With many of the effects of Covid continuing to plague our global economy and supply chain systems, the 2021 holiday shopping season is at risk. Across the board, we hear the stories of inventory stranded offshore, shipping container prices becoming prohibitive, the lack of truck drivers to move inventory, and warehouse staff diminishing. Because of this, brands are in a precarious position for one of the biggest shopping seasons of the year.
Brands that sell on Amazon are certainly not exempt from these effects and need to take them into account when planning their 2021 holiday season strategy. In this post, we will look at the top areas that a brand needs to address and some of the unique challenges that our current market presents. It is also critical as it seems the shopping season has moved up, and Amazon shoppers are making gifting decisions earlier. “According to a 2021 Amazon Advertising/Kantar survey, 39% of U.S. consumers…will start holiday shopping as early as October.”
When planning for Amazon’s holiday shopping season, you need to account for the following factors:
- Buy Box Ownership
- Promotional Activities
By creating dedicated strategies for each of these five factors, Amazon sellers and vendors will be able to benefit from increased shopper impressions and conversions. It will also allow those sellers and vendors to get a jump start on the competition and be less likely to face some of the more difficult challenges in the marketplace.
1. Buy Box Ownership
Owning the Buy Box involves being the featured offer for a product when a shopper reaches the product detail page. This is the critical first step for any Amazon strategy, especially during the holiday season. To prepare, take a look at your product catalog, and determine what SKUs are your best sellers. Those are the ones where it is most important to control the featured offer in the Buy Box all year round but particularly during the holiday shopping season.
Sellers should analyze the “Detail Page Sales and Traffic Report” under the “Business Reports” section. One of the data points available there is “Buy Box Percentage.” This metric will tell you how often you were in the Buy Box as the Featured Offer during the set timeframe. Vendors have the advantage of being shipped and sold by Amazon. Amazon naturally prioritizes their listing, provided pricing is in line with the other offers for the SKU as well as the price the SKU is available for on other major ecommerce sites (See our Buy Box: What Can Go Wrong? post for more details on this!).
With inventory fluctuating and delivery times increasing, check this metric more frequently during the holiday shopping season than you would during any other time of the year. The timing here will be key, as it may be more strategic to give up the Buy Box now, conserve your inventory, allow competing listings to sell through their inventory, and then be the featured offer during Black Friday and Cyber Monday.
As alluded to in the previous point, inventory is a major factor this holiday season. Being in stock at the right time may very well make or break your holiday season on Amazon. If you sell through Amazon Fulfillment (FBA), you need to be shipping your inventory for Black Friday and Cyber Monday now.
With truck driver shortages, FBA shipments are not being scheduled or picked up in a timely manner. Amazon is also having warehouse staff shortages, meaning once your inventory arrives at Amazon, there will be a backlog before it is received, processed, and available for sale. Typically this process takes two weeks under normal circumstances.
Now, however, add in the additional inventory to be processed in time for holiday and the shortage of warehouse staff, and we expect to see this turn into five to six week processing times.
Pricing is a crucial step that needs to be assessed as peak holiday shopping time approaches. Shoppers will want to look for deals around Black Friday and Cyber Monday as well as throughout the holiday shopping season. Amazon will want to see those deals as well since the Amazon algorithm watches sale prices, deals, promotions, and coupons and then rewards the popular listings with increased placements. Amazon capitalizes on this expectation and places high emphasis on providing the lowest shopping prices when compared to other top ecommerce sites as well as your historic price on Amazon.
Evaluate your pricing structure to be sure you’re competitive to win the Featured Offer spot in the Buy Box, but also carefully plan your pricing strategy across other platforms. Amazon’s algorithms watch other shopping sites and could suppress your offer if it finds a cheaper price on another platform — even if you’re the seller on the product detail page.
If you’re finding it difficult to keep up with competitors who are also lowering their prices at this time, you may want to consider using the automated pricing strategies offered in Seller Central. You can set your minimum offer price, and Amazon will adjust your offer price to be competitive until it hits your minimum price. For Vendors, your purchase order price to Amazon dictates in part how much Amazon will then sell the product for. You can look at your co-op agreement to see if you have promotional opportunities or if Amazon requests funding to provide the shopper with a lower price.
4. Promotional Activities
Utilizing the promotion opportunities open to you during holidays gives you an advantage to appear on special Black Friday and Cyber Monday Deal pages, as well as increasing visibility with coupon badges or crossed-off pricing messaging on product pages. These are all things that shoppers look for during these deal days leading up to and after Black Friday and Cyber Monday.
In conjunction with your pricing strategy, evaluate what promotions align with your goals. Each type offers different visibility opportunities and has different discount requirements. Note that Amazon will look at the historic pricing of your product for the past 90-days and require your promotion for this shopping event to be lower than any point during that period.
Advertising during the holiday shopping season on Amazon is highly competitive, so you should expect to have a dedicated advertising budget separate from your average budget for ads during this time. Amazon recommends setting your daily campaign budget 200% higher than what your campaigns usually run at.
Examine your campaign spend during the fourth quarter last year:
- Were your campaigns ever limited by budget?
- Did they stop running partway through the day?
- Or were there areas that had higher search traffic than others?
This is where you want to concentrate some of that increased budget. You’ll want to focus the rest of the increased budget on the products you’re prioritizing for the 2021 holiday.
What products are you owning the Buy Box on already? What products have ample inventory? Be sure to drive traffic to those products to capitalize on being the Featured Offer and being in stock when other sellers may not.
What products are you running promotions on? Be sure to support that promotion with advertising to reach the widest audience.
The holiday shopping season for 2021 will shape up to be just as bizarre as 2020. Shoppers are starting early, and the rush is on to get the deal while it lasts. Consumers are also hyper-aware of shortages and the scarcity that the economy is facing right now. With those factors combined, it will be a frenzied time.