Maybe you’ve already noticed the change to the money-off promotion in your Seller Central account: Clicking on the dropdown list for ‘buyer gets’, i.e. specifying the type of discount, only gives you the option to give a percent off their purchase. Sellers can no longer offer a certain Dollar amount off a purchase.
Why is this change so important for sellers? Let’s explain that by reexamining the basics of how Money-Off and Percent-Off promotions work on Amazon.
How Do Amazon Money-Off Promotions Work?
Hence the name, these kind of promotions you create in Seller Central offer a certain amount of Dollars off a buyer’s purchase. So if the new product you want to launch costs $20, and you offer a Money-Off promotion for $20, you’re essentially giving away that product for free. This was the case up until recently, when Amazon cracked down on product testers receiving free products in exchange for reviews.
Related article: Amazon Cracks Down on Incentivized Reviews
But here’s the important part: Money off a buyer’s purchase is money off the entire purchase of the specified products, not each product. So, for example, if the buyer places 2 items in her shopping cart, each costing $20, the Money-Off promotion only applies once for the entire value of the qualifying items. So the shopper’s total will be $20 x 2 = $40. Now, subtract the promotional discount: $40 – $20 = $20.
With the Money-Off promotion, you’re only giving away one product for free.
How Do Amazon Percent-Off Promotions Work?
Percent-Off promotions created in Seller Central are different in that they are dependent on purchase value – thereby being applicable to all products that qualify for the promotion. So in keeping with the example above, if you offer 99% off (the highest Percent-Off promotional amount that Amazon allows), the buyer will pay $0.20 for your $20 priced item.
Now, if the buyer places 2 items in her shopping cart, each costing $20, then the Percent-Off promotion will be applied to all qualifying items: $20 x 2 = $40 x (-99%) = $0.40. She’ll only pay a total of 40 cents for both items.
Percent-Off Promotions Leave You with Less Control of Your Inventory
You can easily see the danger in giving away these kinds of Percent-Off coupon codes. One buyer might purchase your entire inventory for pennies on the Dollar. In order to still run Percent-Off promotions on Amazon but ensure that you won’t take a huge loss, we cover 3 tips below which might be helpful for you depending on how you sell on Amazon:
- Limiting Purchase Quantity per Order (only possible in some categories)
- Claim Code Types
- Changing Inventory Levels (only for FBM)
1. How to Limit the Quantity of Items a Buyer Purchases on Amazon
It is possible to limit the number of items a customer can purchase. However, this quantity limit is only applicable to each order (e.g. max. 10 per order, but customers can place an arbitrary number of separate orders) and to our knowledge, the quantity limit is only available in the following categories:
- Consumer Electronics
- Health & Personal Care
- Personal Care Appliances
Watch Out: Setting different tiers in the ‘Advanced Options’ of Step 1 when creating a Percent-Off promotion (see screenshot below) will NOT allow you to lower the discounts for higher quantities. This is because each additional tier of the promotion can only have a higher percentage off than the one before. For example: If a shopper buys at least one item, she gets 40% off. In the next tier if a shopper buys at least 2 items, she must get more than 40% off of the total amount (e.g. both items together).
Thus, tiers will not be useful in limiting quantities per order.
2. Using claim code types and advanced options with percent-off promotions
Single-use claim codes are a popular promotional code format used by sellers, but they are more time consuming to generate, download, unzip and then share.
Tip: Even if you use single-use claim codes for your promotion, make sure to limit the number of items a shopper can purchase in one order (if you’re able to). That way, the discount can only be applied to one order of one customer – which is the best way to minimize the risk of selling too many products with the promotional discount!
3. Changing inventory levels in Seller Central to limit promotional purchase quantity
This method is only available to FBM sellers, because FBA sellers cannot change their inventory levels once the product has been shipped to Amazon’s warehouse.
Even if you have implemented the first two methods in your Percent-Off promotion, it’s better to be safe than sorry. Amazon even recommends that sellers limit the quantity of items in a promotion by changing the inventory level available on Amazon.
If you do adjust your inventory levels, then make sure you remember how much inventory you actually have on hand when the promotion has ended, and change your stock levels back to their accurate number.
Manage Inventory Levels & More with Sellics!
How Do Amazon’s Changes to Money-Off Promotions Affect the Way Sellers Market Promotions?
As you’ve seen in the examples above, this kind of promotion can easily be applied to too many products. If you’re not careful, you could sell too many items at discount – which might hurt your bottom line if the Percent-Off discount you offer is larger than your profit margin.
But it’s not just the financial ramifications that sellers must be aware of: Marketing your promotions will change slightly, too, now that Money-Off promotions are no longer available in Seller Central.
Let’s explain how promotional marketing changes with an example: Pat sells hiking boots that normally retail at $79.99. Like any good Amazon seller, Pat also does off-Amazon marketing to increase the visibility of her listing: She has a website for branding, product details and gathering emails for the newsletter.
Pat offers a $5 off coupon for her boots on Amazon when a website visitor signs up for the newsletter. A Money-Off promotion in the amount of $5 sounds decent enough to the buyer. But, $5 off equates to only 6.25%. That number doesn’t look very attractive, as 6% or 7% seems too low. Shoppers therefore might not perceive it as a very enticing offer…. unless maybe it’s promoted on the 25th of June. (Get it? 6/25?)
Percent-Off promotions are normally offered in the amount of 10%, 25% or even 40% – and they are the most common for a reason. They are perceived as being substantial; They are easy for the shopper to understand and to calculate approximately. And in some cases, they sound like a better deal than the Dollar amount would be. (Think about 40% off a $10 item… it sounds a more enticing deal than $4 off.)
The Dollar-Off Isn’t Dead
Although sellers aren’t able to create Money-Off promotions on Amazon anymore, they can still market them as such. If, for example, $10 off your product equates to an unusual percentage, then you can simply round up to the nearest whole number and market it as money off.
Just keep in mind that the Percent-Off promotional discount will still apply to all qualifying items in the shopper’s basket.
Stay On Top of Inventory Levels, Promotional Sales, and More
This most recent change to promotions makes sense when seen as a consequence of Amazon cracking down on incentivized reviews. By no longer offering Money-Off, sellers are left vulnerable if they offer promotional codes with a high percent off (e.g. 90%) especially when issued to too many people (e.g. groups of ‘product testers’).
Amazon is constantly changing its policies and guidelines, so be sure to stay ahead of your competitors with the tips we offer here in our blog and our all-in-one tool for Amazon sellers. With features like review management and PPC optimization, you can stay on top of your entire Amazon business in just one place. Plus, you can see the breakdown of your profits on an individual product level, including cost of goods sold and promotional discounts.
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Featured image credited to Freepik