placing an item on sale won’t likely be enough to generate buzz on Prime Day, Ching said. That’s because — unlike Lightning Deals or coupons — there’s no specific link on Amazon for sale items. “It’s only going to capture people who are already looking for your product or people that have been considering your product,” Ching said.
Also, your competitors will also be offering discounts on Prime Day, so that might be a more profitable strategy for another time of year, particularly if you are consistently able to offer a price that’s lower than your top competitors — assuming your margin allows for it, Evans said.
Promotions need to be tied to a broader business strategy
The new invite-only deals Amazon announced on Wednesday seem to be a way to “claim” the best Prime Day deals ahead of time, Mattar said. Most of the invitations he has seen so far are on Amazon’s own products, such as its 43-inch $99 UHD TV.
“The invitation feature makes sense for Amazon, because it drives more traffic to their products ahead of Prime Day. If anything, it will make the weeks leading up to Prime Day just as busy as the actual days,” he wrote in an email.
On the other hand, he said it could work well for consumers who want to avoid the rush when a Lightning Deal begins. “We know Amazon’s own products will have some of the steepest discounts on Prime Day, so why not try and get in on it ahead of time? The key is that not all invitations that are requested are granted, so for this first year the Prime customers should plan on still checking the Amazon store when Prime Day begins,” Mattar said.
Eventually, this concept is likely to be rolled out to Amazon sellers, he said, and it will be a way to extend Lightning Deals. “If someone sees your product and sees they can request it at a discount, they do so and then get a chance to buy it at a discount later. The downside is that it will make it more difficult to sell your products at their normal price.”
The new Amazon deal concepts reinforce an underlying point for everything e-commerce entrepreneurs do related to Prime Day. Nothing a seller does for Prime Day, or any other time of year, should be done in a vacuum. “It always needs to be part of a larger marketing strategy that you have. Running a promotion aimlessly without having plans for what comes next is a missed opportunity,” Mattar said.