Amazon Subscribe and Save: How to Get Started and Improve Lifetime Value

Post by Tom Baker
19 Jul 2020

Increasing customer lifetime value is the North Star for all Amazon sellers. Simply put, increasing profit per customer means you create a more profitable business. Subscribe and Save is one of a number of tools you can use to increase lifetime value. 

Amazon’s data shows that products on the Subscribe and Save program can achieve 6X growth compared to non-Subscribe and Save products.

In this article, I’ll explain what Subscribe and Save is, how it works, the pros and cons and how to enrol.

From now on I’ll refer to Subscribe and Save and S&S interchangeably.  

So that’s us set up nicely, let’s now get into the details.

What Is Subscribe & Save

Subscribe and Save allows customers to save 5%-15% on the sales price by scheduling repeat deliveries of their favourite items.

Customers set the quantity and delivery frequency and date. They can also amend or cancel their subscription at any time.

Customers like it because it makes products cheaper and there’s less time spent constantly re-ordering products that they habitually purchase.

Sellers like it because they secure long term revenue and increase customer loyalty.

subscribe and save buy box

5 Reasons to Use Subscribe & Save

S&S is suitable for products purchased regularly. Customers can set the replenishment frequency.

Before we get into the details of how to enrol on the program, it’s important to understand why S&S is so popular amongst sellers.

  1. Increase Lifetime Value

The principal reason to use S&S is that it can increase Lifetime Value (LTV). This is particularly true in instances where multiple sellers are competing. Once you ‘capture’ a customer into your S&S program, you don’t need to compete for the Buy Box to win them a second time.

S&S is one of many ways that you can increase Amazon customer lifetime value.

  1. Increase Brand Loyalty

The simplicity of a subscription re-order should also dissuade customers from switching to other brands.

  1. Attract Amazon’s High-Value Customers

Offering S&S attracts Amazon’s most savvy and loyal customers. People that buy more of their products from Amazon than elsewhere. 

According to Amazon’s data, people that use S&S buy more frequently and spend more on each visit.

Sounds like the right customer to attract, right?

  1. Increase Product Sales

Amazon will tell you if you ask, products on the program increase their sales at a far higher rate than products not on the program.

Every Pound or Dollar invested into S&S discount sees, on average, a 7x ROI.

  1. Increase Buy Box Win Rate

As of December 18, 2019, enrollment of new products is limited to brand owners. Given that customers have a strong preference for S&S, this gives a huge advantage to brand owners that are competing against resellers. The subscription buy box will be the default option for customers;  therefore, it automatically increases the brand’s win rate. 

Secondly, it will deter resellers. If you’re having problems with unauthorized resellers, then it can be a great way to deter them from continuing to compete against you.

How Does Subscribe and Save Work?

When a customer chooses to subscribe to a product delivery, they choose the product, how many they want to be delivered and how often. They receive a 5% discount per subscription until they have five subscriptions delivered each month, after which they will receive a 10 or 15% discount on their entire order.

subscribe and save funded discounts
Subscription Discounts in European Marketplaces

The program is broadly the same across all marketplaces but there are some important differences between North America and Europe.

Refer to the localised help guides before you make any decision about enrollment

Customers will make their initial purchase and commit to future purchases. In Amazon’s lingo…

  • A sign-up order is a customer’s initial order when subscribing to a product in the Subscribe & Save program. For your Subscribe & Save offer to appear for a product, your offer must be the Buy Box offer. 
  • A replenishment order is automatically created according to the frequency set by the customer. Subscribe & Save customers can set deliveries at monthly intervals, from one to six months.

For more information, watch this 3 minute video from Amazon

What are the Eligibility Requirements

Firstly, you must be the Brand Registered entity. No one else can offer S&S on your products. The exception is if Amazon has indirectly got its hands on your products. They could offer S&S even if they don’t have a 1P agreement with your brand.

If you are brand registered, you can participate in Subscribe & Save by enabling the program in your account settings. Eligibility criteria include your sales history and seller performance metrics, among other factors. 

To participate, you must, at a minimum, have an FBA account that:

  • Is in good standing – good account health metrics (response rate, refund rate etc.)
  • Has a seller feedback rating of 4.7 or higher (the seller account not at a product level)
  • Has been selling in FBA for three months or longer

To discover whether you are eligible head to Settings > Fulfilment by Amazon.

If you are not eligible, you will see this notification.

disabled settings

Once you are eligible and have enrolled on the program the setting will look like this.

enabled settings

How to Enrol on Subscribe and Save

To enable Subscribe & Save in your account settings:

  1. In your seller account, in your Fulfilment by Amazon settings, locate Subscription Settings and click Enable Subscribe & Save.
  2. After reviewing the FBA Subscribe & Save program information, go to Subscribe & Save to add products to the program.
  3. Use the template file to upload the SKUs.

Alternatively, eligible sellers can enrol in FBA Subscribe & Save from the programs Portal.

What Do Amazon Sellers Say About Subscribe and Save?

These quotes are taken from the S&S section of Amazon’s website. I’ve included them to give you some insights from people that are using S&S. It goes without saying that Amazon would only share quotes from brands that have had a positive experience of the program. Take what you can from these quotes but use them as one small part of the overall mix when deciding on whether to enrol.

Schwartz Bioresearch

April 2017, Health & Household

ENGAGED CUSTOMERS – Schwartz Bioresearch sells popular, high-quality supplements and vitamins. Since starting with Subscribe & Save, they’ve seen a significant jump from 10% to 30% in repeat customers. In their own words, “The strongest benefit of Subscribe & Save is customer loyalty. We get repeat customers with minimal investment.”

Puracy

April 2017, Health & Household

Consistent sales: Puracy, based in Austin, Texas, offers natural personal-care products. In just one year, Subscribe & Save has become 20% of its annual revenue. Subscribe & Save has helped lower its user acquisition costs, provided reliable business and expanded the brand. The best part about Subscribe & Save? “It’s a business that you can count on.”

Vital Proteins

April 2017, Health & Household

Easy purchasing: Vital Proteins, which offers nutritional products, loves the added benefits that their customers see with Subscribe & Save. “People are increasingly busy. Subscribe & Save is convenient, and they do not have to add ordering our products to their to-do list.”

FAQs

Can customers get the 10% or 15% discount by subscribing to offers from multiple sellers?

For customers to receive the discount, they can subscribe to any offer available in the program and are not just limited to your available inventory.

Case Example 1: If a customer subscribes to 3 of your products and 2 products from other sellers/Amazon, they will reach the 15% discount providing that they arrive on the same delivery day in the same month

Case Example 2: If a customer subscribes to one of your offers selecting a quantity of 5, this only counts as 1 Subscription.

My understanding is that the subscription price is based on the buy box price. I can see a potential risk if we are locked into the lowest price bidding that we get locked into low prices. Is there a way we can manage this?

Customers pay whatever the sales price is at the time of the replenishment.

If Amazon takes the view that prices have increased too much, then they can remove you from the program. They would not do it immediately. Emails would be sent to warn and ask for explanations.

  • Do Sellers have any control over the discount amounts? 

No

What is a pricing violation?

If you fail to maintain a consistent price for the products that you enrol in the program, then it is a pricing violation. If there are frequent pricing violations in an account, then Amazon reserves the right to suspend access to the S&S program.

What is an inventory violation?

This violation is caused by frequent inability to keep S&S inventory in stock. The same risk of suspension applies in these instances.

How to Measure the Effectiveness of Subscribe and Save

I’ve referred on a couple of occasions to the strong uplift that many brands experience when they enrol their products onto S&S.

Do not assume that you will see the same positive results or that they will be consistent across your product range.

You must review performance and adjust your strategy as the data rolls in.

Before we measure effectiveness, we need to know what KPIs we’re expecting to improve:

  • Repeat purchase rate
  • Lifetime value
  • Conversion rate & ACoS
  • Revenue and profit 

It’s not straightforward to calculate all of these metrics. To assist, we’ve created step by step guides for calculating repeat purchase rate and customer lifetime value on Amazon.

Amazon provides a dedicated subscribe and save report. This allows you to analyse product sales and uplift.

To extract the report go to Reports > Fulfillment > Subscribe and Save Performance

subscribe and save report

Fundamentally, the question you need to ask is

By enrolling on Subscribe and Save do I now make more profit? That calculation is based on 

  • Has there been an uplift in sales since enrolling
  • How long are people subscribing for and what is the profit per customer
  • Have conversion rates increased and ACoS reduced since enrolling

The calculation is simply; have these KPIs improved since enrolling, and what is the net impact of those changes?

To control for outside factors, we often recommend to clients that they split test Subscribe and Save.

Pick similar performing products and enrol half of them on the program.  Wait at least 3 months for the subscription behaviour to become apparent then compare KPIs and profit for the control group versus the S&S enrolled products.

This is the cleanest way to measure how effective the program is.

As I’ve already mentioned, expect to see variance between enrolled products.

Once you’ve analysed the results, you can then be confident about which products should continue or be added to the program.

Key Takeaways

So there we have it. Everything you need to know about Subscribe and Save. I’ve shown you what the program benefits are, how it works, how to enrol and finally how to measure the success or failure of the program.

We’re big believers in subscribe and save. In the battle for the Amazon customer, utilising sales features which increase your control and extend your relationship are going to give you a significant advantage. Not only against listing competitors but against other brands not enrolled via S&S.

Increasing lifetime value is so important. It increases profit per customer and enables you to increase your ACoS targets and build your market share. Dominance of your product category should be the goal, and this is the way to do it.

One final word of caution. Yes, the program can look like a no-brainer but never assume it will work for all of your products. Use the reporting tools that Amazon provides, run split tests and analyse at the product profit level to give you a robust sense of whether the program is delivering more profit for your Amazon store.

Tom Baker

The guy writing this stuff. Previously worked in-house doing all sorts of marketing for start-ups and large brands. Now helping business to sell on Amazon and building a full service Amazon agency

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