Prime Your Profits

How Amazon merchants can learn from Prime Day and prep for the holidays

It’s no secret that Amazon Prime Day 2017 set new records for both Amazon and its merchants. In fact, sales soared over 60% compared with last year’s Prime Day. Granted, all that exposure is great, but when merchants forfeit such significant portions of their margins to Amazon in fees alone, what other ROI can they glean from selling on the world’s largest marketplace on its biggest day of the year? At the very least, merchants can learn from their Prime Day data and adjust their strategies to fully maximize sales during the upcoming holiday season. Here’s a 5-step plan for priming those profits:

1. Get a sense for overall profit:

• After deducting marketplace fees, shipping costs, and promotions, calculate the profits (or loss) of your top-selling items

2. Learn what the optimums were:

• For each SKU you sold, plot out all your final selling prices and units sold at each price — the results should look like a cloudy curve.
• Now, take those sales prices and remove all the costs associated with each product (cost of the product, shipping, marketplace fees, etc.) and you’ll get a new curve that shows profit per item and units sold.
• Multiply the units by the price for each of the curves and you’ll be able to find price points that drove maximum revenue (first curve) and maximum profit (second curve). These should be your book-ends for future pricing of the SKU.

3. Fix issues before the holidays:

• Check in with your logistics team or provider to figure out where things broke. Were there late shipments? Out of stock items? False alarms because data wasn’t updated between systems?
• Understand what caused those problems. Maybe a disorganized warehouse, orders got lost, technical difficulties, system delays, understaffing.
• Find a solution and a backup before the holiday rush.

4. Be better prepared for the Holidays:

• Take results from steps 1 and 2 and use them to update your projections for the 2017 holiday season.

5. Once you’ve optimized the third step, update again and enjoy feeling prepared for a great holiday season!

Have you done your own analysis of Prime Day? Share what you found in a comment below!