Are Amazon Lightning Deals for You? What to Consider Before You Jump In (Part 2)

In our last post on Lightning Deals, we discussed what they are, how to create one, and the pros and cons of doing so. Today we’ll look more closely at what you should consider before taking the leap, and why Lightning Deals are worth a test run for your products. And to illustrate the benefits of a successful Lightning Deal, we’ll also show you some real results from a Bobsled Marketing client.

Are Amazon Lightning Deals for You? What to Consider Before Jumping In

 

WHAT TO CONSIDER BEFORE USING LIGHTNING DEALS FOR YOUR PRODUCTS

 

1. There is a fee.

For every new product or parent SKU you submit for a Lightning Deal, you’ll be required to pay an associated fee; typically, you can expect to pay $150, but this fee varies based on the marketplace and on the week (running from Monday to Sunday) that you choose to run the deal.

 

2. You can’t choose exactly when your deal will run.

While you can select the week you run your deal (within a seven-day window), you can't select the specific date or time that Amazon will feature it. Your deal will be shown on the Amazon Deals page for only a limited time--typically a 4-6 hour time window--but the exact time and day is determined solely by Amazon. This is a key consideration, as the time frame you are assigned can have a huge impact on the sales you see. For example, if your deal runs in the middle of the night, you may see fewer sales than if your deal was featured during peak shopping hours. However, as soon as your deals have been submitted and accepted by Amazon, you’ll be told what hours it will run so that you can anticipate the impact it will have on your potential sales and plan accordingly.

 

3. Your products have to meet the eligibility criteria.

Not all products in your catalog are necessarily eligible for lightning deals. The key eligibility requirements are:

  • Your product must have a minimum rating of 3 stars.
  • Your product must be Fulfilled By Amazon (FBA) or Seller Fulfilled Prime (SFP).

 

4. You need to submit a certain percentage of your product’s variations.

If one variation of your product is eligible for a Lightning Deal, but you have several variations (such as a sweater available in several color options), you will have to submit a certain percentage of these variations for the deal to run. The threshold varies, but you will likely need to submit about 70% of your variations; in other words, if your sweater is available in four colors, you’ll need to submit at least 3 of the 4 for the Lightning Deal to be accepted. This is an important consideration because this means you will have to do extra work to prep those additional variations to be included.

 

5. Amazon sets the maximum deal price.

Amazon sets the maximum price that you can charge for your deal. You can expect this to be at least 15% off your regular list price. You can offer your product at a value below the defined maximum for the deal, but not above it. When selecting a price, it’s important that you determine your likely Lightning Deal sales, while subtracting the Lightning Deal fee and any tax or shipping costs (shipping costs would apply to Seller Fulfilled Prime accounts).  

 

6. You have to forecast inventory.

Amazon will set a minimum deal quantity, and you must have this quantity in FBA warehouses  seven days before the deal runs. In order to be prepared with adequate inventory, you need to forecast accurately. This forecast should take into account the minimum quantity required to run the Lightning Deal, as well as inventory to cover organic sales before, during, and after the deal runs. If your Lightning Deals are a huge success and you stock out, you could lose up to two weeks of sales getting replenishment inventory into FBA warehouses.

 

7. You have to act fast.

Amazon’s algorithm searches the database for suitable Lightning Deal products every week. This means the deal recommendations can change every week, so if you plan to submit a deal, you have to act quickly and determine whether you can meet the eligibility requirements and submit the deal before Amazon changes the deal term. A change in the deal term could mean that the quantity, product, price and time window has changed. To avoid chasing your tail and to make the best use of your time, check the Lightning Deals frequently (under the Advertising tab).

 

8. Optimize your listings.

Ensure your product pages are fully optimized before you submit them for Lightning Deals. This will increase conversions and sales. For guidance on this, see our blog post entitled "3 Ways to Optimize your Product Listings for Amazon’s Search and Ranking Algorithm in 2017".

Amazon Lightning Deals: Do they live up to the hype?

 

Okay, so why should I bother with Lightning Deals?

Despite the rather long list of checks and balances to follow before submitting a Lightning Deal, they do have some very attractive benefits. Here are four compelling reasons to take advantage of them:

  • Great way to get your product found: The Amazon Deals page attracts a lot of traffic! If you’re a relatively new seller on Amazon, Lightning Deals are a great way to get yourself out there, expose your product to a larger audience, and promote brand awareness.
  • Benefit from the halo effect: Lightning Deals may only run on a portion of your catalog, but their presence on the Amazon Deals page exposes your whole catalog to potential sellers. What we’ve seen with our clients is that sales increase on non-deal items and continue to trickle in up to a month after the Lightning Deal has run--see the case study below.
  • Clear out inventory: Having excess and unwanted inventory after a popular sales period is a common problem, but Lightning Deals can help move inventory quickly and make room for a new season’s items.
  • Find out if they work for your brand: As the saying goes, “you never know until you try.” If your margins can support them, we recommend trying Lightning Deals and evaluating their performance. If they’re a hit, you can implement the winning strategies for the next round.

 

How we implement Lightning Deals: a case study from a real Bobsled Marketing client

We recently ran Lightning Deals for three different products for one of our clients. The deals ran on the 9th and 10th of February 2017. The times of the deals are noted below:

Deal 1: Feb 9 1:10 AM PST - 7:10 AM PST 

Deal 2: Feb 9 6:25 AM PST - 12:25 PM PST

Deal 3: Feb 10 6:00 AM PST - 12:00 PM PST

As you can see from the sales data below, product sales were up 60% the week of the Lightning  following the deals.

bobsled marketing Lightning Deals Part 2 Are They Worth It.png

 

Will Lightning Deals work for you?

There’s only one way to find out! Follow our advice to help you determine if Amazon’s Lightning Deals might be a good choice for your products. If you missed the first part of our Lightning Deals discussion, read it here to learn more about how Lightning Deals really work. Still not sure? Request a consultation with us here and let us help you decide.