Three Steps to Prepare for Amazon Prime Day

by Liz Adamson, on May 28, 2019

It’s hard to believe that Prime Day is just around the corner. Amazon.com, Inc. ("Amazon") is already making its plans and so should you. There are several factors to consider to make sure you are ready to take full advantage of Amazon’s second largest sales day of the year.

1) Inventory Management

Start forecasting and ensuring you have enough inventory. If you were selling last year you can look at those numbers to see the impact Prime Day had on sales. If this is your first Prime Day it can be a little harder. Depending on what type of product you sell and promotions you run, the impact on sales could be as much as a 400% increase or it could be just a small bump. If you are having a hard time determining how it may affect your sales, plan for a big bump, but don’t send in any more inventory than you can sell in the next 1-2 months should sales be less than stellar.

If you are using the FBA program, don’t wait until the last minute to send in your shipments. By early July the fulfillment centers will extremely busy and shipment receiving will take longer than usual. Also keep in mind that the FCs will continue to be busy post Prime Day as sellers try to restock.

2) Amazon Prime Day Promotions

So, should you be running promotions and, if so, what kind? This will depend on many factors, including whether or not you want to be seen as a brand that discounts and/or if you have enough inventory to support the promotion. Do keep in mind that customers on Amazon’s site during Prime Day will be looking for sales and discounts and will be shopping with that mindset, so using a promotion is a good opportunity to move a lot of units and increase sales.

Lightning Deals are one way to promote your products, but the window has already closed on Lightning Deal submissions for this year. There are other options. Coupons are a great way to run promotions. They are advertised on the Amazon Coupons page and are visible in search results and in your Amazon ads. You also only pay for coupons that are actually redeemed, instead of an upfront fee like Lightning Deals, and you control how long and when they run.

When setting up promotions, be very aware of what your product margins are and whether or not you can tolerate the discount, especially if your advertising costs increase. Increased sales won’t do any good if it your bottom line is in the red because your discount was too steep.

3) Amazon Advertising

There are a lot of opinions on what to do with ads both leading up to and during Prime Day. Amazon will even start sending emails out with all sorts of advice on increasing budgets and bids. What to do will depend on your business goals, products and how advertising is working for you now.

Two common misconceptions are that you should increase budgets and bids across all campaigns. There is only one thing I can guarantee with this strategy: you’ll spend more money. Yes, if you want your ads to stay active for the duration of Prime Day you may need a bigger daily budget. Yes, clicks may get more expensive if other sellers are raising their bids.

But that doesn’t mean you should just blindly spend more money. Instead, start by examining your campaigns and ad groups. Are there keywords that are doing really well with good sales and low ACoS? Consider raising bids on just those keywords to stay competitive, but make a plan to drop those bids back down post-Prime day. When setting those increased bids also consider your conversion rate and how many clicks you’ll get and how much you will spend for each sale. For example if you have a 10% conversion rate it will take 10 clicks to get a sale. If your max bid is $2.00, you’ll spend $20 for each sale. So make sure you can afford your bid increases and don’t raise bids more than what you are willing to pay for each sale.

As for budget increases, are there campaigns that are performing really well and can tolerate a potential lower conversion rate and increased traffic on Prime Day? Increase those budgets, and bring them back down again post-Prime Day.

As for timing, when should you do all of this? Some sellers start increasing their advertising budget and bids before Prime Day. Keep in mind, however, that conversion rate tends to drop once Prime Day is announced and Amazon starts promoting it. So unless your goal is brand awareness and you can tolerate a low return on ad spend, you may want to consider waiting until Prime Day itself.

With a well thought out strategy sellers can see a nice bump on Prime Day to both their top and bottom line. It’s also good practice for Black Friday and the rest of Q4. Document both your strategy and the results and apply what you learn to the end of year holiday season. Prime Day is a great opportunity for many brands, so don’t let it just slide by.

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