Why Prime Day will be a break-even proposition for one Amazon seller
July 7, 2016 12:56 PM
Web-only jewelry retailer Bling Jewelry is banking on a big sales day Tuesday, and it has been preparing for Amazon Prime Day for months now, hoping to build on its success from last year.
“We’re definitely betting big on Prime Day,” Bling Jewelry founder Elena Castaneda says. “Last year we had an exceptional day and sold four times as much as a regular day. This year’s we’re much more prepared.”
A few months ago, Amazon.com Inc. contacted Bling Jewelry via email asking it to submit up to 20 SKUs that the merchant would be willing to discount heavily—30% or 40%—for Prime Day deals. Of those that Bling Jewelry submitted, Amazon selected three—a pair of chandelier earrings, an anklet and a necklace. Amazon likely selected those three SKUs based on the number of sales of those items in the past, in addition to the volume of inventory Bling had of those items in stock, Castaneda says.
In addition to those three SKUs that will be included in Amazon Prime Day-specific deals and promoted heavily by Amazon itself, Bling Jewelry will discount its entire Amazon catalog by 20% for the day. It’s also investing $20,000 in ads through Amazon’s marketing arm, Amazon Media Group, aimed at driving traffic to Bling Jewelry’s Amazon storefront. That investment is far more than Bling Jewelry has ever spent on Amazon ads in one day. Leading up to Mother’s Day, for example—usually a peak shopping time for jewelry—the merchant spends roughly $5,000 per day in ads on Amazon.
The Prime Day ads will be targeted at consumers that have shown an interest in or are searching for jewelry items, Castaneda says. They will appear as banner ads on consumers’ Kindle e-reader devices, Amazon mobile apps and desktop versions of Amazon.com. Consumers who click on them will be taken to Bling Jewelry’s Amazon storefront.
To prepare for the anticipated rush in orders, Bling Jewelry has been stocking up its inventory in Amazon warehouses for shipment to consumers via Fulfillment by Amazon, she says. The merchant has roughly 15% to 20% more inventory in stock than usual, with a few hundred each of its three SKUs slated for Prime Day deals.
A rush of orders may not lead to a ton of gains to Bling Jewelry’s bottom line, however.
When adding the standard fee that Amazon charges merchants to sell on its marketplace—usually 10% of the value of all orders—to the extra fees Amazon charges to fulfill those orders (usually $0.50-$2 per order, depending on the size and weight of the item, among other factors), the 20%-40% discounts on its products and the $20,000 investment in display ads, Castaneda acknowledges she doesn’t expect a windfall Tuesday.
“It will be a break-even proposition, or we could make a little money,” she says.
But Bling Jewelry hopes to recoup that investment in the long term and encourage Amazon customers to continue to buy its products on Amazon.com or its own e-commerce site in the future. “We’re focusing on building our brand, and since it’s such a special day, we felt it was important for us to be a part of it,” she says. “These people will probably buy more from me on Amazon down the road.”
Bling Jewelry is No. 700 in the Internet Retailer 2016 Second 500 Guide. The merchant did roughly $15.0 million in online sales last year, and is on track for $20.0 million this year. About 60% of those sales come from Amazon.
Want a quick fact sheet on Amazon Prime Day from 2015 and how it compared to all other major e-retailing sale events?