What is Subscribe and Save? Amazon’s Subscribe and Save option allows shoppers to choose a subscription-based plan for a particular product, automatically placing a new order for that product after a given time interval. This option makes a lot of sense for consumables like diapers, water filters, and groceries.
As with many e-commerce trends, the 2020 pandemic ramped up demand for subscribe and save, and although this trend has declined in the past 12 months, it shows signs of stabilizing at a percentage much higher than pre-pandemic levels.
This is good news for consumer-packaged goods (CPG) brands and any products consumers buy at a frequent rate, such as baby wipes and supplements. For these consumables, Amazon’s Subscribe and Save option makes a lot of sense. In this blog post, we’ll discuss which products brands should consider enrolling in the option, how to make your products eligible, and the pros and cons of using Subscribe and Save for you brand.
Which Products Perform the Best
Any consumable item which customers buy frequently has the potential to do well in this option. There are several obvious choices for subscription-based consumption, including vitamins and supplements, groceries, pet foods, baby products, and sundries such as lotions, toothpaste, razors, deodorants, and shampoo. There are also less obvious categories such as household cleaners, air and water filters, automotive parts, and office supplies.
The best way to determine whether or not your products make sense for a subscription model is to analyze the purchase frequency and sales performance of the product in question to determine if demand is high enough. You can do this from your Seller Central account dashboard.
How to Make Products Eligible
In order to participate in the Subscribe and Save option, sellers must have a fulfillment by Amazon (FBA) account and be in good standing. Enrollment of new products in this option is limited to brand owners, which means your brand must also be Brand Registered through Amazon’s Brand Registry. However, any product enrolled in Subscribe and Save before December 18, 2019 remains eligible.
Here is the criteria Amazon uses to determine product eligibility:
- Fulfillment history and in-stock rate
- Sales performance
- Product category
- Average selling price
Fulfillment History and In-Stock Rate
As we discussed in the blog post, Product Lifecycle Management for Amazon, maintaining a good in-stock rate and therefore good fulfillment is about knowing your sales velocity and making sure you manage your inventory in a way that can absorb a spike in demand.
Something every brand tracks very closely, sales performance is one metric Amazon pays a lot of attention to when determining whether or not a subscription option will work for a particular product. Amazon values efficiency, so products must move off the shelves at a consistent and predictable rate.
Consumables are the best fit for the Subscribe and Save option. Some categories do better in the subscription-based option than others, but the categories that are eligible for this option are:
- Office supplies
- Health & Baby care
- Automotive parts & tools
- Industrial supplies
- Home tools
- Home improvement
- Musical instruments
- Lawn & Garden
- Pet supplies
Average Selling Price
Pricing is a common pain point for sellers on Amazon, and in the case of subscriptions it can play a pivotal role in whether or not a product is eligible for this option. Working with an Amazon consultant can help you regain control of your pricing and boost product eligibility.
How to Add Products
Although you may want to consult with an Amazon agency to determine which products and categories you should add to this option, adding eligible products to subscribe and save is a fairly straightforward process.
Log in to your Seller Central account and navigate to the “Add or remove subscribe & save products” tab through the Help menu (under the FBA features & fees tab). Once there, you will receive an excel sheet with an instructions tab to assist you with uploading the product data. You will have the option to enroll specific SKUs, so read the guidelines carefully and select the appropriate products.
Pros and Cons
Customers who enroll in a subscription receive a base discount on these deliveries as an incentive. This discount is paid by the seller, which means it can affect margins and profits. For it’s part, Amazon offers an additional 5% discount when customers receive five or more deliveries of a subscription. Unlocking this additional tier discount helps keep customers enrolled in the option.
Here are the options available to sellers:
Seller funded at 0% – Customers receive no discount until they’ve received five or more subscriptions on the same delivery date, at which point they earn a 5% discount funded by Amazon for a limited time.
Seller funded at 5% – Subscriptions start at a 5% discount. Five or more subscriptions on the same delivery date earns the 5% discount funded by you the seller, plus an additional 5% discount funded by Amazon for a limited time, which brings the customer savings up to 10%.
Seller funded at 10% – the same structure as above with the seller funding a 10% discount, unlocking a total customer savings of 15% for a limited time.
For sellers, the main downside of the Subscribe and Save program is that the base discounts are paid by them, not Amazon. Amazon will also monitor performance metrics and may discontinue this option for SKUs that do not perform well.
As for the pros of participating in this program, sellers can benefit tremendously both from a visibility standpoint and from a product sales perspective. Here are the main benefits of participating:
- Consistent Sales – enrolling customers in a subscription helps lower acquisition costs and provides a consistent and reliable revenue stream. Brands who utilize this option can see a 10 to 30% increase in overall sales.
- Increased Loyalty – once a customer is enrolled, they are a consistently purchasing from your brand. This makes much easier to strengthen customer loyalty and promote new products with minimum investment.
- Engaged Customers – customers who consistently receive and use your products are much more engaged with your brand overall.
- Increased Visibility – there does seem to be a priority placement for Subscribe and Save in search filter preferences, making it easier for new-to-brand customers to find your products.
If you still have questions about the Amazon Subscribe and Save option or would like some guidance in enrolling products in this option, you can reach out to an agency like Kaspien to help determine which SKUs and categories you should consider.
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