Amazon Subscribe & Save allows FBA sellers the ability to offer discounted products in exchange for long term commitment from customers. This has substantially boosted sales and customer loyalty for many brands.
In the past, individual sellers who have chosen to offer discounts with subscribe and save amazon have borne the financial burden of paying for those customer discounts. However, recent changes to the program show Amazon taking more ownership, including some of the financial burden. There are definitely pros and cons for sellers, but if you understand the system, it can be very beneficial for your business.
How does Subscribe & Save work?
Since 2007, Amazon’s Subscribe & Save program has allowed customers to receive recurring and scheduled deliveries of the products they love and use most often—such as toiletries, foodstuff, and diapers—at a discounted price. It’s a great opportunity for buyers to save money on things they already plan on purchasing. When leveraged correctly, it’s also an opportunity for FBA sellers to increase customer retention and boost conversion.
Customers can choose from thousands of products and select their favorites for automatic shipping every one to six months, and are rewarded with a small discount for each order that ships. They can skip any order that isn’t needed or cancel anytime for free, so the risk is low for customers. Consumers love finding deals, so amazon subscribe and save has them built in, like when customers receive five or more subscriptions in a single month, they get a steeper discount – making the program even more appealing.
How does Subscribe & Save benefit sellers?
At first glance, providing 5-10% discounts on your products may seem like a poor financial decision. However, because you are trading discounts for more sales, your brand ends up making more money in the long run. How is this possible? Because Amazon Subscribe & Save is easy and convenient for customers, they commit to reordering products for months, and also will order multiple products at a time to receive a larger discount.
Because customers have signed up under your brand and committed to receiving a product for several months–and because customers are now automatically receiving the supplies they need without thinking twice–they no longer need to return to Amazon and peruse for other products similar to yours, limiting competition from other similar brands. You no longer have to worry about sharing the Amazon search result page with competitor brands, because once buyers are set up with Subscribe and Save all you need to do is keep up their subscription and delivery dates. This keeps sales up and customers loyal–all while shortening the reorder window. Also, an Amazon Prime account isn’t required for free shipping with Subscribe and Save, so you can reach a broader audience with the same benefits.
How to know if Subscribe & Save is best for your business
After learning about subscribe and save, you’ll need to look at your business and determine if it’s right for you. Here are some questions to ask:
- Is your product an essential item that requires repeat purchasing? (I.e. vitamins, foodstuff, toiletries.)
- Are your listings competitive? You should optimize your listing to receive the best from Subscribe and Save on Amazon.
- Are you open to using discounts, or do your MAP prices allow you to discount products?
- How is your inventory? If you are consistently stocking out of inventory, Amazon will not let you use Subscribe and Save.
Pattern can also help you decide if Subscribe and Save is best for your business, as well as how to utilize it for the highest amount of sales.
Tips for Success with Subscribe & Save
If you are seriously considering Subscribe and Save amazon, you will need the correct tools. Here is an in depth look at the details of the Amazon Subscribe and Save system to set you up for success. There are three main topics that sellers will want to pay attention to:
- Tiered discount options
- Who funds the discounts
- How products are enrolled
1. Tiered discount options
Originally, the amount of discount was determined by which category items were in. Sellers can now opt in at either a 0%, 5%, or 10% base discount to customers.
Amazon claims that funding at 10% can drive up to a 1.8X increase in conversion over no discount at all. Being able to choose a 5% or 10% discount means that sellers can now make more strategic decisions based on various factors. Having the option to push up to a 10% discount gives aggressive competitors an extra weapon in their arsenal.
It’s important to note that once a customer has ordered at a certain discount rate, that rate will be locked in until the customer either skips or cancels their subscription. Customers are also notified of when prices are increased and can choose to skip or cancel their orders.
2. Who funds Subscribe & Save discounts
In the past, sellers saw no personal benefit from paying the higher discount rate for 5+ monthly subscriptions. Those items didn’t have to be from the same seller, so sellers were essentially paying for the benefit of a customer being very Amazon-centric. Acknowledging this, Amazon has taken responsibility for the additional discount offered for 5+ monthly subscriptions, but made it a standard 5% above the seller discount.
That means customers may receive 5/10 or 10/15 discount based on their number of subscriptions, but sellers are only responsible for the 5% or 10% that they’ve committed to. (There is a 0% option, but we’ll discuss that later)
During the transition from the old model to the new model, it is a bit unclear on how long existing subscriptions will continue with 5/15 before getting pushed over to the new pricing model. All pre-existing Subscribe and Save ASINs are, however, automatically enrolled at the 5% discount. Sellers would need to manually change those legacy items to 10% if they wanted to offer a steeper discount moving forward.
3. How products are enrolled
One of the biggest changes to Subscribe and Save on Amazon—and the one that could possibly cause contention for some brands—is in how items are opted into the Subscribe & Save program. Instead of relying on sellers to choose which products offer subscriptions, Amazon now determines which items are most relevant to regular replenishment and automatically enables Subscribe and Save at a base 0% discount.
That means that brands that follow tight pricing practices will now have their products below their Minimum Advertised Price, but technically Amazon skirts this complaint by not offering the discounted price on the product detail page. The discount is only realized behind-the-scenes if customers receive five or more subscriptions in a single month. They would then receive a 5% Amazon-funded discount.
In addition, the ability for sellers to bulk upload products for enrollment in Subscribe & Save has been removed. To begin offering a 5% or 10% discount, sellers need to contact the Amazon Subscribe and Save team to check eligibility and get those running (or to opt out of the program altogether). It’s important to note that in order to apply you will need to be reaching a minimum number of sales per product and have enough inventory in-stock. With so many other great things happening, this seems like a step backwards for the Subscribe and Save program.
Overall, these changes reflect Amazon’s obsession with providing a good customer experience. More products will be available with Amazon’s auto-enrollment feature for replenishable products, which means bigger savings for customers. Sellers will benefit as well, because they can strategically choose their discount tier—and only pay for what they’ve committed.
How Pattern Can Help
Pattern will examine your brand and products, then help you understand if you should launch on Subscribe and Save. If the answer is yes, we’re ready to jump in and optimize your listings for best effectiveness; streamline your logistics for efficient inventory; and provide reporting and insights on how your products are performing and where the next opportunities lie.
Not sure what discount parameters to start with? Curious what percentage of brand orders come from Subscribe and Save? We’ve got expertise in that too. On a brand level we can help you identify your best sellers and how much of your success comes from Subscribe and Save. On a product level, we can check data to determine changes in subscribers, number of subscribers per product, and how those change over time. And that’s not even getting in to our advertising tactics to drive leads to your offering.
Ready to upgrade your Subscribe and Save offering? Get in touch today to learn what Pattern can do for your ecommerce business.
