Amazon has just dropped their latest feature, and Facebook groups and seller forums are buzzing about it. If you haven’t heard yet, the Amazon Self-Service Coupons are out. This new feature allows sellers to create targeted promotions on Amazon. We'll attempt to break down every aspect of what we know so far to give you a better insight into how this can help your FBA business.
The Break Down
Here is what we have dug up so far on these new coupons. Accessible from within the Advertising menu on Seller Cental, the new coupon service allows sellers to create coupons for eligible products or families of products. Coupons are visible to buyers as little orange badges next to your listing all across Amazon, for example, in the search results, detail pages, the Gold Box deals page and a new landing page, just for coupons.
Once a buyer has clipped a coupon by clicking on it, the search results they are automatically sent to your product listing page where the coupon is then displayed in green directly under your product’s listing price. You can set your coupon to be a percent off the total purchase price, or this new coupon restores the option to give a dollar off amount.
At this time, the buyer can choose to use the coupon, and it is automatically deducted from their purchase upon checkout. However, if they do not make it to check out but have still clicked on the coupon, this coupon is considered “clipped” and is added to their Recently Clipped Coupons HomePage.
The great thing about these new coupons is they eliminate the need for entering promotion codes at checkout. Forget about your promotion code getting into the wrong hands, once your coupon budget has been reached, the campaign is shut off, and your coupon no longer appears on your listing; which brings us to our next point.
Setting The Budget
Amazon allows sellers to set a budget for how many coupons may be used at any given time depending upon how much is in their spending budget. Which simultaneously means you are paying Amazon for this specialized marketing capability. Amazon is charging $0.60 per coupon redeemed and clipped, but you are only charged the total fee of the coupon when it is redeemed. Here’s the breakdown:
If you have a product that is $25.00 and you are offering a coupon that is $4.00 off, you turn your coupon on and 50 people purchase your product with that coupon. This is your cost regarding those transactions as Seller Central describes it:
(USD equivalent of the discount you are offering * number of redemptions) + (redemption fees * number of redemptions)
($4.00 * 50) + ($0.60 * 50) = $200 + $30 = $230
Your budget will be depleted by $230 the following day as a result of this Customer interest in your coupon. We will deactivate your coupon once your budget is fully utilized.
This is where things get a little confusing. When the buyer clips a coupon it stays on their clipped coupons homepage, but there is no expiration date determining how long the coupon will be available to the buyer. Judging from that last line in the Seller Central excerpt, the coupon will be deactivated when the budget is fully utilized. Which we can only assume means your budget must never run out if you want your coupon to be available for an extended period of time.
A coupon that expires when your budget is reached could be a good thing. Good, in the case that Amazon Buyers don’t know when it will disappear from their Coupon Homepage, inciting scarcity, and encouraging a purchase sooner in order to use the discount. But might also be a bad thing if the buyer wants to be able to use the coupon at a later date, who then might complain to the seller about it becoming unavailable.
Target Your Coupons
Overall, the coupon looks to be more and more attractive as we peel away the layers. For instance, Seller Central recommends targeting your audience effectively to increase your conversions on each coupon campaign. When you try and strategically target your audience with a coupon, you are trying to increase the people that will redeem the coupon immediately. This will help alleviate clipping fee-related costs.
Your best interest is to target people who have purchased similar products, or you think are within your demographic. Since your budget is going to be dependent upon who clipped and redeemed your coupon, it helps if the number who purchased was higher than those who may have just clipped and saved for later. As we all know, you can cut a physical coupon out of the paper, but it may live in your wallet until its expiration date.
Some of the creative ways you can optimize this service is to target coupons to buyers:
- who purchased a complementary or compatible product
- who did or did not purchase a certain item from you in the past
- who purchased a competitor's product
Will this new feature wipe out Coupon Services?
We don't think so. Running promotions through Social media will still be an important way of driving sales. We believe that techniques for list building and audience building outside of the Amazon eco-system will be far more valuable for sellers in terms of getting repeat customers and owning their customer base, instead of losing this ability completely to Amazon. As we all know, sellers will constantly be pushed by Amazon to offer lower prices and get thinner and thinner margins. And then, there is always the danger of being suspended.
If you are running promotions outside of Amazon, we encourage you to check out Efficient Era's new "Promotions Tracker" tool that helps you keep track of orders that resulted from each promotion and measure the effectiveness of your campaigns. While this is such a critical feature, Amazon does not provide these numbers.
Like all new Amazon initiatives for driving more sales, it might be better to approach this new service with a level of healthy scepticism. It won't be surprising if after reaching a certain early adoption momentum, it becomes the "new normal" and lose its charm.
So, what can you expect with the new coupon feature regarding your return on investment? The more results keep coming back from other sellers, the more we have an idea of how well these coupons are doing, but so far, it seems as if the coupons have a pretty high CTR. This may also be because of the ‘newness’ of these coupons. It is also worth mentioning that not all products being sold on Amazon are going to be eligible for the coupon feature. While this is a drawback for some, most are seeing some excellent results.