Why are promotions important? How can they help you scale your sales & profits? In this article we will cover the top tips for running promotions on Amazon.
Tip 1 Why Promote
Amazon ranks products firstly by their relevance using keywords, then it compares the overall sales performance of similar products.
If you’re on page 2 and don’t get much traffic and it’s hard for you to sell a lot of products, you’re always going to be ranked on page 2. The reason for doing a promotion is to get more traffic for 7 or 10 days and increase your organic sales.
By doing this, your product sales will increase such that Amazon will put you on page 1. Using a tool like cash cow pro you can see the exact number of units you need to give away to be able to rank in the top 10.
Tip 2 Preparing for Promotion
The first thing you need to do before launching a promotion is to make sure your listing is fully optimized.
There’s no point driving lots of extra traffic to a product if the images are not high resolution and the copywriting is not optimal. Once you’re confident you’ve done everything you can to make a listing as good as possible, the next thing to do is to drop your price just before starting a promotion.
The reason for this is you want to maximize sales while the boost from a promotion is helping you to rank. The more sales you can get the more likely it is you will stick to the new higher position.
Just boosting BSR is not the goal: you want long-term organic sales.
Tip 3 BSR
Yes, you can spike BSR by doing a large promotion. But many sellers experience a drop back down to their previous rank after a promotion is finished.
The money they spend on giving away products and the FBA fees is wasted. Instead of trying to increase BSR or ranking, your goal is to maximize organic sales.
Tip 4 Sales Velocity
You can check the sales velocity using cash cow pro.
Sales velocity is the number of units sold per day by your competitors. If the top sellers are selling more than 30 units a day, the only way you will outrank them is to consistently sell over this amount for at least 5 to 7 days.
That means giving away more than 200 to 300 units which can be very expensive. I recommend you start with gradual promotions that will move your ranking up over time.
Start with a smaller promotion of 50 units over 5 days and monitor the sales results in your dashboard on cash cow pro.
Tip 5 Organic Sales
By dropping your price, you can create a boost to your promotion.
Your conversions will increase and more customers will click on your product if your price is competitive.
Calculate your breakeven price so that once you’ve deducted Amazons fees you get the landed cost of your product. Compare your breakeven price with the lowest priced competitor and see if you can afford to sell below their offering price.
If you have many competitors below your breakeven price you’re in a bad market. In that situation you should try everything you can to sell your stock and move on to a new niche.
Tip 6 Return on Investment
When considering a promotion, there’s no point doing it if it costs you more than the organic sales you get.
For example, if giving away 100 units costs you $600 in product and Amazon fees, then unless you get $600 more profit over the next 1 to 2 months it’s not worth doing.
Carefully check how many high-ranking items are selling before you try to steal their rank to see if it’s worth the effort.
Tip 7 Profit
Promote items which have a huge margin of 75% or more because the additional sales you make will more than cover the cost of giving some away.