Amazon is an infinite retail aisle. The single biggest key to success is discoverability.
That’s why ‘tentpole’ events like Prime Day and Black Friday are so important. Not only do they deliver short term sales but used correctly they propel products into prime position as best sellers and help products to create and sustain category dominance.
The beauty of becoming a bestseller, Amazon’s Choice and ranked no.1 for the most important keywords is that the ‘chosen’ product will generate disproportionate benefits.
In the same way that no one goes to page 2 of Google, no one really scrolls through Amazon search results.
By understanding this and how to achieve category dominance any product can become a bestseller.
So what part do Prime Day and Black Friday play in this system and how can you leverage them to achieve outsized profits?
Let’s dive into the story of ‘tentpole’ events and Amazon’s sales optimization flywheel.
Everyone knows Prime Day and Black Friday are big events but it’s worth recapping on just how big they are and how the pandemic has accelerated the shift towards buying on Amazon.
Prime Day will generate nearly $10 billion sales this year according to emarketer research
Over 175 million units are expected to be sold worldwide on Amazon
Adobe expect 2020 Black Friday sales to increase 20% on 2019
Key events are not just for the big brands. It’s estimated that around 40% of sales go to small and medium sized businesses
According to Cowen Proprietary Consumer Internet Survey, 28% of non-Prime Amazon customers have increased their online purchasing. 50% of Prime subscribers have increased theirs.
It is estimated that there are more than 75m Prime subscribers in the US and 150m globally.
Even in countries that are less familiar with buying online, Amazon is now growing at a remarkable rate – see this report on Amazon’s 2020 growth in Italy.
Aaaaand breathe. You get the picture. Prime Day and Black Friday are big deals.
Welcome to the concepts of the Amazon revenue flywheel and pulsing.
The revenue flywheel describes the nature of Amazon as a purchase engine. In the same way that Google (as a search engine) rewards good content and credibility, Amazon rewards products that sell through quickly.
Amazon uses this as a proxy for customer satisfaction. Let’s say 100 people each visit two comparable products. If product A generates 50 sales and a 50% conversion rate and product B generates only 20 sales and a 20% conversion rate then Amazon’s algorithms are going to favour product A.
This becomes a self-fulfilling prophecy. Higher conversion rates are rewarded with better organic rankings which leads to more targeted traffic which leads to more sales and higher conversion rates and so on. The higher the conversion rates the faster this mechanism starts to work in your favour. Hence why we call it a flywheel.
Our second key concept is pulsing – increasing Amazon advertising spend in the build up to and during high-intent purchase periods. We know that high conversion rates (you might hear it called sales velocity in Amazon circles) increases the ability of a product to gain dominance in it’s category.
Combine that knowledge with the fact that naturally conversion rates will increase during promotional periods (consumer intent to purchase is so much higher) and you begin to understand the benefits of pulsing.
Build up traffic and conversion rates before the main event and you may even see an increase in sales rank and organic rankings to perfectly coincide with the influx of customers during the peak days of the promotional event.
So now you understand the theory let’s discuss the crucial aspects of successful event-based campaigns
Our mantra for developing an Amazon strategy is ‘product-first’. That means success on Amazon is all about crafting a strategy to make each product a best seller in their respective categories. It is not about brand KPIs and there is no spill-over benefit from one product to another.
Your product-level strategy will depend on the maturity of the product in the market.
Depending on what your objective is you’ll need to know how you’re defining the objective, what success will look like and how you’ll know whether you’ve been successful or not. Let’s take profit as an example.
Tentpole events drive truly phenomenal amounts of traffic. More than likely you’ve not got enough budget to reach all potential customers and some keywords are going to be too expensive if you’re trying to achieve profit.
Hone in on the most relevant keywords and keep a close eye on your CPC bids. This is where ad optimisation tools really come into their own.
It sounds obvious but an all-round strategy that attracts new customers AND gives them an extra incentive to purchase is going to be highly effective. The key point is that
Successful Amazon strategies are not just about advertising. Amazon is its own ecosystem and as such it requires you to bring together multiple stakeholders to create a finely tuned machine.
Get the foundations right before you commit to spending money. Make sure you have enough inventory in stock at Amazon and have a fall back plan if you happen to sell out.
If you have an alternative fulfilment operation, maybe your own warehouse, then create a second Fulfilled By Merchant (FBM) or event better a Seller Fulfilled Prime (SFP) offer on your ASINs. Switch over to these offers if you do sell out of your Fulfilled by Amazon (FBA) inventory.
The worst thing you can do during a Black Friday type event is sell out. Always have a fall back option and don’t assume you can quickly replenish FBA stock during the longer events. Amazon will be much slower to receive goods during peak periods.
If you’ve missed out on the Prime Day bonanza then the Black Friday/Cyber Monday becomes all the more important.
As with recent years the event isn’t really two days or even a weekend, it’s a 3 week festival of sales.
The peak period will be over the weekend of November 27th-30th.
All of the general rules that I’ve shared above will apply but here are some specific tips that you can action immediately.
FBA Sellers Send your Inventory in ASAP
There’s no point having the perfect sales strategy if you’re out of stock. If anything over-forecast your inventory requirements. Incurring some storage fees is better than losing sales.
Sellers with Large Inventories Should Focus Time and Money on a Small Selection of SKUs
Your time and attention are limited. Also, it’s inevitable that some products sell better than others. Don’t try to promote your less popular products in the hope that Black Friday is a way to revitalise them.
By all means use the event to run down this stock but see it as a chance to liquidate not to profit.
Capitalise on Out of Stock Products and Competitors Not Participating
Competitors may have had a wildly successful Prime Day and are now struggling to replenish. In addition they have chosen to not run Black Friday promotions given that Prime Day was so close this year.
Both scenarios give you an opportunity to take sales away from them. Identify these sellers then set up advertising campaigns to target their product pages.
Offer Different Promotions on Different Products each Event Day
That gives your customers choice. You can also take the opportunity to learn what combination of advertising strategies and promotions are most effective. Don’t forget tentpole events are not just an opportunity to drive sales. The vast quantities of demand and data are opportunities to learn more about your target audience and their motivations.
Increase Ad Spend in the Days Running up to November 27th
As I argued earlier in the article, increasing exposure and sales before the big day will not only flag your products to the algorithm, they’ll also get your products in front of more people.
Consumers tend to browse in the days before the big event and hold off until they see the promotion price.
Get in front of the target audience and hold tight until after Cyber Monday. Only judge the success or failure of your sales strategy after the full sales period has passed.
Ride the Halo Effect of Traffic after Cyber Monday
Don’t assume traffic drops back to normal levels immediately. Cost-per-click invariably decreases but there’s still lots of demand. This is where smart advertisers pick up more profitable sales.
Q4 is Not Just Black Friday and Cyber Monday
In the madness of sales season it’s easy to forget there are still 3 weeks after Cyber Monday until Christmas. The last thing you want to do is run out of stock during this period.
Treat Black Friday and Cyber Monday as part of a wider Q4 strategy and ensure you have a cohesive operational plan to support sales activity.
We’ve seen that your goal for every product should be to become a best seller because it allows you to capture an out-sized amount of consumer demand.
The way to achieve this godly position is to leverage the Amazon revenue flywheel to your advantage. Particularly to ‘pulse’ your Amazon advertising spend around key events where purchase intent is at its highest.
Combining these best practices with a strong operational game will be the foundation of a successful Q4. The biggest winners will be brands that have an awareness of how consumer behaviour will be different this year and a deep appreciation of how that will impact demand and advertising dynamics.
Even if you feel it’s too late to capitalise this year the principles that I have explained in this article apply to other key promotional events and will hold true for Prime Day and Q4 in 2021.
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