For most FBA sellers, Prime Day is the biggest event of the year. We spend months, if not the entire year, prepping for the promos and figuring out how to make our way up to best seller ranks. This year, Prime Day fell on July 12-13, so we had to have our deals submitted by the end of April and all inventory received to Amazon warehouses in June. But the overall preparation began much earlier. Some inventory can take as long as 100 days to arrive, if it’s being shipped from China, for example. Months in advance, we were thinking about pricing strategies and what discounts to offer, evaluating a range of possible impacts that could have on margins, profit and inventory. In fact, it’s fair to say that we’re constantly preparing for Prime Day, because it can and should be part of a long-term strategy of price and inventory management.
These considerations - pricing and stocking - are two of the biggest concerns for sellers right now. Ecommerce has seen ongoing supply chain issues since the start of 2020, and inflation is gradually making itself felt in the Amazon marketplace. As the online retail ecosystem continues to change in a post-pandemic world, this year’s Prime Day seemed like it might turn out to be especially nail-biting.
But as it turned out, we’re seeing major success on Amazon - not only household essentials, but with gadgets, toys, and clothing as well. This Prime Day topped last year’s, with U.S. sales rising to $12 billion, 9% higher than last year. At Razor Group, we saw a 670% increase in revenue compared to Prime Day 2021, with a 68% increase on a like-for-like basis.
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Here are some key takeaways which our brand managers provided, to explain how they achieved success on Prime Day and what to have in mind for next year:
Prime Day deals are limited to 12 hours per product. These can boost your ranking, so you want to take advantage of that even after the Prime deal ends - plan follow-up deals to leverage your rank and the increase in traffic.
Prime Day can be a double-edged sword if you sell more than you anticipated and don’t have enough inventory. Running out of stock means that you’ll lose your listing while competitors’ products continue to appear in keyword searches.
When running PPC, be alert to how it affects your margins, since they’re already going to be squeezed by Prime Day deals. If PPC gets a good response from customers, you should be able to keep spending on marketing without sacrificing your margins - you can potentially test visibility against price elasticity here by increasing prices slightly. Conversely, if marketing spend isn’t accelerating your revenue, then you should push margins on pricing and deals instead.
Amazon promotes Prime Exclusive Discounts (PED) - use these to leverage the day’s higher traffic. Some of our biggest successes came from brands giving 20% discounts across all products.
Remember that you can and should use Prime Day as a rung in your long-term strategy of building a customer base and good reputation. You should aim to maintain your best selling rank even after Prime Day and use that boost to come out of it with better organic ranks.
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Razor Group’s house of brands saw unprecedented success this year and we are always happy to share insights into our past experiences. If you want to discuss growth strategies in more detail, or if you’re interested in exploring various exit options for your brand - reach out to us. We have the technology, and financial and operational leverage to ensure that our brands stay competitive.
