Nozzle Insights

The latest news and industry insights for all things Amazon advertising, both for agencies and sellers. Keep in the loop for Amazon search and display stories, as Nozzle helps brands leverage success in the e-commerce world.

How to get ready for Prime Day 2020

    In an earnings call on 20 July, Amazon confirmed that delayed Prime Day would still be happening this year. The announcement confirmed that their annual sales bonanza for Prime Members would be held "in the fourth quarter" of this year. 

    Although they haven't announced the actual date as yet, early October seems like the only feasible window — avoiding a clash with Halloween, Thanksgiving, Black Friday, Cyber Monday, and the Holiday Season. 

    With Prime Day delayed, and more focus than ever on ecommerce purchases, taking advantage of Q4 as a whole looks critical for Amazon Sellers and Vendors. For 2020, Prime Day planning needs to become an integral part of your Q4 planning — helping build brand awareness for other Q4 events — and Q4 success will depend on your preparation in Q3.

    Pandemic uncertainty and ecommerce boom

    According to emarketer, in this time of uncertainty, US ecommerce spending will increase by 18% this year to $709 billion. High street retail spend is going the other way, decreasing 14.0% to $4 trillion. It’s an excellent time to embrace ecommerce, and there have never been more tools available that you can leverage to better the performance of your listings.

    But COVID-19 has brought challenges with it:

    • Supply: Lockdown caused factory and raw material problems.
    • Logistics: Amazon’s reliability took a hit, and flying freight became fraught. Freezes on FBA support have reignited questions about FBA vs FBM for Amazon merchants.
    • Buying habits: Some brands benefited from COVID-19, others have suffered. Our own monthly insights have shown the wide fluctuation in buying behavior during COVID in a range of markets and categories.

    Is Prime Day as important this year?

    Digital Commerce 360 estimated that sales by Amazon Sellers only account for about a third of Prime Day sales. Yet marketplace Sellers accounted for 58% of annual gross merchandise sales in 2018. 

    As Prime Day is now moving into your Q4 planning horizon, you need to factor in that this year will probably be even more Amazon-product focused. Why? Because large brands will be prioritizing Cyber Week and Holidays, and probably won't want another promotion vehicle for Q4.

    CyberWeek, Thanksgiving, Black Friday, and Cyber Monday, are forecast to drive 20% of all online holiday sales this year, kicking off a compressed holiday season that includes six fewer days than usual between Thanksgiving and Christmas.

    For small Sellers, this might be an opportunity. Prime Day is a perfect opportunity to build brand awareness and momentum that can be carried on (using re-targeting) into these later sales. Fundamentally, we believe that taking a long-term strategy to Amazon success is important for small and large businesses alike. Every business should pay attention to Prime Day — but, equally, don’t get so laser-focused that you lose sight of larger goals. 

    So, what does this mean? How do you get ready for Prime Day 2020? Let’s explain!

    Step 1: Play the long game

    A lot will be happening on Prime Day — and there will be competition. You should be selective about where you choose to focus, and remember some sales opportunities last beyond events like Prime Day. You should concentrate on products that deliver long-term positive outcomes.

    Base your decisions on customer lifetime value (CLV)

    Instead of taking an individual and transactional view of profitability, you can look to outmanoeuvre the competition by understanding which customers you need to focus on and, just as important, why you should focus on them.

    • Analyze your customers’ buying trajectories and personas.
    • Look at where you place your bets for the whole of Q4 and beyond. 

    Our own analysis of customer buying patterns reveals that the likelihood of a repeat purchase (either of a single product, or others within your portfolio) isn’t uniform across products. Certain products tend to produce more regular purchases, and generate longer-term value for businesses. These are great products to focus on advertising during the run-up to Prime Day.  

    CLV eBook ad

    The right analytics tools can help you quantify your customer data and deploy AI-driven analysis to identify which products can deliver those recurring sales. This is a critical asset of our own tool (Nozzle). If you get in touch, we can help. If you want to take a more manual approach, the transactional data contained within Amazon MWS is where you need to start.  

    Start early to protect your rankings

    Irrespective of whether you go all-in for Prime Day or not, use it as a marker by which point you need to have your product rankings secured. During Q4, it is unlikely that you will be able to outbid or outspend the big players.

    Realistically, there are tactical gains to be made in Q3 which can carry over to Q4. For example, in the midst of the pandemic, a large number of brands managed to take key positions in Amazon search results, mostly due to competitors being “out of stock”. Smaller brands recognized the opportunity and moved quickly, which resulted in a climb in the organic ranking. 

    Pro Tip: Analyze your most recent Amazon sales data to selectively double-down on winning products and improve your ranking.

    You don't need to discount

    Prime Day appears to support the “rising tide floats all boats” view, with increased traffic to Amazon lifting the sales of products across the site — even if those products weren't offering discounts. According to Teikmetrics, 40% of products increased prices on Prime Day. It’s possible to capitalize on the Prime Day traffic surge without cutting prices.

    Section 2: Get your logistical planning right

    Sellers hoping to keep up with the intense pace in Q4 will require flexible logistics operations. If you are expecting a high-volume Prime Day, make sure that you don’t run out of stock or falter with fulfillment. 

    Fundamentally:

    • Plan now to ensure you have enough stock:
      Understanding buying trends from your Amazon reports will help with this.
    • Have a Plan B and even a Plan C:
      Address worst-case scenarios, and think about what these might be. Perhaps backup your FBA using FBM or MFN — read more to get the details.  
    • Recognize the trade-offs between maintaining stock levels and a good IPI: Amazon has introduced ASIN-level quantity limits on products in FBA based on IPI (Inventory Performance Index) score.
    • Clear the decks: Q3 is the time to hit your inventory performance dashboard in order to clear unproductive inventory, increase sell-through, and keep popular products in stock.

    Pro Tip: Look to get continuous daily forecasts and estimates for your fulfillment/third-party logistics providers.

    Step 3: Widen and deepen your PPC game

    It could be an expensive day. Choosing the most relevant keywords will be important. Starting your PPC strategy early will also allow you to win more PPC placements, increase your overall performance (delivering more sales and more reviews), which will improve your organic listing. By ramping up PPC now, you will improve your Prime Day results. 

    You also need to build a PPC strategy for Prime Day. Make sure that you:   

    • Research new keywords — the market is volatile — monitor it closely.
    • Check your Amazon Advertising Search Term Reports regularly in order to remove non-profitable terms.
    • Watch for when seasonal search terms start to appear — using analytics on last year's data will help.
    • Analyze your data or traffic surges affecting CPC — use bid management tools in order to optimize outcomes. 
    • Watch out for window shoppers during Prime Day — intent to buy may not be there during an opportunistic showcase event.
    • Focus on achieving incremental increases to AOV and CTR in Q3 to carry you through to Prime Day and beyond.
    • Target ACoS will be challenging to maintain. Keep the real focus on break-even ACOS to ensure you are not going into the red. 
    • Go further and augment your break-even ACoS calculations using CLV — check out our guide to CLV and break-even ACoS to learn more.  
    Improve ACoS

    Optimize, optimize, optimize

    With all that said, probably the most critical element of Amazon PPC is bidding on the right terms. You need to make sure that your PPC spend is dedicated to relevant terms. Setting up “exact match” campaigns for specific keywords is the best way to deliver that outcome — but your “broad match” campaigns can be used to help identify the best keywords.  

    The process of moving ideal keywords from broad match to exact match campaigns is a strategy called “search term optimization”. This is a strategy that you need to understand, and is a strategy we have already detailed in our blog — What is Search Term Optimization

    Step 4: Audit your content 

    Review your listings and make sure that they are up to date and relevant.

      • Compare listings against competitors: Your content presentation has to be better than your competitors. Learn from what they are doing.
    • Add videos: Strongly consider how you are going to add videos to your listings. There is still a window for "home produce" videos, and you can learn before you need to go to professional production.
    • Work on A+ content: Until recently, A+ was only available to Amazon Vendors. Now, if you're brand registered on Amazon, you can start creating A+ content for your products. There was previously a more limited offering to Sellers known as Enhanced Brand Content (EBC), but A+ offers so much more. You should also have a look at the new A+ split test feature to hone your product listings early.

    Step 5: Exploit other advertising vehicles

    Sponsored Product campaign costs will come under pressure during Prime Day, especially if you are selling generic products against larger brands. There is, however, potential to be more creative by using some of the other tools in your Amazon advertising arsenal. For example, you can prepare holiday/event-related landing pages and coupons to pick up “new-to-brand” purchases. 

    More established options to pursue include:

    • Sponsored Brand ads (great for building brand awareness)
    • Sponsored Display ads (great for brand awareness and re-targeting — we cover more here)
    • Storefronts (another great brand awareness feature) 

    Customer demographics and profiles can also help with your targeting. You can use Sponsored product ads for specific targeting and Sponsored Brand and Sponsored Display ads to raise brand awareness beforehand and target your competitors. You can then carry on this strategy after Prime Day to keep up the momentum moving forward. 

    Start to experiment now with less used and potentially more cost-effective vehicles such as Amazon Posts — which is now being reported in Advertising Console. It’s in beta, and you must be a Vendor or a Seller enrolled in Amazon Brand Registry and have a US Store. But it’s free, so it’s worth adding to your ad strategies as and when it is available in your region, 

    Success is about data and planning

    Getting ready for Prime Day is now "getting ready for Q4". Even with the possibility of a “second wave”, this will be a massive quarter for Amazon Sellers. 

    Central to success is being fleet-of-foot, understanding customers, and monitoring your competitors. To be ready, you must continually analyze your data and use it to tailor your strategy to best effect.

    With the compression of the selling window, all of Q4 will be a roller coaster ride. Detailed analysis and actions in Q3 will be vital to making the most of it. We can help you plan and execute a data-driven campaign — get in touch today. Otherwise, check out our two free eBooks to learn about third-party and Amazon-provided tools to help you leverage your customer data as a competitive advantage: 

    Amazon Prime Day Campaign Audit