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

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.

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.

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.

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]

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]

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]

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.

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.

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.

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]

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