Amazon coupons function the same way as traditional brick & mortar coupons. The seller offers a percentage or dollar amount off, and shoppers can clip and redeem coupons to activate the discount. On Amazon, sellers can choose to target specific audiences with coupons, but generally there’s little incentive to do so.
At face value, that’s the short of it, but in this post, we’re going to dig a little deeper into this popular Amazon tool. We’ll look at how well Amazon coupons work and best practices for leveraging them on and off the marketplace.
How Effective are Amazon Coupons?
Amazon Coupons are a highly effective marketing tool, increasing product visibility and sales velocity. In 2020, Kaspien ran 200 coupons, managing $70,000 in coupon spend, generating $385,000 in attributable sales. That equates to a 18% advertising cost of sale (ACOS) or 5.5 return on ad spend (ROAS). There’s good reason that coupons have endured in retail for so long and successfully expanded into ecommerce.
Benefits of Amazon Coupons
First and foremost, Amazon coupons drive sales. According to Amazon, coupons increase sales by 12%. This is likely due to the coupon “tag” that appears on the product listing and on the search results page when you run a coupon. The tag is visually eye catching, and the discount pulls them into the consideration phase.
In addition to driving sales, coupons also indirectly support product rank improvement. Like any type of paid marketing on Amazon, higher sales indicates to Amazon’s algorithm that shoppers like the product. Since Amazon is a customer-centric platform, the algorithm will rank the product better. This increases the product’s visibility and organic sales, creating a cyclical effect. Coupons are but one piece of the Amazon marketing flywheel, but a helpful one.
How Much Do Amazon Coupons Cost?
Coupons are affordable. They cost $0.60/redemption + the discount, and they require a minimum budget of $100. Products with a coupon will display a coupon “tag” on the search results page and in the listing. They will also appear on the Coupon page, which is one of the highest trafficked pages on Amazon.
What’s the Best Way to Use Amazon Coupons?
Kaspien has conducted numerous tests to determine the most effective ways to deploy coupons. Here are some of our more interesting learnings.
Best Sellers or Slow Movers?
We’ve found that offering a lower discount on a high-volume item performs better than a large discount on slow-moving items. This finding indicates that coupons are a pleasant bonus, but not influential enough to change the buying decision for many shoppers.
Coupons & Sponsored Product Ads
We’ve also tested how coupons compare to Amazon Sponsored Product Ads. We found that coupons tend to have a lower return on investment than Sponsored Product Ads. However, Sponsored Product Ads typically require a larger budget than coupons (we typically recommend $500/month at the very minimum), so coupons are still a useful tool for sellers with tighter marketing budgets.
In general, we recommend focusing your marketing budget on Amazon advertising, and using coupons to promote seasonal sales events.
Dollar Off or Percentage Off?
Our marketing experts have also tested the performance difference between percentage off vs dollar off coupons. Our results suggest that dollar-off coupons are generally more effective, perhaps because a simple dollar-off figure is easier to mentally calculate.
When is the Best time to Use Amazon Coupons?
Coupons are quite effective during holidays and other sales evens. Shoppers are accustomed to looking for deals during such times, and coupons, especially when they offer more substantial discounts, check that box.
Some Categories are Sensitive
Coupons are generally fine to use for most product categories on Amazon, but some categories need to practice a little caution. Categories where quality and safety are especially prioritized by shoppers, such as the Baby category, can become wary of coupons if they appear too frequently, as they lead shoppers to question why a product is always offered at a discount. Is it legitimate? Is it low quality so the seller has to compensate by lowering the price? As such, brands in applicable categories should time coupons with holidays or other sales events to dispel any questions about why a discount is being offered.
What Are Amazon Coupon Codes?
Coupon codes are created for use in off-Amazon promotions intended to drive offsite shoppers back to Amazon. You can create coupon codes for specific sales channels or pair them with influencers. For example, you might share a coupon code on your brand’s Facebook page, “Save $5 when you use the code GOODBYE2020.” Whenever that code is redeemed, you can attribute the source to your Facebook page.
At Kaspien, we recommend creating unique coupon codes for each influencer you partner with, helping you track attribution from each partner.
Amazon Coupons vs Prime Exclusive Discounts
You may have heard of Prime Exclusive Discounts, a program that Amazon launched in June 2019. As the name suggests, Prime Exclusive Discounts are seller-funded discounts visible and accessible only to Amazon Prime members.
From a shoppers’ perspective, coupons and Prime Exclusive Discounts are quite similar, the only difference being their exclusivity. That said, exclusivity is a tried-and-true marketing tactic. Consumers like to feel special, and knowing that they are among a privileged few (take that with a grain of salt – there are over 150MM Prime subscribers) with access to a deal can boost engagement rates.
From a seller’s perspective, Prime Exclusive Discounts do not come with a $0.60/redemption fee, so you enjoy small savings with this tool. Prime Exclusive Discounts also have more stringent requirements for which ASINs are eligible for the program.
We do not see a notable difference in performance between Amazon coupons and Prime Exclusive Discounts. Furthermore, coupons, at least at the moment, are much easier to create, as Prime Exclusive Discounts require sellers to download and fill out an Excel spreadsheet, then upload it back into Seller Central. As such, we recommend brands focus on coupons for the time being, but keep Prime Exclusive Discounts on your radar.
How to Create Amazon Coupons
In Seller Central, select “Advertising” in the main nav bar, then click “Coupons.” In the upper right, click the “Create a new coupon” button.
From here, you can follow the onscreen instructions. You can add up to 200 ASINs to a coupon. We recommend grouping ASINs by product line. For example, you could include all the color variations for a blanket, but you wouldn’t necessarily include blanks and baby bottles on the same coupon. This helps with reporting in the future.
Once you select the ASINs, you choose the discount type: Money off or percentage off. As we mentioned above, we typically recommend using money off. The one use case for percentage off is when you include products that have different price points on the same coupon.
You also have the choice to limit coupons to 1 redemption per customer. We typically don’t limit the redemptions because we want to drive as many sales as possible.
When it comes to budget, coupons require a minimum budget of $100. Do note that you can always add more budget, but you can never take budget away.
The final step before reviewing is scheduling your coupon. You can schedule coupons in advance, and you can always cancel coupons before their end date.