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Amazon Rolls Out Fees for Lightning Deals Ahead of Prime Day 2018

In what is likely a preparatory move for the year’s biggest non-holiday holiday (Prime Day), Amazon introduced merchandising fees for Lightning Deals via email on March 23rd, to take effect on April 1st. The stated purpose of the new fees is to motivate vendors to offer more valuable deals to consumers and ultimately grow the attractiveness of the Amazon deals page, which is linked to from the “Today’s Deals” tab below the Amazon search bar and featured on the home page under ‘Deals for you’.

In this post, we’ll walk through Lightning Deal setup and considerations brands should keep in mind.

What are Lightning Deals?

Lightning Deals are special promotions found throughout amazon.com that formerly had no fee associated with participation. These deals are submitted by sellers to Amazon, which then reviews and either accepts or rejects the proposed deal.

They are offered in limited quantity over a time frame of 4 to 12 hours, with the seller determining the quantity of products eligible for the Lightning Deal as well as the duration. Shoppers can sign up to watch Lightning Deals up to 24 hours before they begin. Lightning Deals are usually available to all shoppers, but there are some that are exclusive to Prime members, and all Lightning Deals are exclusive on Prime Day.

Anatomy of a Lightning Deal

Lightning Deal Qualifications

Before introducing the pricing model, Amazon had, and still has, several eligibility requirements to ensure that deals are valuable, including:

  • Products must have a sales history on Amazon and at least a 3-star rating.
  • Products must be in new condition and Prime eligible in all US states, as well as Puerto Rico.
  • Sellers should include as many size, color, and style product variations as possible. For some products, such as clothing, at least 65% of variations should be available.
  • Sellers must have an overall 3.5-star rating and receive a minimum of five ratings per month.

Another thing to keep in mind is that running a Lightning Deal does not guarantee that a seller will win the Amazon Buy Box even though Lightning Deals often produce very competitive prices. With that in mind, it would be in a seller’s interest to run Lightning Deals primarily on their proprietary goods or on goods where they have margin to price products well.

Pricing

As of this post, there are now three known pricing tiers. On regular non-event days Lightning Deals will cost advertisers $150. During Prime Week (the week surrounding Prime Day) the price jumps to $300 and on Prime Day itself the price jumps to a whopping $500 per deal.

As for other big online days like Black Friday and Cyber Monday, Amazon has said that they will determine pricing closer to the various event dates. It is probably safe to assume that pricing for big holidays will be similar to the stated Prime Day fee, if not higher. 

Why Lightning Deals Are Important

While Lightning Deals are available year-round, their potential impact is greatest during high traffic time periods like Prime Day and the holiday months. In times like these, it is pivotal for sellers to find ways to stand out when so many are jockeying for customers’ attention and money. Lightning Deals can help do just that; they signal value, have an element of exclusivity, and have the chance to feature products prominently on the site during big days.

Given this, it makes sense that Amazon would take as many steps as possible to ensure that Lightning Deals demonstrate real value to customers. The additional fee structure is yet another check on sellers to make sure they are providing real deals with real savings.

Amazon also states that not all Lightning Deals submitted are guaranteed to be selected for an event, which lends credence to the idea that Amazon is introducing a pricing model to curb the sheer number of Lightning Deals they must review. Bottom line: Lightning Deals are a great way for a seller to stand out from its competitors, but sellers need to make sure they have a real discount and adequate inventory on items they submit for deals. This will increase the likelihood of their deal being selected and their investment paying dividends.

For a comprehensive guide to advertising on Amazon, check out Merkle’s Amazon Ads Playbook.

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