Season 1, Episode 146

Structuring Deals and Handling Compliance for Prime Day

with Marc Bruggemann

One crucial aspect of Prime Day success is structuring deals effectively. A significant part of the conversation with brand owners revolves around ensuring that their deals are not only appealing but also compliant with Amazon’s regulations. In this episode, Chris McCabe speaks with Marc Bruggemann of Cartograph, discussing crucial strategies for deal structuring, advertising innovations, and proactive compliance measures to ensure a successful sales event.

Show Notes

Transcript

[00:00:00] Chris: Hey, everybody. Welcome back to Seller Performance Solutions. I’m Chris McCabe. I am here today with Marc Bruggemann of Cartograph, an agency that we’ve worked with you guys for, I want to say, two or three years. Is that accurate?

[00:00:15] Marc: Sounds about right.

[00:00:17] Chris: And you are based in New York City?

[00:00:18] Marc: Just outside of new Jersey.

[00:00:21] Chris: New Jersey. Okay. Let’s say, let’s say close to New York.

[00:00:24] Chris: I don’t know Jersey so well. That’s sort of foreign territory for me. So, I met you in the city at least. We’ve worked on some stuff with you guys. We have conversations about big topics that impact a lot of people like upcoming prime day with agency owners and people who work on brand pain points like yourself. What is the typical conversation you have with a brand owner who’s worried about something heading into prime day Or do you typically work with people who are like we’re 100 percent set all the deals are ready to go, what could possibly go wrong so many things?

[00:00:59] Marc: Yeah, if I’m talking to a brand owner going into prime day You know, we’re talking about a deal strategy. Well, we want to be mindful of, you know, if we’re talking like Listing health right? I want to be mindful of list price going into prime day, your discount has to be 20 percent lower than your list price, I think 30 days prior to the sale period.

[00:01:18] Marc: So that’s something to be aware of. We’ve seen last minute suppressions immediately before Prime Day as well. So playing things safe, making sure your listings are clear of anything that might cause a flag. Prime Day is not the day to experiment with I wonder if Amazon will catch me for doing this.

[00:01:33] Marc: So, avoiding any of those errors, but otherwise, it’s mostly structuring deals, we’re looking at couponing strategies, going in, setting up advertisements, how we want to handle our advertising strategy to build consumer interest, and then after Prime Day, kind of following up and making sure we tap back into those consumers and do anything we can to kind of help support sales rank after the Prime Day hangover.

[00:01:55] Chris: Right. One of our favorite hangovers is the prime day hangover. But at least we get a chance in later July to kind of recoup. And, it’s not quite like Black Friday, Cyber Monday after that’s over, you’re like, Oh yeah, by the way, it’s still peak holiday for another three weeks or two weeks.

[00:02:11] Chris: Do people ever watch what their competition’s doing and get worried? Like, Hey, these guys are doing this. We should be doing it. Why aren’t we doing it? You’re proposing that we do something new from different from last year. Do you have those kinds of conversations with people?

[00:02:25] Marc: Yeah. I think one of the largest items that I’m typically been asked about is, these guys are doing like 30%, 40%, 50% discount, right? Like, you see people go pretty steep and in some categories that works. Interestingly enough, and this is something, you know, again, certain things I necessarily don’t want to experiment with on Prime Day, maybe in other tentpole events, but, steeper discounts in some categories can actually negatively impact conversion rate. This is something I have seen in the past where we have premium goods, specifically 1K6T, where we tried running with a 50 percent discount. We had overstock, and we were trying to move through units a little bit faster.

[00:03:00] Marc: And conversion rate dropped significantly, and it turned out consumers were actually concerned that the product was not of sufficient quality, that there was a bad reason that it was being discounted so heavily. So it makes me less quick these days to drop steep discounts on things, on one hand the client gets to save a little bit, they’re making a little bit more money.

[00:03:17] Marc: They don’t have to lose as much to a discount. But consumers also have a level of assurance that, you know, the product is in such low quality that you can afford to discount it by 50%.

[00:03:27] Chris: Yeah. And I mean, the ad space has changed a lot too. Are people talking about ads versus Prime Day as much now, or is that kind of the same as it was last year?

[00:03:38] Chris: Because the ad space just seems to have exploded in terms of using AI testing, the AB testing of different concepts. I mean, I don’t know if 12 months is, completely changed it, revolutionized it, or if it’s just like tweaks.

[00:03:52] Marc: There are more things we’re doing now. Like we have, access to things like brand tailored promotions, which I guess, isn’t strictly advertising.

[00:03:58] Marc: It’s technically a type of promotion, but running it does get you exclusive placements. If you get push notifications on your phone, exclusive deals just for you, brand tailored promotions. You’ve been targeted with some specific discount for a product. You know, as certain like newer levers, brands are interested in subscribe and save coupons, somewhat new.

[00:04:16] Marc: It’s one of those things that can work, it depends on the business. It depends on how much of a discount you’re offering. subscribe and save motivation is usually, you know, a significant discount, right? You have 10 percent coupons, not gonna cut it probably, so there’s a lot of that that we have to be mindful of, like we see competitors doing these things and like, can we do it too?

[00:04:34] Marc: Like, well, you know, it depends, how does your margin shake out? We’re doing unit level economics. We’re looking at what your cost breakdown is on a per unit sold basis. So. It’s something that we try to be mindful of as we get close to Prime Day.

[00:04:45] Chris: Right, do people talk about the types of things that we work on in terms of, last year I had a random ASIN restriction, or I was asked to appeal something right before Prime Day.

[00:04:55] Chris: Are those the types of things where people express concern about it way before it happens, or do they really only bring it up if there’s some sort of crisis or emergency like the night before?

[00:05:04] Marc: Savvy brands are going to be a little bit more on edge. They know what can happen, the dietary supplement space especially, right?

[00:05:11] Marc: We now have these lab service requests that brands have to go through. So now it’s sending product out to a lab and getting it tested. We’re seeing like six to eight week turnarounds in some cases, but from initiating a request to being live again. So, right, if you’re in the supplement space, Personally, that’s a question I’m asking between now and Prime Day.

[00:05:30] Marc: I’m like, am I gonna get hit with a request for lab services two days before Prime Day? Outside of that, I’ve had things like, in the toy category. We got hit with a test. There’s like a lead test that you’re supposed to perform on kids’ children’s toys, something to that effect.

[00:05:44] Marc: We had hit with that request day before Prime day. So things like that can be a concern on a seller’s minds.

[00:05:51] Chris: Yeah. And not to give anyone ideas, but I think this is already out there. Some competitor attacks have taken the form of trying to create doubt over whether their competitors have compliance documentation ready to go.

[00:06:03] Chris: And then magically, mysteriously that seller is asked to produce those documents. So I think that’s kind of a lingering trick from last year. Hopefully Amazon’s kind of caught up on that, and they’re aware of these things , that they’re being kind of played a little bit.

[00:06:16] Marc: To that point, even the supplements case, it just takes one person complaining, I think my favorite one is this product tasted so bad it made me nauseous, right? Like, you’re not saying that there’s anything wrong with the product. Maybe you’re using hyperbole. It’s all Amazon needs to hear. They will shut your listing down. They’ll start putting you through compliance process. So there are black hat tactics like that, that sellers should be aware of.

[00:06:41] Chris: I think Amazon’s getting at least a little bit better.

[00:06:43] Chris: I mean, that was bad last year and the year before. I think now Amazon’s kind of catching up to this idea of, you know, maybe we’re being played here. I mean, they don’t really think about it when it’s an automated trigger. And Requesting documentation. People might just not really even give it a second thought if they see a buyer complaint that says certain things, but there’s much more of a concept now that Amazon has to punish some people for reporting their competitors for something that’s not legitimate, that’s fake.

[00:07:13] Chris: And they’ve started suspending sellers. I mean, I’ve seen it on the suspension side. They have started suspending people more for you made false allegations against the competitor, or you tried to weaponize us to make them look bad, or to make us do something against them. And they weren’t really hip to that as much until I would say this past spring.

[00:07:36] Marc: So it’s shocking it took them that long, but I’m glad they caught on to it. It’s definitely been prevalent for a while now.

[00:07:43] Chris: Usually there’s like an initial mistake where an action is taken. I’m saying you can contest it more easily. Now you can say this is a mistake. We’re disputing it. We’re being falsely accused.

[00:07:53] Chris: These guys have done it before. That is much easier to make that argument now than way back when, when you were saying, Oh, I’m being attacked. This is a mistake. We’ve already passed this process, whatever it might be for compliance or Amazon would say, Oh yeah, sure. It’s a mistake. Yeah. Yeah, they didn’t believe you.

[00:08:10] Chris: They’re more, they’re more likely to believe that you’re being attacked. Now that’s my good news.

[00:08:15] Marc: That’s a huge change for them

[00:08:17] Chris: Yeah. And I think they’re also a bit more suspicious of timing. You know for years black hat attacks would happen on like friday night at midnight And for some of the clients we had it would be every friday night at midnight And so the timing I think they’re kind of Hip to this idea of they’re trying to hit you when you’re paying the least attention or when you’re at your weakest Or if it’s right before Prime Day right before Black Friday I mean, they’re finally you’re right like that.

[00:08:44] Chris: We should have been talking about this in 2022, but they’re finally catching up to these guys.

[00:08:48] Chris: So people have kind of made some plans for deals. They’ve got strategy already set up.

[00:08:54] Chris: Do you guys as agency owners have contingency plans in case there’s a glitch, there’s a technical problem, their listing goes down, whether it’s an Amazon screw up or a technical issue? Do you have irons in the fire already?

[00:09:07] Marc: I think a good example of this is a lightning deals.

[00:09:10] Marc: these are really prone to issues, pretty often, whether it’s maybe you accidentally set your committed number of units too low. So the deal is a hundred percent, you know, it’s user error. But you know, it could be that I’ve had it where Amazon reflected that a lightning deal was running.

[00:09:26] Marc: But you pull up the detail page in a Prime account and no Lightning Deal. So in those situations we want to have these listings prepared with Prime Exclusive Discounts to run in the background. So what will happen is if a Lightning Deal and a Prime Exclusive Discount are scheduled at the same time, only the Lightning Deal runs.

[00:09:43] Marc: So something like that is a great contingency in the event that, okay, my Lightning deal has gone down. If there’s been a technical issue, it says it’s running, but it’s not. Worst case, you could simply end the Lightning deal, Prime Exclusive Discount should take over. Or alternatively, if the Lightning deal never ran to begin with, or if there was some other error for it, the Prime Exclusive Discount should just take over automatically.

[00:10:02] Marc: Or if you, if the Lightning deal just ends due to all the reasons being claimed. So you can at least make sure that you have something there to support the listing in that situation. Otherwise, it’s mostly just sitting there and watching, you know, are my deals active, checking in, are my listings okay. To your point, you know, this is when you’re most likely to be under attack.

[00:10:23] Marc: A seller could come along and add all your units to their cart and try to, you know, take them out of circulation. That’s something that I’ve seen before. So things like that, you just want to be prepared. Maybe it’s turning on an FBM listing instead. Just so you have something to offer, if there’s some sort of a more gray issue on your FBA listings

[00:10:43] Chris: and now some of your clients have SAS core reps or a majority or a more, a majority done?

[00:10:49] Marc: Not a majority. There’s a wait list to get an SAS rep, right. Most recently we saw had around like a three month wait. and you do need to have minimum sales volume before SAS will even talk to you. So some people are left out in the cold because they haven’t quite reached that point yet.

[00:11:05] Marc: Other accounts, it’s a question of whether or not the investment is worth it. SAS is helpful in certain situations. I’m sure you have more insight on that on your end.

[00:11:14] Chris: I think when there’s a crisis around Prime Day, some, depending on the rep, sometimes they act quickly and know what to do. I think it’s useful if they have both of those.

[00:11:24] Chris: Like the skills and the experience, so they know what to do and they act quickly. You kind of need them both together. If you only have, well, they act quickly, but they take the wrong action. Obviously that’s not very helpful. And we’ve had to kind of pick up the slack in a few instances where that happened.

[00:11:39] Chris: Or if they do have the wherewithal to take the right actions, but they’re not that responsive. Of course, prime day is only two days, so they have to be responsive in order to create an internal escalation or to show their prowess in this field or their ability to make an impact that’s going to you know, positively affect your revenue for that two day period.

[00:11:59] Chris: Otherwise, if you don’t have both of those acting together in unison, then you’re probably missing out on something.

[00:12:05] Marc: Exactly. Yeah. And I think one of the advantages for the SAS reps is, they can trigger something called a hot PO. So if you need like inventory checking faster, you know, that is partially with Prime Day coming up as a great ability to have, sometimes, you know, bad situations occur.

[00:12:19] Marc: Actually, I think one that I forgot about was FC processing, you know, the state of inventory being in a reserved state, under investigation, right? We’ve all seen this. I have seen, where the majority of the seller’s inventory is locked in that state immediately before something like Prime Day, which is the absolute worst timing you could possibly imagine.

[00:12:40] Marc: So in situations like that, I expect having a savvy SAS rep to be pretty helpful. I’ve spoken to people that had a prior experience in Amazon’s warehouses. So bad grader insight than others.

[00:12:52] Chris: , do you ever hear people looking past Prime Day? Like they expect, Oh, Prime Day is going to be this.

[00:12:59] Chris: These are our projections. Let’s talk about Q4, the second Prime Day is over. Is that the point we’re at now with brand management and selling on Amazon? You’re looking three, four months down the road because of the low inventory fees, other fees, things like that.

[00:13:13] Marc: It’s funny, the low inventory fees have not played as much of a role as I expected that they would.

[00:13:18] Marc: And the changes to that policy have, they made a lot of changes before enacting it. I think the final state that it took was pretty good, it was nerfed quite a bit. , in terms of like planning ahead, right, this is a prime day is going to come. We have the rest of the summer. So there’s a lot of categories that are sleeping down during those months.

[00:13:36] Marc: I think protein powder is worst month of the year, September. Summer’s over, summer bodies are made in the summer. And summer’s over.

[00:13:44] Chris: Well, September is the month to let yourself go.

[00:13:47] Marc: Exactly. Yeah. You got to start, start bulking up for the winter. So you can get into hibernation.

[00:13:52] Chris: Interesting.

[00:13:52] Marc: Yeah. A lot of the conversation then becomes, you know, like we have tent pole events. We have prime day. Some brands we have back to school, right? Back to school is coming there. There are brands that apply there. So how do we build momentum from one to the next? How do we keep people in the funnel that we’ve worked so hard to acquire?

[00:14:07] Marc: Tons of people are discovering new brands for Prime Day. The week leading up to Prime Day, there’s a lot of customers that are simply doing research. Even if you compare day one versus day two of Prime Day, you’re going to see much lower conversion rates on day one because a lot of customers are coming back on the second day after having looked around, shopped around, looked at what deals are running.

[00:14:27] Marc: On day two, they decide what to buy. So now all these new customers, all these people who are aware of you, how do you keep them, you know, how do you keep your brand top of mind for these consumers until the next tent pole events or whatever motivates them to purchase? So if you have back to school, you want to at least stay top of mind for when back to school comes.

[00:14:44] Marc: Otherwise you might have to wait until fall prime day in October. And then you have T5. and Q4 as well. For giftable brands, right? You have Christmas coming. So the entire lead up to Christmas up to like the 20th, there’s people still buying gifts. I worked on a toy brand once again, 90 percent of our sales were in for the entire year we’re in the first three weeks of December.

[00:15:08] Marc: It’s things like that to be aware of. One day prime. One day prime. Exactly. Making sure you’re everywhere. 0. 5 day prime. Making

[00:15:16] Marc: sure that you’re distributed across every single location possible. Oh my God. Yeah. It’s actually, you know, and even that, if you, if you have like inventory concerns, right.

[00:15:24] Marc: I think at this point we are officially past the shipping cutoff for prime day. Uh, but, uh, one thing that, uh, for brands in a difficult operation situation where, maybe supply was low before prime day. One feature that we were taking advantage of is Amazon’s placement services. You can select West coast, East coast, or central us for your shipping destination.

[00:15:44] Marc: And so we were rotating through regions for shipping and inventory to kind of like, so that by the time inventory is checked in, we’re already distributed throughout the fulfillment center now. So things like that can kind of speed things along.

[00:15:58] Chris: Nice. Nice. Do you work on the creative side too? Like one thing I’m always watching YouTube videos for, I mean, different people covering the Amazon space from different angles. I’m always wondering why YouTube isn’t feeding me like Prime Day specials for like different brands doing their YouTube videos. For some reason, the algorithm isn’t pushing brand video content to me about Prime Day, but maybe there’s a reason for that.

[00:16:25] Marc: I think that a lot of brands are afraid of their advertising or rather advertising their Amazon channel will end up cannibalizing their DTCs.

[00:16:37] Marc: They want to prioritize DTC. Maybe, brick and mortar. I think there’s still a lot of fear amongst brands around Amazon. They think it’s going to erode at their consumer base. Uh, one point that I’ve made in the past to brands is that, uh, consumers know Amazon exists, right? If they’re shopping with DTC, other DTC channels, it’s not because they’ve never heard of Amazon.

[00:16:58] Marc: Uh, they, they know it’s there. They know it’s an option. Uh, but DTC customers will generally prefer to purchase from DTC. You’re not really going to see a lot of customers migrate away from DTC over to Amazon just because. They saw an ad for your prime day sale. Um, yeah, so I think that’s one of the, I think we’ll see more advertising and channels like Google, social media, YouTube.

[00:17:20] Marc: Uh, as brands see that there’s not as much cannibalization as they originally suspected.

[00:17:26] Chris: Interesting. Yeah, I didn’t think of it that way, for sure. Well, cark of Cartograph, thanks so much for joining us. Any last insights about Prime Day or should we just give people a chance to contact you, the best way to reach you?

[00:17:38] Marc: Reach out through gocartograph.com, fill out the contact form. You’ll be placed with a Brand manager like myself, a part of our team, a lot of smart people here and yeah.

[00:17:50] Chris: Any, any last words of wisdom in terms of Prime Day, other than watch your back?

[00:17:55] Marc: Please don’t take any of the things you heard here as advice, as far as tactics.

[00:18:00] Marc: One of them is to stay up. Thank you, please.

[00:18:03] Chris: Yeah, exactly. Please leave Mark’s brands alone. Just for a couple days. At least for a couple days. You can, you can ease off. All right. Thanks again, Marc, for joining us. Thanks everybody for listening to Seller Performance Solutions. We’ll catch you next time.

Hosts & Guests

Marc Bruggemann

Chris McCabe

 

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