Ep 470: Why Amazon’s Badges Can Make or Break Your Sales Strategy | AKNF

Summary

DTC Podcast Episode Summary: Ep 470 - Why Amazon’s Badges Can Make or Break Your Sales Strategy | AKNF

Release Date: January 3, 2025
Host: DTC Newsletter and Podcast

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1. Episode Introduction

In Episode 470 of the DTC Podcast, the hosts delve into the critical role Amazon’s deal badges play in shaping the sales strategies of direct-to-consumer (DTC) ecommerce brands. The discussion is anchored around the recent Black Friday Cyber Monday (BFCM) sales performance, strategies for leveraging Amazon’s promotional tools, and insights into post-holiday campaign adjustments.

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2. Black Friday Cyber Monday Performance Overview

Rob opens the conversation by reflecting on the success of the recent BFCM period, which extended to a "Turkey 12" sales event on Amazon. He shares impressive statistics, highlighting robust sales results:

• “We saw pretty strong results across that period, which was exciting. Some brands didn't see big lifts, but those brands either weren't able to leverage discounting to their full ability...” [00:00]

• Notably, one client experienced a staggering 246% year-over-year (YoY) increase, while another doubled their previous best day in revenue twice during the period. These figures underscore the potential magnitude of effective promotional strategies during peak shopping seasons.

However, not all brands reaped similar benefits. Rob points out that some brands struggled due to missed opportunities in leveraging discounts fully or faced inventory constraints, limiting their ability to capitalize on the sales surge.

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3. The Significance of Amazon's Deal Badges

Clifford takes the lead in unpacking the mechanics behind Amazon’s deal badges, which are pivotal for visibility and sales during major sales events like BFCM.

• “There is a big bright red Black Friday deal badge that a listing gets when it is properly discounted for Black Friday... It switches to a Cyber Monday deal badge as soon as Saturday morning hits.” [05:21]

These badges not only signify a promotion but also enhance the product’s visibility by featuring them prominently in Amazon’s search results and deal pages. Clifford emphasizes that securing these badges is essential for standing out amidst intense competition.

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4. Strategies for Securing Deal Badges

The conversation delves into the various methods brands can employ to attain these coveted badges:

• Deal Types: Brands can choose from several promotional strategies such as sale prices, coupons, buy-one-get-one offers, and Amazon-specific paid promotions like Prime Exclusive Discounts and Lightning Deals.

• Eligibility Requirements: Only top-selling products within their categories are typically eligible for the most prominent deals. Clifford notes, “Only certain amounts of products within each category are eligible for deals... they have to be a top seller within your category.” [05:21]

• Scheduling and Execution: Promotions must be meticulously planned and scheduled well in advance—often two months prior—to ensure compliance with Amazon’s guidelines and to secure the appropriate deal badges.

Failure to correctly implement these strategies often results in listings missing out on the deal badges, leading to reduced visibility and sales. Clifford warns, “You would be shocked by how many brands we see around us that are on sale but they don't have the badge on these days because they ran their sale wrong.” [08:20]

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5. Impact on Advertising Costs and Competition

With the acquisition of deal badges comes heightened competition, significantly affecting advertising dynamics:

• Increased CPCs: The presence of deal badges intensifies competition, driving up the cost-per-click (CPC) for ads. Clifford explains, “Cost per clicks are so much higher. Especially like bidding against Amazon... cost per clicks will rise substantially as soon as that deal goes live.” [10:35]

• Advertising Strategy Adjustments: Brands must be prepared to adjust their advertising bids and budgets proactively to maintain competitiveness without overspending. Clifford highlights the pitfalls of automated bidding systems that may not respond swiftly to changing market conditions, potentially leading to overspending or missed opportunities. “Automation is going to raise your bids and raising like continually raising things and it's the worst decision you could be making...” [14:35]

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6. Post-Holiday Campaign Strategies

Transitioning from the holiday rush, the hosts discuss strategies for maintaining momentum into the New Year:

• Christmas Campaigns: Rob emphasizes the importance of monitoring listings for shipping badges that indicate delivery schedules around Christmas. Adjusting ad campaigns promptly based on these badges can prevent unnecessary ad spend during periods of low sales activity. “We're just making sure that paying attention to that for all our brands and when it switches, being sure to be quick on adjusting ad campaigns...” [11:49]

• New Year Initiatives: Aligning product content with "New Year, New You" themes presents significant opportunities, especially for health-oriented brands. Rob suggests targeting listings with imagery and content that resonate with consumers' post-holiday resolutions, potentially capturing a surge in demand for fitness and wellness products. “From a content perspective... products that align to that sort of like New Year new you like health aspect.” [15:03]

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7. Amazon Vendor Program Insights

A segment of the discussion sheds light on Amazon’s Vendor Program, clarifying its structure and implications for brand control:

• Rob explains, “Vendor is kind of like a grocery store. So the Amazon buys your inventory but you're still have control over your listing... you're still responsible for advertising.” [17:57]

This analogy highlights the balance brands must maintain between partnership and autonomy, emphasizing that while Amazon handles inventory purchases, brands retain control over their product listings and advertising strategies.

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8. Amazon's Pricing Policies and Seller Challenges

The hosts touch upon the contentious nature of Amazon’s pricing policies and their broader impact on sellers:

• Clifford elaborates on Amazon’s mandate to maintain the lowest prices, often forcing sellers to increase prices on other platforms to comply. “Amazon's pricing policy thing where they have to be the lowest price on the Internet and if they're not, they will take away your buy box.” [18:58]

This policy creates a ripple effect, compelling sellers to adjust their pricing strategies across multiple channels, which can inadvertently lead to higher overall prices for consumers.

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9. Market Dynamics and Amazon’s Future

The conversation briefly veers into the financial standing of Amazon, discussing stock performance and regulatory influences:

• Clifford speculates on Amazon’s stock trajectory in light of leadership changes at the Federal Trade Commission (FTC), suggesting that reduced regulatory pressure could positively affect Amazon’s market performance. “With her gone, there's a lot less heat on Amazon from the FTC.” [21:38]

However, the hosts advise caution, noting the volatile nature of stock investments and the influence of external factors like tariffs on Amazon's ecosystem.

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10. Conclusion

Wrapping up the episode, the hosts reiterate the pivotal role of Amazon’s deal badges in shaping sales strategies and emphasize the necessity for brands to meticulously plan and execute their promotional campaigns. They encourage listeners to stay vigilant and adaptive in their advertising approaches to harness the full potential of major sales events.

Notable Quotes:

• “Only some of those give you those badges that give you the Black Friday deal badge or the Cyber Monday deal badge.” — Clifford [05:21]

• “You would be shocked by how many brands we see around us that are on sale but they don't have the badge on these days because they ran their sale wrong.” — Clifford [08:20]

• “Automation is going to raise your bids and raising like continually raising things and it's the worst decision you could be making...” — Clifford [14:35]

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For more tactical insights and detailed discussions, subscribe to the DTC Newsletter or tune into the next episode of the DTC Podcast.

Transcript

[Rob]

Great Black Friday Cyber Monday we had Turkey 12 this year so Amazon's extended sales so we saw pretty strong results across that period, which was exciting. Some brands didn't see big lifts, but those brands either weren't able to leverage.

[Clifford]

There is a big bright red Black Friday deal badge that a listing gets when it is properly discounted for Black Friday. That badge switches to a Cyber Monday deal badge as soon as Saturday morning hits. Getting those badges is the entire template.

[Rob]

Pole event winner we had multiple clients up over 100% year over year. One client up 246% year over year. We had another brand that doubled their previous best day in revenue twice over the period, which was pretty fun.

[Eric]

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[Rob]

Yeah. So I mean this is the first time we're talking again since pre Black Friday. I think the last time we talked was like we were just in the lit up so we could do a quick summary of sort of like Black Friday results and then shift into what worked and what didn't, which would be applicable to kind of sale days coming up in the new year here and then we can. It was going to talk Q5, but Q5 is going to have already happened so maybe we focus on Q1 then.

[Eric]

Cool. Well, dive in.

[Rob]

Clever. Do you want to kick off Black Friday? You want me to dive in first?

[Eric]

High level. What's. Yeah, what's our. What's our vibes on Black Friday?

[Clifford]

I think I'll let Rob talk about some of our successes and failures and they'll kind of dig into like what drove it.

[Rob]

Yeah, high level. Great period. Great Black Friday Cyber Monday. We had Turkey 12 this year. So Amazon's extended sales T12, T12 even. Yeah, good old T12. So we saw pretty strong results across that period, which was exciting. Some brands didn't see big lifts, but those brands either weren't able to leverage discounting to their full ability and maybe it was inventory constraints. So to the best of their ability we did what we could, but for the most part brands that were able to take advantage of the deals and run for that period saw really strong results. We had multiple clients up over 100% year over year, one client up 246% year over year. We had another brand that doubled their previous best day in revenue twice over the period. Yeah. So strong results.

[Eric]

Were there any brands that didn't pop and what were the. What was the reason for that?

[Rob]

Yeah, there was two that didn't and they were constrained going into it with regards to. We actually started in November with those brands. So there was some issues in terms of being eligible for discounts, like products being restricted for discounts that due to seller feedback, ratings or I forget what the second one was. But our hands were essentially tied from a what we could do aspect. So we went into different deal types and pushed ads as much as we could. But having just kicked off in November, we couldn't really leverage it to the full potential.

[Eric]

Still start early, folks. Yeah, join Pilothouse early. Right, Clifford, what are your keen observations?

[Clifford]

Yeah, the biggest is there is a big bright red Black Friday deal badge that a listing gets when it is properly discounted for Black Friday or for 212 in this case. That badge switches to a Cyber Monday deal badge as soon as Saturday morning hits. But it has to be done properly. And what I mean by that is there is a lot of ways to put your product on sale on Amazon. You can just go into an individual listing and you can change the price. You can put it in as a. There's like a. Your price section which is the typical. Just how you set your price. There's a sale price section in your listing where you could just do a sale price. You could have that time limited. You can run coupons, you can run promotions which are. These are all different things inside Amazon. So using the very specific terminology that Amazon uses, you can use promotions which is like buy one, get one, buy one, get one 20% off type of thing or coupon codes in promotions as well. You can run deals which are specifically paid promotions through Amazon where your product is on deal for possibly the entirety of T12 or a lightning deal where it's only on deal for like a 12 hour window somewhere within T12 and they choose that window. Or you run a prime exclusive discount, which is a discount specifically only for prime members, usually has again some minimums around it. Each of these have certain different minimums around them except sale price. You can do whatever you want to your product. So all that to say only some of those give you those badges that give you the Black Friday deal badge or the Cyber Monday deal badge. And specifically two so deals themselves. So those ones that you pay Amazon for and you pay them more on event days. I think it was up to $1,000 if you wanted to run the full T12 deal. And only a certain amount of products within each category are eligible for deals. So typically you kind of have to be a top seller within your category to be able to be one that's eligible for the full T12 deal thing. I think we had one or two brands that were eligible for the full T12 deal in that those get a ton of attention. They get you on special deal pages. They're fantastic. If you're eligible, those are almost always worth running. Then there's lightning deals, those are open to a few more brands. Again, all these have to be scheduled like months ahead of time. It's like two months before the deadlines for these. They're a little bit cheaper, but they only run for 12 hours. They also give you the badge, but again only for 12 hours. Then there's everyone else who you're not eligible for those deals or you want to run something for the full 12 days. That's when you run your Prime Exclusive Discount. Prime Exclusive discounts have their own requirements. Typically it's about 20% off. It's a very standard Amazon number. It seems to be the case for almost every big tentpole event they run. But you have to schedule those. You can schedule them literally the day of doesn't really matter, but you have to specifically go in the Prime Exclusive discount portal in there, click the button that says for Black Friday, Cyber Monday. I'm very explicit about this because you would be shocked by how many brands we see around us that are on sale but they don't have the badge on these days because they ran their sale wrong. And then you literally get filtered out of search results or people just don't look at your stuff because you don't have the big Black Friday deal badge. So literally go into the Prime Exclusive Discounts tab, check the box that says for Black Friday or for Cyber Monday or For all of T12, put in your products. And then after you do it, it tells you if it's going to run, it'll say like suppressed or there's some error or if it's scheduled and it's going to run like give it a minute, refresh it 24 hours later or whatever. If you're scheduling ahead of time, make sure it all looks good and then it'll run, it's fine. And if something goes wrong day of you can go in there and fix things usually. But those getting those badges and not is the entire day like tentpole event.

[Eric]

I believe it.

[Clifford]

If you don't have them, you're like literally it's like probably cut your spend, like barely advertise because you're gonna get slaughtered because everyone around you is going to have that badge and people just.

[Eric]

Visually filter by that. Yeah, yeah. And then the brands that you were fully loaded up for, loaded to bear with the, with the proper deals and the right run Runway and everything, those ones saw exponential benefit from from having the badge from being placed favorably in Amazon's algorithm.

[Clifford]

Yeah, it's. It is night and day difference of especially with the way this worked where it was the 12 days, it was like a week, a week and a day earlier than Black Friday. That first day of T12. Big spike in sales for a lot of brands. Not as big as Black Friday typically is, of course, but a big spike in sales for all the brands that had that badge that day and the brands that didn't. It looked like the day before, if not even worse than the day before, depending on the brand.

[Eric]

Costs are so far up. So much more competition.

[Clifford]

Yeah, so exactly. Yeah. Cost per clicks are so much higher. Especially like bidding against Amazon. Inside the ad side has a suggested bid for events. And if you. I don't know how many people are doing this. We don't do it. But if competing advertisers are allowing Amazon to just up your bid for the holiday, which is an option, then cost per clicks will rise substantially as soon as that deal goes live, because Amazon will rise those prices immediately.

[Eric]

That section is called Bezos Take the Wheel. When you allow them literally. That's what we might call that. We might call this podcast Bezos Take the Wheel. Or you do need the stinking badges that we might call it that as well. Okay, so we. Sounds like it crushed anything else on Black Friday or we want to move into Happy New Year and New Year new you on Amazon.

[Rob]

I think that covers Black Friday.

[Eric]

Okay.

[Rob]

Excited to see what. What happens next year, of course. And just kind of use these learnings for. For that.

[Eric]

For Prime Day. I was just looking. Prime days in July Looks like July 23rd is what they're estimating based on the constellations.

[Rob]

That's the current guess. Yeah. Very good chat.

[Eric]

GPT wins again.

[Rob]

Nice. Yeah, so I mean, maybe chat briefly like just like Christmas campaigns because maybe kind of reflecting on how that that went and for your brands. Right now we're just really focused on like watching for that arrives before Christmas badge on our listings changing to like delivers after Christmas. Amazon's very prominent about that. So this time of year with all the gifting going on, we're just making sure that paying attention to that for all our brands and when it switches, being sure to be quick on adjusting ad campaigns where necessary, so reducing bids, budgets, understanding like the. The sales drop off just because we don't want to spend unnecessary money there. Once people kind of stop shopping, then the same goes for like Q5 period. This is a time where people are at home shopping. It's not as big of a push on Amazon as it might be for. For other channels. That said, important to monitor that period because you might see an uptick of sales happen or purchases. So just being mindful of your campaigns and not just like letting Bezos Take the wheel for from like the 21st through to the new year. Like pay attention. Like there's some, probably some opportunity there. If you're, you're in there adjusting and making changes versus while everyone else is kind of letting Bezos take the wheel.

[Eric]

There's a lot of people scrolling around their families. Probably going to try to put my phone away this year on a personal note, we'll see if that works. But so yeah, so there's that opportunity there.

[Rob]

Yeah. And it's also just an opportunity to make sure you stay like within, stay efficient because there might be some, maybe you forgot to cut some things going into Christmas and they're now overspending. Like we just want to be mindful that it's a, it's a time where things can easily get missed if you're not paying attention. So definitely get in there and make someone, make sure someone's paying attention to it at least.

[Clifford]

Especially a lot of Amazon advertising happens through automated software that controls a lot of the bidding. Like I would say probably 40, 50% of the website's ads that are there are being controlled by some sort of automated bidding. We use some automated bidding as well. A lot of manual intervention, but still some automated bidding. And keeping in mind that automation does a really bad job of handling this type of switch off where you have huge conversion rates, very strong results for weeks in the beginning of December and then suddenly really bad because automation is going to look at those past two, three weeks and it's going to be raising your bids and raising like continually raising things and it's the worst decision you could be making on, you know, December 27th is probably not a great time to be drastically raising your bid above where it was on December 12th because it's looking at past performance to drive those bid increases. And most bidding software, if not all bidding software is going to work on some sort of 7 day, 14 day, 30 day window and it's going to look back at that very favorably. So it's not a, a lot of those are not quick to adjust. You have to be a lot of manual intervention to happen basically as Rob said right as you get that arrives after Christmas, it's like it's time to butcher some bids.

[Eric]

Nice. And then into near. Is there anything new year new you that you guys sort of take advantage of in the new year for beat the January blahs primarily I would say.

[Rob]

From a content perspective. So for products that align to that sort of like New Year new you like health aspect. So in the supplement world or fitness Space, uh, there's an opportunity to, whether it's listing images, content, targeting some sponsored brand headlines or imagery towards that sort of angle, I would say that's the biggest opportunity you're going to see. Brands in the space probably get well traffic increase. So then competition is going to increase because bids will go up. More people are kind of getting aggressive after it. But primarily I would say content perspective. I don't know if Clifford, if you.

[Clifford]

Compare it to like obviously January's big gym membership month, it's not too different in the supplement space where we definitely see that. I don't know if we've historically seen CPCs get that much larger in the space, but there is some very clear like more aggressive advertising that happens around supplements or healthier products and whatnot in January because there is such a huge pool of new customer acquisition to grab and of course a lot of people's budgets are resetting at the beginning of the year. Like now's the time to spend to grab those new customers who could be subscribers for the rest of the year. And so there's like a lot of competition for products that are get someone in the first time and they'll subscribe for the rest of the year type of thing. Most of that supplements. But that can even get into like a lot of different products with accessories and things like that.

[Rob]

That's a really good point. We'll just remind me of we're managing a fairly prominent non alcoholic drink brand this year and the expectation, at least my expectation is we're going to see a spike in that in January because like generally like dry January, people trying to take a month off, especially after holidays. So if we see a, a spike there and lean into subscriptions then potentially we can actually like have a fairly large recognized revenue over the year from just an acquisition in like Q1 by leveraging that sort of dull the opportunity there. So really curious to see how that plays out this year.

[Eric]

Super cool. Speaking of letting Bezos take the wheel, I was talking with my favorite brand, Bio Steel Dan Crosby, who's going to be one of our first episodes of the new year as well. And he, he explained to me about how he's in their vendor program and I haven't, you know, we obviously if they're, if they're working with Pilot House, they're not in the vendor program because that's the program where they basically buy it from you and take over every aspect of the listing and the, and the distribution sort of like you guys probably don't like the vendor Program because it takes away clients.

[Rob]

No, we, we manage vendor brands.

[Eric]

Oh, you mean venture. Explain how that works.

[Rob]

Yeah, so vendor is kind of like a grocery store. So the Amazon buys your inventory but you're still have control over your listing. From a creative perspective, you're still responsible for advertising. There's.

[Eric]

Is there a program above vendor that where you're not responsible for advertising?

[Rob]

No, not to my knowledge.

[Eric]

Oh, interesting. Okay, maybe I misunderstood.

[Rob]

Yeah, so you don't have to advertise, but if you spend on advertising then you drive sales and then Amazon orders more positive. So you're trying to just continue to get Amazon to, to buy inventory. So similar as a grocery store is like grocery store can just buy stuff but if you want to fund a promotion or get end cap or pay for a particular placement like that's the relationship with, with Amazon in the vendor side.

[Eric]

Nice. No, nothing else. Bezos on the news. I guess we've mentioned him and Lord Bezos enough times today. I've heard, I heard some hot take in that he might take, take the reins back in 2025.

[Clifford]

I think people want him to because. So there's a lot of, there's, I mean there's always a lot of seller animosity towards Amazon because Amazon very heavily puts customer first. I'll say that lightly. A big, a big, big topic that comes up all the time is Amazon's pricing policy thing where they have to be the lowest price on the Internet and if they're not, they will take away your buy box. We've talked about it I think on the podcast before. But that causes a lot of sellers to then need to raise their prices on other sites so that Amazon can continue to be the lowest. So there is an argument that it actually hurts the customers in the long run because yes, Amazon's the lowest, but now they have to raise prices across the board to maintain Amazon being that low because they'd rather price Amazon a little bit higher to make up for fees and whatnot. And so a lot of people think that should be not allowed. And there's a lot of animosity towards Amazon for that exact policy which is.

[Rob]

I mean interesting from the like from the consumer perspective you can almost just the based on the hold that Amazon has on a consumer, both from a trust standpoint, an easy return standpoint, a fast delivery standpoint, you're almost willing to pay a premium for that. Like if it's a 10, 15% difference on a lower price product, maybe from a consumer you're like, hey, I'd Rather just buy it from Amazon. It's so easy and it's free shipping that that would be fine. But Amazon doesn't want to do that because they're like, no, we have to be the lowest price.

[Clifford]

And from, from an Amazon perspective as well, they sell so much of every item that it doesn't really matter. Like in your BioSteel example, if, if BioSteel is cheaper on their own website than they are on Amazon, Amazon takes away their buy box. In Amazon's eyes, If someone searches BioSteel, they'll just buy one of BioSteel's competitors from Amazon. If BioSteel doesn't have the buy box, that's Amazon's perspective. So they're like, well, end of the day, we're going to make the money, so we don't really care if you don't want to price lower. Oh, well, here's your competitor right beside you ready to price lower.

[Rob]

Reminds me, I need to buy more BioSteel. I'm almost out.

[Eric]

Yeah. Oh, nice. All right, we're becoming the fully unofficial New Year question. I know you're not financial experts. Is Amazon still a good buy? In your personal opinions, are we allowed to talk about that? With the FTC coming down on us?

[Rob]

I'm just going to hold.

[Clifford]

Okay. So with the incoming Trump administration, they've made the announcement just this last week that they're replacing Lina Khan at the ftc, which I think is why Amazon stock went up like 4 or 5% in a week, is because now they're like, well, all those lawsuits from the FTC might suddenly go away soon.

[Eric]

So I'm sorry, is she from Amazon? Is she from Amazon or something? What's the connection with that particular person?

[Clifford]

Head of the ftc, and she's been very anti Amazon and trying to go after them for a lot of these policies that are suspected to be anti consumer and things like that. And so the thought process is, with her gone, there's a lot less heat on Amazon from the ftc. That said, their stock's gone up a lot in the last, like, month, two months. I don't know if it's a great buy anymore. It might be time to sell.

[Rob]

I don't know.

[Clifford]

It's a little sketch. It's a little. It's pretty high up. It's doing like really well. And now I'm like, ah, is there room for it to go higher? I don't know.

[Eric]

We just got to see how tariffs play out too, I guess. Right? Like, that could be a huge ecosystem shock. If it. If, you know, it goes through as planned. So I think. Yeah, definitely. Maybe wait for. See how that gets digested.

[Rob]

Yeah. Buy a few options for insurance purposes, you know.

[Eric]

Nice.

[Rob]

Not financial advice.

[Eric]

Okay. I'm just all in on Bitcoin and Ripple right now, so let's. Let's go. All right. Let's. Happy New Year, and I look forward to talking with you guys again soon.

[Rob]

Awesome. Happy New Year.

[Clifford]

Thanks, Eric.

[Eric]

Thanks for listening to today's episode. If you're not getting the D2C newsletter, you can subscribe for free at directtoconsumer. Co. And if you want to learn more about Pilothouse's all killer no filler services, take off to Pilothouse Co. I'm Eric Dick, and this has been the DTC podcast. We'll see you next time.