By Martin Heubel, Amazon Strategy Consultant at Consulterce
Rotating price promotions are the number one margin killer for Amazon vendors.
Yet, most brands will run activations like this:
- Today, they run a promotion with Walmart.
- Tomorrow, they run the promotion with Target.
- The day after, they run the promotion with CVS.
While Amazon will match each price discount. Diluting your Net PPM and causing Vendor Managers to ask for margin support.
And if you don’t compensate Amazon:
- Your Buy Box gets suppressed
- Products are getting delisted (CRAP’ed)
- Participation in deal events will be blocked
So how can you escape this vicious cycle?
By aligning your marketing calendars.
Granted, this is easier said than done. After all, Amazon often does not contribute more than 1-4% to a manufacturer’s overall revenue.
Yet, it’s the only way to ensure you don’t create a downward spiral in price on items sold to other retailers.
So if price promotions with other retailers take priority, limit your funding for Amazon deal events like Prime Day. Instead, invest it in the structural profitability of your top-selling items.
And no, moving this selection to 3P won’t work. Amazon will simply suppress any 3P offers that don’t provide a competitive price to shoppers.
For further information and support, contact Martin Heubel here
