Amazon Lightning Deal 2021

Profit Whales Team on Oct 21, 2020

Amazon´s philosophy is to propel competition and encourage fair pricing amongst the sellers. The main ways to inspire customers for purchases are promotional discounts, redeemable coupons, and, of course, Lightning Deals. 

Lightning Deal is a tool to boost sales of a selected ASIN. It is used to induce the faster sale of a specified item quantity and at a certain discounted price. The fee Amazon charges for taking part in Lightning Deals is fixed, it can range from $150 to $750. How well the product is prepared for a sale is the key to gaining profit from the Lightning Deal. 

Categories and items are at https://www.amazon.com/gp/goldbox/.

 

Lightning Deals work on Amazon

From the customer’s perspective, Lightning Deal is an opportunity to get an item at a considerable discount. 

Every product on the Deal has a countdown till the end of a deal and a progress bar that tells a buyer the percentage of the inventory that has already been sold. It has a compelling effect on customers and brings up a wish to buy the product here and now because such an opportunity cannot be missed.

From the seller’s perspective, it’s like bulk selling to a drop shipper. For a fixed fee Amazon lets a dedicated number of the product, typically 100-200 units, be sold via the above-described mechanism.

Amazon.com does not guarantee any sales with the Lighting Deal´s help. All it does is give the seller a chance to benefit from it. Sellers are not allowed to pick the exact time of the Deal: the algorithm will allocate a selling window automatically and will notify about LD launching 24 hours before the start.

The famous selling platform will always take its share in form of fees and the only seller can calculate if it is profitable to participate in such promotion as Lightning Deal. To be precise, a seller can compare extra sales via Lightning Deals to the percentage of profit margin it would take to enable the LD.

 

The reasons to participate in Lightning Deals

Sometimes Lightning Deal does not bring any profit and is used as a way to introduce products to Amazon visitors. 

For example, when the product is still new and lacks customer reviews. These are necessary for Amazon’s algorithm to start showing the product more often on the 1-2 search results pages. 

Or when there is a need to score extra sales and gain sales velocity before an expected surge in sales (before the X-Mas season, Mother’s Day, or Prime Day). Even an incremental increase in BSR (requiring extra sales of an ASIN to be recorded by the algorithm) will pay back when the high sales season begins by scoring extra dozens or even hundreds of sales. 

Lightning Deals also work when the aim is to take back a Best Seller Badge that has been recently overtaken by a competitor — by the same virtue of a temporary boost in sales velocity. 

The last example is connected with a wish of clearing the inventory. Sometimes an influx of cash is required to reinvest into a new product. Selling an existing product even at a break-even price is a good way to have another go on Amazon with a newer, fresher, and better product.

 

The way to find Amazon LD

The way to find Lightning Deals is to go to the Seller Central account, Advertising -> Lightning Deals.

Not that long ago Amazon.com was offering lightning deals to sellers after the company’s manager manual assertion of a seller’s products.

Luckily, now the procedure is automated. The algorithm reviews all the products periodically. If it considers any of them qualified for the LD – the seller will see the offers on the menu. 

 

The creation of LD on Amazon

As mentioned above — any Amazon lighting deals are eligible to be found in Seller Central under Advertising -> Lighting Deals menu.

There sellers can see all the available products.

If there are none or if the product that the seller wants to launch via LD is not on the list, there is some additional work that needs to be done. 

For all the available Deal, the seller can manually set the quantity of a product chosen for a sale and a discounted price. 

The smallest available quantity and highest possible price are specified by Amazon from the beginning. The seller can only set more items or even lower prices.

Once every parameter is adjusted, the advertiser can submit an item to be queued for the LD.

 

Lightning Deals requirements: 

  • Product rating no less than 3 or 4 stars (depending on the type of product)
  • Minimum inventory no less than the algorithm-specified quantity

 

Lightning Deals timing

The schedule of Lightning Deals is unpredictable for sellers, but it is influenced by internal Amazon logic. Some sellers get the Deal for 6 hours between 5 pm and 11 pm on Cyber Monday, others get between 2 and 7 am the next morning. The algorithm makes this decision, however, the fees of the less popular time ranges cost less.

 

Amazon LD affects organic sales 

Whether LD affects sales depends on how the product is received by the market. In case it has good reviews, enough sales, and the product listing is on par with the competitors – LD is a boon that will help to sell hundreds of items in a matter of hours. 

 

Lightning Deals tips

  • Product´s scarcity

Setting 100-200 items per Deal can evolve a customer´s interest and they might think that it is worth their attention. If the product listing is solid, it has good reviews and it is received well by the public this scarcity works for the sales boost. 

On the other hand, if the product listing and reviews are poor, then the purchase percentage of an LD can increase slowly, and it can have an opposite effect on a customer’s decision-making.

  • Not participating in LD

It is better to not cancel the pending LD less than 25 hours before the beginning. Otherwise, the seller could be banned from partaking in future LDs (although the scale and length of this ban can different).

  • Inventory

If the inventory drops below the quantity set for the LD, the algorithm cancels the Deal since the seller already ran out of it before LD started. 

Other promotions, Sponsored ads, and organic sales running parallel with the LD also require inventory, that is why it is important to keep it above the minimum.

  • Automated PPC ads and Lighting Deals

Sponsored Products Automated Complements ads help LD the most out of all 4 types of automated advertising. But if the advertiser sets a too-high bid, that LD sales can be mediocre once the Ads Costs are added to the big picture. This happens because Amazon earns money via advertising as well as via sales and LD. It can also show the ads to a much wider audience than the core buyers to justify these extra ad spend. This traffic could be significantly less relevant as a result. 

 

A real-life example:

The Sponsored Products Automated Complements ads bid is set at $0.80

 

The LD results were:

Clicks – 4536

CPC – $0,62

Sales – 561

ACOS – 30.52%

Before the next LD, the seller sets Complements ads bid at $0.55

The 2nd LD results were:

Clicks – 2338

CPC – $0,47

Sales – 485

ACOS – 8.09%

The decrease in a bid by 30% (from $0.80 to $0.55) had the impressions drop by half, but sales dropped by less than 1/5th. 

As a result, the ACoS decreased dramatically, from 30.5% to 8%. Amazon’s algorithm will show the ads to any audience the bid constraints will allow. But unfortunately, the extra gained impressions and the difference is confirmed by the above numbers.

The conclusion is that a careful incremental increase (literally by $0.05 per week) is a solid way to come to the best performing bids on all automated campaigns and to spot the point where extra bids stop being effective.

Of course, this maneuver cannot be done throughout a Lightning Deal. But after 4-6 weeks of prior adjustments, the seller should find the ideal spot. Then, whenever it is time to back up the LD with the ads – it will be there and will perform perfectly.

  • Work before the LD

Deriving form “4” is the rule to always launch Sponsored ads (especially Sponsored Product ads) in advance before any major event, deal, high sales season, Prime Day, etc. It takes about 3-4 weeks for a newly launched PPC campaign to settle in with Amazon’s algorithm and start influencing the sales, the keyword ranking, and the BSR of a product.

It is beneficial to never stop running the PPC campaign at all. Amazon’s algorithm values the continuous flow of sales and a long sales history above the numerous sales. 

  • LD preparation

It is essential to make sure that all 4 types of Automated targeting are included in the Campaign:

  • Complements
  • Substitutes
  • Close Match
  • Loose Match

An additional if-checklist:

  • If the Complements’ ACoS is on par with the ACoS of another Automated targeting option before the next LD, it can be profitable to lower the Complements’ bid. 

When the Complements’ ACoS is lower than the ACoS of other Auto-targeting options – then the current bid might be fine. 

In case during the previous LDs the Complements did not work – the solution is in increasing a current bid by 50-100%.

  • If it is a first-time LD for the product, the suggestion is to run Close and Loose Automated targeting Sponsored Product Ads first. It is possible to get some real sales off them and to find the bid that allows doing that at the lowest ACoS suitable for the profit margin.

Before the Lightning Deal commences, the Complements targeting bid need to be set 30% above the Close and Loose bids.

  • The savior can be to not set high bids on Substitutes. This Auto targeting option can easily kill all the traffic coming from the Lighting Deals.
  • When the sellers are satisfied with the LD’s ACoS it is safe to increase the Auto Campaign budget 3-4 times.

On rare occasions, for the Automated Sponsored Campaign to be effective with Lightning Deal, it is more effective to increase the bids sharply. 

 

To sum up, Lightning Deals are a great instrument for short bursts of sales. They can be used to get some quick cash out of inventory, to help to sell a new product, or to catch up with the competition at critical moments. The LD depends a lot on the Amazon A10 algorithm: both when the product is eligible and when it will be sold. Automated Sponsored Ads can help LDs significantly, but it takes some prior preparations for a good performance.

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