Aren't sellers who do deals basically buying into a scam?

So in general, the reason why stores do sales are to get people in the door so they hopefully also buy higher margin items as well, and also to build brand loyalty.

Sellers not only discount their products, but pay Amazon deal fees on top of that, to build Amazon’s brand! I’m curious as to whether any sellers actually get good value out of these deals.

Keep in mind, if you run a 20% off promotion, and your sales increase by 40% for that time period, you probably lost money on the sale versus selling at your regular volume and regular price. Seems to me like Amazon just came up with these sham sales events (Prime day, then it became a 2 day prime “day,” and now there’s this prime big deals event) to milk sellers for fees just to promote the Amazon brand.

Pretty soon Prime Day will be monthly instead of yearly.

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Don’t worry. Sellers are smarter than Amazon. If you use helium you can see the sales price history of all these “deals”. Not such a good deal after all.

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If you know your profit margins then sales don’t matter. Even when I put my stuff on sale 20 percent off I am still making a profit.

I look at is well I get a sale and that boosts ranking and I’ve spent so much on advertising with little to no reward that at least when I put something on sale I’m making something.

There is a large amount of people who don’t know know about camelcamelcamel and shoot there is a large amount of people that don’t even check to see if target is cheaper than amazon. So much drop shipped stuff on Amazon comes from Costco or Sam’s club lol which I guess if you don’t have a Costco or Sam’s club near you maybe I guess it’s worth it to pay more on Amazon?

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Of course most sellers still make money on a sale, but I’m willing to bet the majority of sellers make less money than if they didn’t have the sale.

Say you got a $40 product at a 40% margin that sells 100 units in a time period, that’s $1600 profit
If you do a 20% off sale, and your volume goes up by 40%, and you paid a $150 fee to run the deal. Now you have a $32 product at a 28.75% margin ($9.20 / unit) that sells 140 units, after the fee that’s a $1288 profit. Basically the seller lost $312 to help promote the Amazon brand.

Keep in mind that not every sale price on Amazon requires a fee.

As @ModernSwitch noted, sometimes there are other benefits that make running a sale worthwhile, even if the profit margin is less.

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I’m curious as to the average sale performance. You really need to be getting a huge volume boost to make it worthwhile.

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I think it depends on the category. In ours, it’s all about customer acquisition because if we can get them into our brand, there’s a good chance they’ll be back for more AND THEY WILL pay reg price for it.

I see it all the time as I go over each and every sale we get 1 by 1 manually, like the lunatic that I am. There’s a reason for that - many actually. We go real deep on days like today.

Here’s our pricing model:

MSRP - 10% less than any other major brand’s “Like Product”.
Everyday Price - 23% less than that
Prime Days / Limited Time Deals / BF/CM - 25% less than that.

Still making stronger margins on days like today than most Amazon sellers.

I hope Amazon doesn’t do this but big volume days like this are a hard habit to break and we’re doing a lot better today than we did last Oct Prime Day so Amazon is too obviously so you may be right. They did a much better job promoting this year.

They are separating this from reg Prime Day with Prime Big Deals or whatever the hell they are calling it.

Overpromotion is a slippery slope, even if you are giving other people’s money away and getting sellers to buy in on a more than 2X a year frequency might be tougher but there will always be lots of new desperados to give it a go. If they do go beyond 2X a year, I doubt it will be more than quarterly and they may whip out surprise Prime Days when they aren’t having a strong quarter overall. In a past life, when I worked for a public company, that’s what we did and it shored up the #'s.

I don’t know if you saw Amazon’s attempt at another big promo (Coupon Party). That was a bust…

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2X is what we see.

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PED’s are free to run.

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Well, double sales is actually quite impressive. That seems worthwhile for marketing purposes.

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And now I am responding to myself BUT… This is what it’s all about…

Reorders and subscribers that have $0.00 advertising costs tied to them once they have jumped aboard a quality brand at a value price.

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For your specific industry, lifetime value is pretty important, but for a lot of things, like say, a dish drying rack, or a hair dryer, there’s not a lot of LTV because those products don’t tend to get reordered frequently.

That’s probably why supplement companies are willing to bid $2 / click for a $20 product.

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Correct. The prayer here is word of mouth.

Incorrect. Try $10-$15. I’m not joking either.

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And as a Handmade seller, many times I have “dropped my price drawers” on an item (low inventory or OOAK) that I wanted to get rid of, only to have a buyer satisfied enough to become a repeat buyer for other items at full price.

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Hence the reason why you hired world-class talent to leave the wannabes in the dust.

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Very happy with our 35-45% ACOS that used to be 80-90% when this dummy was trying to do everything himself. With TACOS below 8% (including the talent), we are satisfied with the results of the gamble.

The Big Prime Day effect on velocity. Keep in mind that there’s plenty left to this Amazon day…

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Hmm. If I normally sell 10 of something at $10, that’s $100. Now, it’s $8 and I sell 14 of them. That’s $112. Sounds like I made money. As long as the promotion doesn’t have fees (and not all of them have extra fees).

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But Amazon makes the seller and brand as invisible as possible, encouraging cheap knock-offs and actually “suggesting” them to the buyer when he/she attempts to repurchase what they bought before. The lure is strong “save x $!”.

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You have a special deal from Amazon and your suppliers where you don’t have to pay for your products or FBA fees?

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I meant no extra fees for promotion. All fees being equal, I would make money.

If I sell 10 products at $10 and they cost $1 each in fees, that’s $90. Now, it’s $8 and $1 each in fees and I sell 14 of them, that’s $98. I still made money.