Amazon Deals, Discounts & Promotions: 2019 Update

In 2017 brands on Amazon witnessed a shift in the promotional opportunities allotted to them through Seller Central: the tide in promotional parity was changing.

Fast forward 24 months and the shifting tide has only accelerated, transforming into a tidal wave of change. There is once again a significant disparity in available promotional opportunities between Vendor and Seller Central. Seller Central has emerged as the predominant platform, offering both a greater breadth of deal types and superior reporting.

If you have not yet marked your calendars for September 27th, now is the time: this Friday is a key date for both Vendor and Seller-run promotions, marking the submission deadline for inclusion in Black Friday & Cyber Monday deals.

Whether you’re scrambling to execute your holiday plan or seeking to supplement your Q4 strategy with additional deals, ARMR has curated a platform comparison for the deal opportunities on Amazon.com.

 

Promotion Type Seller Central Vendor Central Best Experience
Public Discount Code Yes Yes, Requires Approval Seller Central
Individual Discount Codes Yes No Seller Central
Price Discount Yes Yes, Requires Approval Seller Central
Multi-Buy (BXGY) Yes Yes, Requires Approval Seller Central
7-Day Deals Yes No Seller Central
Best Deal No Yes, Requires Approval Vendor Central
Lightning Deal Yes, Invite Only Yes, Requires Approval Vendor Central
Deal of the Day Yes, Invite Only Yes, Requires Approval Vendor Central
Giveaways Yes No Seller Central
Coupons Yes Yes Seller Central
Subscribe & Save Yes Yes Seller Central
Prime Exclusive Discounts Yes No Seller Central
Discount Codes

Sellers have been effectively using Discount Codes as an effective marketing tool for years. Brands can assert control on the product, discount, visibility, timing, and redemption policies. With options to arrange discount codes as group-claim or single-use codes, brands can limit financial risk. Additionally, discount codes can have display precedence set, or be hidden from detail pages altogether.

Sellers can also create Social Media Promo codes, which can be shared with Amazon Associates members to increase exposure.

Advantage: Seller Central

Price Discounts

While not a true promotion, Sellers have the benefit of adjusting their Sale Price (found in Product Details) to execute a price reduction almost instantaneously. This promotional strategy helps with click-thru rates in search via the competitively displayed price, however there is no indication of a sale price or discount off MSRP, nor does this qualify for deal-based merchandising placements.

This promotional strategy is not recommended, but does serve as a last-ditch effort for brands scrambling to implement promotions during Q4.

Advantage: Seller Central

Multi-Buy Discounts or BXGY

Designed to give customers a buy one (or many) and get one free opportunity – Sellers can use this promotional type to increase sell thru on a given product or generate interest in a new product.

Similar to Discount Codes, Sellers can choose single-use or group codes, adjust detail page display, and select specific purchase parameters for customers to qualify for the promotion.

Advantage: Seller Central

Best Deals & 7-Day Deals

Limited to Vendor Central, Best Deals are multi-day promotions that leverage similar merchandising opportunities to Lightning Deals, but without any merchandising fees.

Best Deals may run up to 14 days, allowing products to accrue sales velocity. Discount expectations are more accessible than Lightning Deals: the minimum discount is 10% Q1-Q3, rising to 15% during Holiday.

Amazon recently launched “7-Day Deals” on Seller Central to provide parity with the Vendor Central. 7-Day Deals have identical discount expectations to Best Deals but have a set seven-day time limit and additional associated merchandising fees, ranging from $300 to $1,000 per deal.

Minimum qualifications apply to products for both platforms for deal eligibility.

Advantage: Vendor Central

Category Specific Lightning Deals (CSLDs)

These time- and quantity-bound deals have been a characteristic promotion for years on Amazon. Available on both platforms, brands can execute offers which will be prominently displayed on the Today’s Deals page, qualifying event and category homepages, and in search results. Amazon levies merchandising fees on Seller & Vendor Central, ranging from $150 to $500 per deal.

The minimum discount is 15% for Q1-Q3, increasing to 20% for Prime Day & Q4. Amazon also levies minimum requirements for products to be eligible for CSLDs: product rating, traffic, and sales thresholds are minimum qualifications to submit a CSLD.

Lightning Deals are ranked according to performance, which can greatly influence the outcome of your promotion. Amazon supports deals that are performing well and suppresses those that have little traction. It's critical to set promotional discounts and available units to maximize your promotional performance to retain visibility.

Advantage: Vendor Central

Deal of the Day

Deal of the Day (DotD) is Amazon's premier limited-time offer. Deals of the Day are plastered all across the platform and featured in customer-facing email campaigns. While technically available to both Sellers and Vendors, Vendors are able to submit or nominate products where Sellers are at the mercy of Amazon recommendations.

In order to participate the featured item must exceed minimum qualifications including product rating, discount amount, sales forecast, and detail page traffic – all of which vary by category. These standards can be particularly challenging on high-traffic days like Prime Day or Cyber Monday.

All submissions must be manually reviewed and approved by Amazon.

Advantage: Vendor Central

Giveaways

Released in 2018, Amazon Giveaways are a sweepstakes deal type available exclusively to Sellers. Brands can use their products, or other eligible items, as the prize for a no-entry-required instant-win contest for Amazon shoppers.

Brands and Authors can opt to include a required action, such as following the author or watching a YouTube video prior to entry, helping to drive brand awareness and product recognition.

Giveaways are setup as instant win based on the Nth entry, but the key is the follow-up promotional opportunity: brands can elect to offer a discount code (up to 40%) towards a future purchase to non-winning entrants.

Advantage: Seller Central

Coupons

There has been parity on coupon integration since Q4 2017. Both platforms offer performance metrics in the form of clips, redemptions and revenue associated with the promotion, however the cost attribution model and timing are different between the two platforms.

Seller Powered Coupons (SPCs) work solely off redemption, with Amazon charging $0.60 per redemption. As a seller you’re only liable to fund the promotional discount and redemption fee. In terms of timing, Sellers can submit same-day coupons.

With Vendor Powered Coupons (VPCs), Amazon charges for both a unique clip fee and redemption fee. Standard fees (Q1 through Q3) are $0.17 per unique clip and $0.08 per redemption. During Q4 Amazon increases the clip fee to $0.21 per unique clip.

If your coupon redemption rate is below 40%, the cost of running a Vendor Powered Coupon will be higher than running the same coupon in Seller Central.

In terms of timing, Vendor Central states "…the start date must be at least 28 days after the current date…" requiring Vendors to submit their coupons nearly one month in advance.

Advantage: Seller Central

Subscribe & Save

Both Vendor & Seller Central offer the Subscribe & Save program. Seller’s need to have a minimum record 90 days of FBA selling, meet performance criteria, and remain in-stock to be eligible.

The difference between Vendor & Seller Central is the accessibility to data. Seller Central provides historical reports and Subscribe & Save forecasts in their Inventory Reports menu.

Advantage: Seller Central

Prime Exclusive Discounts

Amazon’s shiniest new promotional toy. Prime Exclusive Discounts (PEDs) are deals available only to Amazon Prime members, that display strike-through pricing and messaging in search results and on detail pages. During Prime Day, unique badging was applied to product detail pages.

The standard minimum discount is 10%, increasing to 20% for Prime Day and Black Friday/Cyber Monday.

There is a list of eligibility requirements, including offering the lowest price in the trailing 30 days, a minimum 3-star product rating, and of course, Prime-eligible fulfillment.

Advantage: Seller Central

What Should I Know About Funding Promotions?

It’s important to know the promotional levers available to your brand, but equally as important is the financial model that applies to your product.

Selling direct to consumer through Seller Central means that your discount will come directly from your retail price. The Amazon commission associated to your sale is reduced based on the final purchase price to the consumer. Any merchandising fees are then deducted from your account balance before being remitted back to you.

In Vendor Central, the promotional discount on the retail price is reduced from your cost price to Amazon and this is charged back to you in the form of an accrual.

Since Amazon doesn’t share in the funding of your promotion, and doesn’t alter their accruals program – your brand is liable to fund the promotional discount, normal account accruals, and any additional merchandising fees

Have Additional Questions?

Whether you’re new to selling on (or to) Amazon or want additional context on the types of promotions above, a great resource is ARMR’s Amazon Promotion Glossary.

If you have questions about your platform strategy, promotional calendar, or want more insight on how successfully capitalize on increased Q4 traffic, the ARMR team is available to help.

--Anders

Anders Palmquist
Vice President & General Manager
Have a question? Please reach out to us at info@getarmr.com

Platform Parity: Running Promotions on Amazon

It’s a little scary to think about, but the end of the Holiday season is fast approaching. Browsing the front page of Amazon over the last month you'll have seen the transition from Black Friday and Cyber Monday to 12 Days of Deals, curated Holiday Gift Guides, and soon, last-minute deals.

Both Vendors and Sellers are often eager to participate in Amazon's promotional programs but it's not always clear which opportunities are available or how to effectively pursue and execute different promotion types--you may have even built your 1st- or 3rd-Party strategy around the promotional opportunities available to you.

Fortunately, the disparity between promotion types available in Vendor Central and Seller Central has shrunk considerably since 2015, with fewer and fewer gaps remaining as new features are announced throughout the year.

Background on Platforms

If you are new to selling on (or to) Amazon or want additional context on the types of promotions available, I’d suggest familiarizing yourself with our Amazon Promotion Glossary. Traditionally, Amazon reserved premium merchandising, marketing, and promotional tools for Vendor partners: businesses selling direct (wholesale) to Amazon through Vendor Central. Access to Amazon Marketing Services, the use of Vendor-Powered Coupons, Lightning Deals and Best Deals have been Vendor-exclusive opportunities from their respective launches.

This strategy allows Amazon to maintain power in the vendor relationship and continue to dictate the economic terms for products. Because promotions are always Vendor-funded, Amazon maintains item-level profitability, while the Vendor (and Amazon) see growth in unit volume and increased baseline performance from that point forward.

The next You may be asking “If Amazon is able to exercise this level of control over Vendors, why bother improving functionality in Seller Central?” The answer is simple: cash flow. With FBA and MFN, Amazon is able to offer products without tying up funds in inventory. In Seller Central, the Seller retains ownership of all inventory and Amazon's platform commission is only taken when a customer purchases the product.

Analysis of the Current Landscape

Promotion Type Seller Central Vendor Central Best Experience
Public Discount Code Yes Yes, Requires Approval Seller Central
Individual Discount Codes Yes No Seller Central
Price Discount Yes Yes, Requires Approval Seller Central
Multi-Buy (BXGY) Yes Yes, Requires Approval Seller Central
Lightning Deal Yes, Invite Only Yes, Requires Approval Vendor Central
Best Deal No Yes, Requires Approval Vendor Central
Deal of the Day Yes Yes, Requires Approval Vendor Central
Coupons Yes Yes Neither
Subscribe & Save Yes Yes Neither
Discount Codes

A popular choice for Sellers and Vendors: businesses can distribute redemption codes through social media or e-mail campaigns to drive traffic and sales. Seller Central offers additional functionality to create individual (unique-per-customer) discount codes to better control who is eligible to receive the offer (and limit financial exposure.)
Advantage: Seller Central

Price Discounts

Sellers have the benefit of adjusting advertised prices almost instantaneously and Amazon's commission is taken from the new sale price. In Vendor Central, because Amazon owns the inventory, you have almost no ability to influence Amazon's price in the first place, and all promotion submissions must be reviewed and approved by Amazon; funding is based on cost-per-unit and deducted from the wholesale price.
Advantage: Seller Central

Multi-Buy Discounts or BXGY

Sellers have a distinct advantage through the self-service promotion setup workflow. Where Vendors need to submit these promotions for approval, Sellers are able to set them up as little as four hours in advance. In addition to having full control over the setup process and the ability to execute these promotions much more quickly, Sellers are also able to better control the monetary exposure by having full control over the base or non-promotion price.
Advantage: Seller Central

Best Deals

Exclusive to Vendors, these Amazon-sponsored promotions are merchandised on top-trafficked pages (including the Amazon Deals Store) and provide a longer discount period relative to Lightning Deals or Deal of the Day.
Advantage: Vendor Central

Lightning Deals

Both platforms offer the use of Category-Specific Lightning Deals (CSLDs), but Seller Central has far less flexibility. The pricing expectations are consistent between the two platforms, but which products are eligible may not be. Sellers are dependent on Amazon's “Recommended Products” assortment, while Vendors can submit a deal proposal on any product in their assortment. Additionally, where Vendors are only responsible for funding the price discount, Sellers must absorb both the price discount and are subject to fees ranging from $150-$500 simply for the privilege of running the promotion.
Advantage: Vendor Central

Deal of the Day

Deal of the Day is Amazon's premier featured deal-type, promoted across the site and via e-mail. Qualifying for Deal of the Day can be challenging, particularly for high-traffic days and the minimum product rating, discount, and sales forecast will vary by product category. All submissions must be manually reviewed and approved by Amazon.
Advantage: Vendor Central

Coupons

Only just launched in Seller Central (Q4 2017), this marks a significant shift in on-site merchandising and functionality for Sellers. In addition to funding the customer-facing discount, Coupons also incur a "clip fee," which is currently being waived if the coupon is promoted through Product Display Ads.
Advantage: Neither

Subscribe & Save

This functionality is on even footing between both platforms.
Advantage: Neither

So Why Does the Shift in Promotional Parity Matter?

Improvements to Seller Central functionality allows Amazon to showcase a larger assortment of products to consumers and drive additional sales on the platform without tying up funds in retail-owned inventory. Sellers now have the ability to truly compete on the platform, offering the same customer experience as Amazon retail deals.

For businesses, the opportunity to adjust your fulfillment strategy to 3rd-Party selling and improve your profit margin is now more viable than ever. Looking at the economics of a promotion, Vendor Central puts the onus of funding a discount on the shoulders of the vendor. Since the brand owner is selling at a wholesale cost direct to Amazon, the discount is taken from that price which can easily lead to unprofitable situations. Similar to Vendor Central, Sellers also shoulder the burden of promotional pricing--however, Sellers are able to capture the full retail price (with Amazon's commission scaling back accordingly.)

With increased functionality and improved profit margin, Sellers are poised to benefit from increased awareness and conversion through a variety promotional opportunities while still executing the lowest-cost option.

So Many Options! Now What?

As the promotional opportunity gap between Seller Central and Vendor Central shrinks with each passing quarter, you need to focus on the economic implications of the promotions they’re running and determine if your current Amazon strategy is truly meeting the needs of your growing business.

If you haven't already considered leveraging Amazon's 3rd-Party platform and the incredible power of the FBA model, it may be time to re-evaluate your strategy.

--Anders

Anders Palmquist
Director of Client Experience
Have a question? Please reach out to us at info@getarmr.com