This is the first in a two-part series about Lightning Deals - in this post we talk about how Lightning Deals work, and the major pros and cons of the program. In the second part we will share more case studies and data around when Lightning Deals are a good idea (and not)!
Lightning Deals were recently made available to merchants on the Seller Central platform on Amazon. Currently, Lightning Deals are offered on an invitation basis. At Bobsled Marketing we’ve been experimenting with Lightning Deals for many of our clients, to measure the benefit that brands can get from this promotional tool.
Amazon customers love a good deal, and Amazon loves offering good deals to their customers! “Lightning Deals” are one of the ways Amazon offers discounts to customers, which keeps them coming back to the site frequently to take advantage of the deals.
Known to customers as “Gold Box Deals”, Lightning Deals are limited-time sales that run for up to six hours. These are promoted on the homepage and through social media and customers are encouraged to sign up for deal alerts through their preferred channel - email, social media etc.
Lightning Deals can get a lot of traffic, and Amazon promotes the program to Sellers as a way to boost sales and sell through large quantities of inventory. How do they work and are Lightning Deals really worth using as a promotional strategy?
How to create a Lightning Deal
Previously, Lightning Deals were an invite-only event where Amazon selected sellers to invite to participate. Recently, they opened these deals up, allowing sellers to apply for a deal on a product that Amazon recommends within their inventory.
You’ll see Lightning Deal recommendations under the “Advertising” tab in Seller Central.
In the Lightning Deals Dashboard, you’ll see “recommendations” from Amazon. Currently, you can only run deals on products recommended by Amazon. No recommendations from Amazon means you’re unable to run any Lightning Deals at this time.
Creating a deal is easy - just accept the recommendations, and specify the lowest price you’re prepared to offer each SKU (the ‘minimum price’).
In terms of timing, Sellers can choose the week that the deal is run, but not the exact date or time of the Lightning Deal.
The benefits of Lightning Deals for Amazon Sellers
Amazon promotes 3 core benefits for sellers:
- More visibility. Lightning Deals appear on the Deals page, one of the most visited pages on Amazon.
- Halo effect. Lightning Deals may help drive additional customer discovery and sales both during and after the deal.
- Clear out inventory. Lightning Deals can help you sell down overstocked inventory or seasonal products.
The challenges of Lightning Deals for Amazon Sellers
After running Lightning Deals for several clients, we have found a few downsides with Lightning Deals:
- No control over timing of the deal. While the Seller can submit a suggested week for running deals, it’s ultimately Amazon who chooses the specific date and time of day. This means your deal might run from 2am-8am. Not exactly prime selling hours!
- The halo effect is short-lived. Amazon touts a ‘halo effect’ of sales that extend beyond the deal period, but this appears to be short term in nature at best, and nonexistent at worst. Our recent analysis of 4 sellers across 4 categories (Home & Kitchen, Clothing & Accessories, Toys & Games, and Health & Beauty) and 17 products, found only 5 products experienced an extended increase in BSR (Best Seller Rank or Sales Rank). In most cases, the bump lasted 2-3 days before returning to its steady rank.
- Inventory minimums apply. Any deal you submit to Amazon that has been approved is subject to being canceled if your FBA inventory levels fall below the minimum quantity required within 25 hours of the deal. A challenge with this is if you send in more inventory specifically for the Lightning Deal. If the deal doesn’t do as well as expected you could be stuck with excess inventory.
So, are Lightning Deals actually worth it?
This depends on your goals for the deal.
- If your goal is to deplete inventory for an item you’re looking to discontinue, or sell through excess stock, a Lightning Deal could be the ideal solution!
- If your goal is to increase the visibility of your product, a Lightning Deal could help, but that is also dependent on the time of day Amazon chooses to run your day. Keep your fingers crossed for a deal that runs during waking hours!
- You could expect to get a bump in genuine product reviews, since more people will be buying your product.
- As we enter the Holiday Selling Season, any opportunity to potentially increase the visibility of your products and get them in the hands of more customers is worthwhile considering. Be open to accepting deal recommendations in the month of October and moving into the glorious shopping months of November and December.
It’s fair to say that running a Lightning Deal is not a magic bullet.
Lightning Deals can be a worthwhile tool in your overall arsenal from growing revenue on Amazon, along with maintaining healthy Seller metrics and efficient PPC (Pay Per Click advertising) campaigns.