Once again, it is Christmas in July! Unlike most holidays, however, you won’t be celebrating with your family eating turkey and dressing. Instead, if you are anything like us you will be fervently glued to your computer screen, pushing the refresh key, and furiously pumping your fist with the insane amount of sales that are taking place.
(That is our process, anyway. Don’t judge!)
The very first ever Prime Day was two years ago. There were a lot of things that went right, and a lot that went wrong. There was much criticism from the customer side that the deals weren’t very impressive. As a seller, I can tell you that it DID NOT affect our sales in any negative way. In fact, around that time in particular we were averaging around $10k/ day in sales. On Prime Day that year, we did over $30k in sales. Then, the second Prime Day was also not a disappointment. Our sales were about 50% higher than usual, but our inventory was significantly more stacked with day-to-day (like food and health and wellness products) items as opposed to more destination items like toys and shoes.
One of the concepts that truly applies here is “a rising tide raises all boats.” On Prime Day, Amazon gets so many customers on their website that whether you sell the hottest product or Christmas lights, your sales will likely see a sizeable jump.
So, from a seller’s perspective, Prime Day was a complete success both years. To be honest, we were WELL underprepared the first year (even though our inventory was more suited for it), as Prime Day exceeded all expectations. It was almost like a second Black Friday for our company! One point you have to realize is it doesn’t matter what you sell, or if you have any of the Lightning Deals being advertised. Our sales increase was with no Lightning Deals, and with standard run-of-the-mill products!
So, regardless of what you sell, or if you are offering Lightning Deals on that day, Prime Day can have a huge impact on your company. My goal with this article is to help you prepare for Prime Day, and give you the best opportunity possible to succeed.
I want to preface this topic with the fact there are definitely multiple schools of thought on this subject. I will try to address it from several angles, so hopefully, you can apply it to your business and model.
In terms of selling the most product on Prime Day; if that is your goal, and your business operates on liquidity, then you will ultimately want to be competitive in your pricing. Our company is based around liquidity and likewise wants to move as many units as possible of various products, so our prices will be competitive come Prime Day.
(TIP #1) To maximize unit sales, price competitively. Particularly look at this approach if you have price flexibility and are looking to move a lot of units of a product.
If you are an RA, OA, or thrift-based seller, this approach may not be best for you. In those instances, you should look to maximize profits. I realize this thought may be commonplace, but I wanted to make it here.
The more your business is volume-oriented, the more you can work on lower margins. Conversely, the less volume-oriented your business is, the more important it is to seek higher gross margins.
Scale minimizes the amount of distance between Gross and Net margins through efficiency. This is particularly true in processing and shipping.
The following suggestion may be more realistic if you are operating at less scale. Again, you have to realize there will be a HUGE amount of sales taking place on Amazon during Prime Day. You can prepare for that and look at opportunities to increase your margins by finding products with good volume, where there is not a sufficient number of units in stock to meet the expanded demand.
For example, if a product ordinarily sells 25x a day, and the lowest Prime price is $15, but that seller has 54 units in stock, and the next price is $18. It is reasonable to assume with a 3x increase that the seller with 54 units will sell out, and you can easily sell your units at $18.
This is an incredibly simplistic example to point out you can start looking at your inventory now and looking for opportunities where there is a gap in pricing. You can expect if you are priced in the second position, or in a position of realistic expectation, you can garner extra profits on the items you sell.
(TIP #2) If you are looking to move fewer units, and make additional money from the sale of those units, look for opportunities where gaps may occur, and price to take advantage of those gaps in the market.
Another strategy you can examine as a possibility in your business is sacrificing sales on Prime Day to get more sales vs. the depleted inventories *after* Prime Day. People will move a lot of units, and there will certainly be opportunities to maximize profits after Prime day for one or two days (on some products). I suggest using caution here, as this window will be smaller than in Q4, and hard to hit. Also, the opportunity may be hard to spot.
Either way, you should REALLY examine your pricing before Prime Day and develop a plan that works best for your business.
Make a plan… Execute your plan!
2) Arbitrage Opportunities and AZ to AZ Flips
Prime Day will clearly be wrought with opportunity as a seller on Amazon. Lots of people will come and join the festivities, and as we know this going to help all of us make more money!
So, being a seller on Prime Day will be a great time. I promise you will see MORE sales screenshots on that day from various sellers than most other days of the year. Why? Because people will be happy and wanting to celebrate! If this isn’t your thing, I would suggest not looking at Facebook during Prime Day and for a couple of days afterward.
Now, the next pillar of Prime Day is all of the opportunities as a buyer, and there will be plenty!
If you are doing Amazon to Amazon Flips on Prime Day, make sure that you mind Amazon’s rules about buying Lightning Deals, using a Prime Account to buy for resale, and quantity limits. It’s simple, no deal is worth losing your account. I am not here to spout Amazon policy.
Read it, follow it!
However, on Prime Day, you should notice a plethora of deals outside of Amazon! That’s right, folks, the whole eCommerce world should be a big bowl of gravy. Companies are competitive. They want to win. So, many companies will be matching Amazon’s crazy awesome deals, as well as be adding deals of their own.
To take advantage of some of these opportunities, you should start following the social media accounts of other retailers, signing up for their newsletters, and visiting their sites for any announcements. These sites will likely have tons of opportunities.
On Prime Day, as deals get announced, check other retailers for similar products and sales. This is important, it may be MORE beneficial to purchase the same deals from other retailers, as they may have looser quantity limitations than you might find on Amazon.
3) Shipping & Stocking Your Inventory
I realize that the hour is upon us. However, right now is when serious money can be made. Before huge events like Prime Day or Q4 Peak season, it is important that you get as much inventory into Amazon as possible.
When lots of people are shopping it generally means that you are more likely to sell your inventory. Now, in terms of sales increases, those will vary based on items. If your inventory is more destination-based you may move 3x+ the amount of inventory that you might move on other days. Whereas, if your inventory is day to day need-based, then you may move 50% more.
Either way, you are likely to see an increase in sales (but this ONLY happens if you have the inventory to support it).
(TIP #3) If you are loading for Prime Day, we suggest using parcel shipping (like UPS or FedEx) to prevent problems with long receiving times associated with freight shipping. There could be nothing worse than sending in extra items for Prime Day only to watch them not get received.
The heavy increase in sales will also create other opportunities. For example, as things sell out on Prime Day, there will be replenishment opportunities for people who can send in items immediately following Prime Day, where they can get high prices on sold out or low inventory products.
(TIP #4) Watch out for product opportunities for products that sell out on Prime Day!
My goal with writing this article is to help you prepare to take advantage of a HUGE opportunity with Prime Day, as well as give you some insight into how we plan to navigate and prepare for it. I sincerely hope that you found something useful, and something that will make you extra money.
Be excited…Christmas is coming!