Amazon Prime Day Series (Part 3 of 4) – Strategies for Prime Day

In Amazon Insights, Ecommerce by Corey Thomas

Now that we’ve gone through and looked at the history of Prime Day and made some predictions for the event, it’s time to look at the different strategies a brand can take to maximize the event.

Prime Day is massive. With almost 1,000 orders per second and 125 million total orders over the 36-hour window in 2018, every brand should consider what they want to do during the event.

Go Big

If a brand decides to “Go Big” they won’t be alone. Brands like Instant Pot, Amazon’s own devices, and other Prime Day staples like headphones, TV’s, and beauty products, have become synonymous with the “Go Big” strategy for Prime Day. Almost all of the brands that have elected to “Go Big” on Prime day have used a combination of promotions and discounts to maximize their sales.

As a whole, the Electronics category and kitchen appliances in the Home & Kitchen category perform exceptionally well on Prime Day. The Grocery & Gourmet Food and Beauty & Personal Care categories also do incredibly well.

Although the sales strategy by brands in these different categories is very similar, the goals are very different.

For a big-ticket item like a TV, it’s about triggering an “impulse buy” for a product that the customer may not otherwise buy, and it works because the product has a high enough price and enough margin built into the regular retail price, to support a limited-time sale. These big-ticket items are also a source of pride for people who buy them and the brands benefit from the “Hey, check out my new TV!” effect which drives sales at other times of the year.

For brands in the Grocery & Gourmet Food and Beauty & Personal Care categories, they don’t have the benefit of the steep dollar value discounts or the customer’s pride of sharing their purchase the way big-ticket items do, but they too need to inspire an impulse buy. In response, these brands are willing to substantially discount their products, sometimes in excess of 70% off, in order to get their product in the customers’ hands. These brands live on repeat purchases as consumable products, and the more exposure they can get on a sales event like Prime Day, the better.

Any brand that is choosing to “Go Big” on Prime Day should use every tool at their disposal to raise awareness about their discounts and promotions. Things like Daily Deals or Prime Deals will increase the visibility of the promotions and discounts to Amazon customers. Brands should also use their email list, social media accounts, and any PR capabilities they have at their dispoal to promote their Prime Day deals.

While more sales are rarely a bad thing, there are risks to this “Go Big” strategy and heavy discounting. If would-be customers know that they can “wait for the next deal” in the regular months, the discounts and promotions can actually hurt total sales during other times of year and force a brand into a eroding margin situation. Another risk is if a company has implemented a strong Minimum Advertised Price policy (MAP) or Unilateral Pricing Policy (UPP), the major discounts required to use the “Go Big” strategy can undermine the health of those programs. One other risk that brands face if offering discounts over 30-40% is that the discount can be steep enough that resellers will buy the product and resell the product after the event is over, often-times back on Amazon. For this reason, if a brand is considering a big discount, they should limit the number of purchases a single customer can make to avoid a few resellers buying all their inventory and then reselling the brand’s products on Amazon.

Ride the Wave

Another strategy, that isn’t quite as exciting as “Going Big”, but acts as a great middle-ground, is to “Ride the Wave” of Prime Day.

Amazon is going to spend hundreds of millions of dollars promoting Prime Day around the world. Even if a brand doesn’t want to discount their products, it is a good idea to plan and prepare for the extra traffic that will be on Amazon. In this “Ride the Wave” strategy, companies are looking to do much the same they do every day, but should increase their daily advertising spend budgets to account for the extra traffic, increase their inventory by 20-50% for their best selling items, and promote the sales event through their email list and social media.

This strategy is our most recommended Prime Day strategy for the brands we work with, and we think it can be almost unilaterally applied by other brands. There are few long-term risks like there are with the “Go Big” strategy and it is a great way to grow sales in the middle of the summer.

Launch New or Exclusive Products

A third strategy that we see some brands utilize effectively, is to launch new products or Amazon exclusive products on Prime Day. This third strategy is usually combined with some version of the “Go Big” or “Ride the Wave” strategy for the brand’s existing catalog. When brands utilize this strategy, they benefit from Amazon’s massive investment in Prime Day marketing and can grow their business by expanding their catalog rather than only selling more of the same products. We encourage the brands we work with to consider Amazon-exclusive products or Amazon-exclusive versions of their existing products to help prevent channel conflict and leverage Amazon’s platform to its fullest extent.

If a brand chooses to launch a new product on Prime Day, driving traffic to that product page from external sources is absolutely critical since the product will have very little, if any, search ranking and reviews to help general consumers discover the product. With this strategy, and for almost any brand-new product on Amazon, Amazon acts more as a delivery partner and convenient place for customers to shop, than it does a brand or product development platform.

Off-Amazon

The last frequently-used strategy we see used by brands, is what we call the “off-Amazon” strategy. When a brand uses this strategy, they are trying to capitalize on the marketing put into Prime Day to get the idea of buying into customers minds. The thought goes, if people are already in a buying or deal-hunting mindset, why not put a deal in front of those same people but drive them to the brand’s own website. The “off-Amazon” strategy can be effective and is a higher-margin opportunity than selling products on Amazon. In order to make this work, brands once again need to leverage their email list and social media accounts to direct traffic to their own website.

We have seen some brands struggle with this strategy due to the required customer journey it takes to capture the sale on the brand’s own website. It is especially difficult if the brand’s products are already widely available on Amazon by other sellers, either Amazon itself, or another reseller. That leaves this strategy as one with the lowest risk and potential investment of the four strategies we reviewed.

In our final post in preparation for Prime Day, we’ll unpack how brands can prepare for each of the four strategies above so that they can be ready for the big day!