What is a Lightning Deal on Amazon: 2021 Step-by-Step Guide
Table of Content
- 1 What is a Lightning Deal on Amazon?
- 1.1 How do Lightning Deals work on Amazon?
- 1.2 Isn’t Lightning Deals just another way to boost sales?
- 1.3 What if my profit margin gets too thin?
- 1.4 How do I find Amazon lightning deals?
- 1.5 How to create a lightning deal on Amazon?
- 1.6 How to claim lightning deals on Amazon?
- 1.7 When does Amazon have Lightning Deals?
- 1.8 How much do Amazon Lightning Deals affect your sales?
- 1.9 Amazon lightning deals tips
Amazon is the largest single marketplace in the US. It was designed with the customer’s interests in mind. This philosophy is a part of the way Amazon promotes competition and encourages fair pricing amongst the Sellers. At least in theory.
One thing that Amazon.com has in abundance for all Sellers is the ways to offer their .com customers a product cheaper than the existing price: promotional discounts, redeemable coupons, and, of course, Lightning Deals.
What is a Lightning Deal on Amazon?
From Seller’s perspective, a lightning deal is basically a tool to boost sales of a selected ASIN.
It is used to induce short term faster sale of a specified quantity of items and at a specified discounted price. The fee Amazon charges for taking part in lightning deals is fixed, It can range anything from $150 to $750 (on Cyber monday and what not).
How well the product is prepared for sale is the key to gaining profit from the lightning deal. Since the extra cost will be fixed anyway, while the result is primarily up to how well the product is poised to be sold by the Seller.
How do Lightning Deals work on Amazon?
From customer’s perspective
Lightning Deal is an opportunity to get an item (that a buyer either vaguely or specifically wants) at a considerable discount. You can see the categories and these items at https://www.amazon.com/gp/goldbox/, and a typical LD looks like this 👇
The way LDs are presented at Amazon.com plays on both the urgency and the scarcity, as two major compelling reasons to buy the item “here and now”.
Every product on the Deal has a countdown next to it (till the end of a deal) and a progress bar that tells a buyer the % of the inventory that has already been sold out.
From the Seller’s perspective
It’s a bit like a bulk selling of a portion of your product’s to a drop shipper (Amazon.com in this instance). Amazon takes a fixed fee to initiate a Lightning Deal for a product. For this, they let a dedicated portion of your product (typically 100-200 units) be sold via the above mechanism.
N.B. Amazon.com does not guarantee you any sales with the LD! All it does is giving you the opportunity to benefit from this devious selling mechanism.
More so, you are NOT allowed to pick the exact time of the Deal: the algorithm will allocate you with a selling window automatically. And it will give you no less than 24 hours heads-up about the time the LD commences.
Isn’t Lightning Deals just another way to boost sales?
In a sense it is. Just like any other marketing and merchandising activity.
Make no mistake — Amazon will always take its share when it comes to selling your products via its marketplace: in the form of Amazon fees, FBA fees and other incurred expenses.
What an experienced Seller should do is compare extra sales (via given activity, e.g. Lightning Deals) to the % of profit margin it would take to enable said activity.
From our experience, we know that what works fabulously well for one product may be totally ineffective for the others. A seasoned Seller should try increasing sales via every major promotion activity Amazon has to offer. And find one that returns the most bang for its buck.
What if my profit margin gets too thin?
On some occasions advertising activities like Sponsored Ads or discounts on an item — practically has the Seller selling at a break even. Sometimes even at a loss.
And the Sellers are OK with that.
But how come? Three typical come to mind right away:
- The product is still new and lacks both customer reviews. These are necessary for Amazon’s algorithm to start showing the product more often amongst the page 1-2 search results.
- A Seller knows that he needs to score extra sales and gain “sales velocity”.
Typically this is done before an anticipated surge in sales (like the X-Mas season, or 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 worked on a number of occasions 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.
- Clearing the inventory. Sometimes an influx of free cash is required to reinvest into a new product. Selling an existing product even at a break-even price is a neat way to clear out of the bottleneck and have another go at Amazon with a newer, fresher, and better product!
Of course, no Seller should give out their product in exchange for nothing. And if they do – there is a reason behind doing so. Selling for some time at a loss, combined with the knowledge of how the algorithm works can be instrumental in increasing overall sales of a product in the long run.
Luckily for us, most of the times the maximum price discount suggested by Amazon.com (a compulsory upper limit value) for upcoming Lighting Deal is still above a break even cost of the majority of goods.
How do I find Amazon lightning deals?
Fidgeting and managing Lightning Deals is simple. Go to your Seller Central account, Advertising -> Lightning Deals, and look around.
Up until last year, Amazon.com was offering lightning deals to Sellers after the company’s manager manual assertion of Seller’s products.
Luckily for us, now the procedure is automated. The Algorithm reviews all your products periodically. If it considers any of them qualifying for the LD – you will see the offers on the menu.
How to create a lightning deal on Amazon?
As mentioned above — any Amazon lighting deals are eligible to be found in Seller Central under Advertising -> Lighting Deals menu.
Once there, you should see all your products that are eligible.
If there are none or if the product you WANT to launch via LD is not there… then there is some work still to be done on your side. More on that later.
For all the Deals that are available, you can manually set the quantity of a product you want to be allocated to this sale.
And set a discounted price it will be sold at. N.B.: The smallest quantity and highest price are specified by Amazon. You can only set more items or even lower price than those.
Once you are happy with these — you can submit an item to be queued for the LD.
How to claim lightning deals on Amazon?
This is a tricky part. You can’t engage in LD of your own product without Amazon’s algorithm consent to do so.
There are minimum criteria requirements however that are publicly available:
- Have a product rating no less than 3 or 4 stars (depending on the type of product)
- Have a minimum current inventory no less than the algorithm-specified quantity
If your product does not qualify — you need to do your best and meet these criteria first.
When does Amazon have Lightning Deals?
This is another tricky part. Imagine all the Lightning Deals of all the products on Amazon like tickets, that the algorithm receives all the time.
It has to pipeline them and process into a set schedule, following some internal logic. You can get lucky and have your Deal scheduled for 6 hours between 5 pm and 11 pm on Cyber Monday…. Or you can get unlucky and run between 2 and 7 am the next morning. This is all up to the algorithm to decide.
At latest the less popular time ranges cost Selles less in LD fees…
Once you’ve submitted a Deal, you will receive a head up about the allocated window when it will execute. Really it’s all automated from there.
How much do Amazon Lightning Deals affect your sales?
This really, really depends on how your product is being received by the market. If it has good reviews, enough sales, and your product listing is on par with your competitors – LD is a boon that will help clear hundreds of items in a matter of hours.
A well prepared Sponsored Product Campaign, with good ACoS is a great selling tool on its own. Like for example, one that is made with Profit Whales Zero to Hero Sponsored Campaign Creation Service.
And this tool can certainly multiply its impact when combined with the Lightning Deal. We will give a few tips on how to do this in the next paragraph.
Amazon lightning deals tips
- Play into a scarcity hand. Set small 100-200 batches per each Deal. This way your % of goods sold will quickly gain double digits — and will show the potential customers that your offer IS scarce. And thus probably worth looking into.
If your product listing is solid, it has ample reviews and is received well by the public – this scarcity works excellently to boost the sales.
If the product is poor (or if it’s not, but its listing and reviews are) then the purchase % of an LD will increase slowly — and can have an opposite effect on a customer’s decision making: nobody wants to buy the item that other people considers unworthy of buying even on a Lightning Deal!
- Try your best not to cancel the pending LD in less than 25 hours before it begins. Otherwise, you could be banned from partaking in future LDs (although the scale and length of this ban can vary).
- Maintain your inventory above the LD minimum set quantity before it begins. If the inventory drops below the quantity set for the LD, the algorithm will cancel the Deal (since you’ve already run out of inventory before it started).
And remember that you still have your other promotions, Sponsored ads, and organic sales running in parallel with the LD – they all require inventory too!
- Amazon’s algorithm can be greedy with your Automated PPC ads when executing the Lighting Deal.
Sponsored Product Automated Complements ads help LD the most out of all 4 types of automated advertising. But there is a catch. If you set a too-high bid, that LD sales could be mediocre once the Ads Costs are added to the big picture.
This happens because Amazon earns money via advertising as well as via sale and the LD. And it can show your ads to a much wider audience than your core buyers — to justify these extra ads spend. This traffic could be significantly less relevant as a result. But it did still cost you money.
This is a bit hard to take on board all at once, so let me show 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 we’ve set Complements ads bid at $0.55
The 2nd LD results were:
Clicks – 2338
CPC – $0,47
Sales – 485
ACOS – 8.09%
As you can see, 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%. This example plays into the hand our insight: Amazon’s algorithm will gladly show your ads to any audience the bid constraints would let them. But unfortunately, the extra gained it his manner impressions are of poor quality. And the difference is clear with the above numbers.
We have observed this effect for a number of different products going through the LDs. Eventually, we came up with a very simple and effective rule:
To run the Automated Complements Sponsored Ads slowly. A careful bottom-up incremental increase (literally by $0.05 per week) is a solid way to come to the best performing bids on all our automated campaigns and spot the point where extra bids stop being effective.
Of course, this maneuver can not be done over the course of a Lightning Deal. But after 4-6 weeks of prior adjustments, you should find this sweet spot bid. Then, whenever its time to back up your LD with your ads — it will be there, and will perform its best.
- 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, and whatnot.
From our experience: 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.
Ideally, you should never stop running the PPC campaign at all. Amazon’s algorithm values the continuous streak of sales above voluminous but rapidly oscillating sales. And when it comes to leveraging the positive effect a paid PPC has on sales (like for an LD) – the PPC campaigns with a long history of sales will always be viewed by the algorithm more favourably.
- Speaking of prior preparations for Lightning Deals. Let’s see how we can do this for an Automated Sponsored Product Campaign. Again this is to be done BEFORE the LD starts.
First, make sure that you have all 4 types of Automated targeting in your Campaign:
- Close Match
- Loose Match
If you have been running a really old Auto campaign (a few years old), that may need to create a new one. Old campaigns did not have the choice of 4 targeting options.
Then you need to make a decision based on your historical data from previous LDs. Namely: how did your Complements targeting ads work with them in the past? What ACoS did it have in the end?
- If you Complements’ ACoS was on par with the ACoS of other Automated targeting options, that before your next LD – try lowering the Complements’ bid
- If your Complements’ ACoS was lower than the ACoS of other Auto targeting options – then your current bid is probably ok. It’s a good place to apply Amazon Sellers’ golden rule: if it works – do not touch it.
- If during your previous LDs the Complements did not work – increase a current bid by 50-100%
- If this is your FIRST TIME LD for this product — we suggest you run Close and Loose Automated targeting Sponsored Product Ads first. Get some real sales off them. Find the bid that allows you to do that at lowes ACoS suitable for your profit margin. Finally, before the Lightning Deal commences, set your Complements targeting bid 30% above your Close and Loose bids
- Avoid high bids on Substitutes. This Auto targeting option can easily kill all the traffic coming from the Lighting Deals.
- When you are finally happy with your LD’s ACoS (and this can take more than one occasion to adjust) then you can safely increase your Auto Campaign budget 3-4 times, and enjoy the truly lightning sales!
- On rare occasions, for the Automated Sponsored Campaign to be effective with Lightning Deal will require a SHARP increase in bids.
We’re talking 3-5 higher bids than under normal selling conditions. We’ve encountered this peculiar effect mostly when selling portable electronics, but there may be other niches with this situation too.
So in a nutshell:
- 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 still a new product, or to catch up with the competition at critical moments
- They depend a lot on the Amazon A10 algorithm: both in when your product is eligible and when it will be sold
- Automated Sponsored Ads can help LDs significantly, but it takes some prior preparations for this to work best
I hope you find this info and our insights useful. If you have a story of your Lightning Deal going wildly wrong, or extremely successful — we would encourage you to share it with other readers. And to leave a comment and let us know what you think of ours.
And good hunting to you all, fellow amazonians!
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