Amazon-Prime-Day-2015-2016-2017-SalesPrime Day is Amazon’s biggest sale day of the year and represents an opportunity that no brand should ignore. In 2016, Amazon did about $700 million on Prime Day, up from around $600 million the year before. And, if YoY and 2017 YTD trends are any indication, this year’s Prime Day promises to push the $900 million mark. Let’s look at how to make the most of the event.

Don’t go OOS on Prime Day

Managing your stock is one of the biggest challenges for all major Amazon sale days. On Prime Day, especially, you don’t want to go OOS. JT Meng, a previous Amazon Vendor Manager (and current OCR Client Success Manager), has some tips for avoiding the OOS trap:

  1. Your Instock Manager is your best friend. Instock managers get ranked based on OOS and LBB rates for their vendors. Consequently, they’re devoted to decreasing OOS occurrences and increasing Vendor Buy Box Fast Track % (the percentage of time your item is in stock and available for 2-day shipping from Amazon). They don’t want your item to go out of stock any more than you do.
  2. Don’t rely on Amazon’s inventory predictions. Vendor Central calculates demand with only 50-80% If you’re planning promotions (which, naturally, you are), your demand will diverge even more from Amazon’s forecast.

To read more on preventing OOS on deal days, see JT’s article on staying in stock for Cyber Monday.

How to get the most sales lift—and then carry it forward

Brands want to achieve 2 things on Prime Day: get maximum sales lift, and leverage Prime Day momentum into long-term growth. Here are 3 guiding principles that will help, followed by some explanation of each.

  1. Understand Prime Day buyer dynamics
  2. Know your product, and find a discount sweet spot near your typical price point
  3. Know how promo type relates to product group

Prime Day Buyer Trends:

Unlike Cyber Monday and other pre-holiday sales, Prime Day offers more potential for long-term sales lift, largely because of buying trends across product groups. For example, last Cyber Monday’s top 5 product groups by revenue were those in which buyers tended to make larger one-off purchases: Toys, PC, Video Games, Kitchen, and Home. But Prime Day purchasers are chasing everyday consumables more than one-time or gift purchases. True, big-ticket items still came out on top for Prime Day revenue. However, in units sold consumables and other low-dollar items won the day.

Health & Personal unit sales were double that of the highest revenue product group, PC. This leads us to suspect that more buyers are jumping on CPG savings than on the higher-pricepoint deals. What’s more, even though total consumables revenue was a modest $150M for the week of Prime Day 2016, that number represents a 50% spike over the preceding four-week average. Put another way, the revenue percentage spike for consumables was a full 25% greater than for total sales.Amazon-Prime-Day-Category-Revenue

Where Cyber Monday tends toward gift-buying, Prime Day purchasers seem to be snapping up products that they regularly purchase anyway—the difference is they’re eager to land a Prime Day deal. And, they might even defect to a new brand if they find it. Savvy brands understand this and apply a different strategy to Prime Day than to Cyber Monday.

Price Point and Discount Decisions

How should one determine the right Prime Day price point or discount? OCR CEO Spencer Millerberg previously reported that brands must consider 2 key factors:

  1. The most effective discounts fall between 40-50%; more than 50% is less effective on average.
  2. The “sweet spot” Prime Day pricing is between $4-$14. True, customers always want a great deal on big-ticket items. However, the largest increase in market share (% lift) occurs within lower-priced items. Again, this preference favors consumables.Amazon-Prime-Day-CPG-Revenue-Price-Point

Product-specific promotion type might just be the most crucial component of Prime Day success. For example, coupons make consumables competitive, while they don’t do much for Electronics or Home. BXGY deals shine in Home, while they perform about half as well in consumables and Electronics. D.O.T.D. (deal of the day) commanded nearly half of successful promotions in Electronics, and fell flat in many other categories.Amazon-Prime-Day-Promotion-Type

 OCR Subscriber tip: For those who subscribe to our Promo Track tool, looking back at the sales and lift from your category last year can show you what promotions have been most effective in creating high deal day sales, as well as a significant long term lift to business.

Amazon-Prime-Day-CPG-Sales-LiftCase Studies: CPG Success

As one major CPG brand found, a successful Prime Day can extend beyond immediate lift into long-term sales growth. On Prime Day 2016, the brand followed our 3 central principles and witnessed astounding results on one of its most popular products. The item was originally priced around $15.00, and had averaged $12,000 in weekly sales for the month of June. On Prime Day, the brand offered a $5.00 coupon, placing it squarely in the $4-14.00 pricepoint sweet spot. Not only did this item see more than 480% sales lift on Prime Day, but it also carried that lift directly in to August, sustaining an 81% average weekly increase.

Case Studies: Instant Pot

If your product doesn’t land within the pricepoint sweet spot, don’t despair. Instant Pot, one of Prime Day’s bestselling brands, couldn’t discount their pressure cooker to $14 for obvious reasons. However, they did employ the optimal 42% discount promotion. Also, they strategically chose Lightning Deal/DOTD as their promotion type.

The result? Instant Pot’s sales on the item spiked by $30 million for the week of Prime Day over the average of the previous 8 weeks. The spike dropped after Prime Day Week, but average weekly sales remained a good 40% above those of pre-Prime Day, and remained so for the subsequent 8 weeks.Amazon-Prime-Day-2016-revenue-sales-lift

With Prime Day widely predicted to arrive mid-July, brands still have time to develop and implement a strategy for maximizing their lift from the event. After all, Prime Day comes ‘round once per year—but if you position yourself correctly, you can ride its wave for weeks or months thereafter.

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