Amazon News

Get the latest Amazon tips and tricks for newbies or expert. Know what's happening and the get the latest on Amazon here.


Why Product Giveaways DON’T Work on Amazon

by Lewis Civin, CEO
Why Product Giveaways DON'T Work on Amazon

Way back in 2002, the convenience store chain 7-Eleven started celebrating Slurpee’s unofficial birthday craze (which later turned into an annual event) where they gave away roughly 4.5 million mini-sized Slurpees.

Everyone was invited to get their hands on as many mini Slurpees their brains could handle for FREE without being forced to buy something else in return!

Logically speaking, this event could’ve been a big loss to the company considering the massive amount of Slurpees they gave away for free… 

But wanna know a secret?

7-Eleven profited even more from this GIVEAWAY which skyrocketed the store’s sales by 38% on that day!

How could that be?

“It’s because once you take the taste of one, you have to have more”, said Laura Gordon, brand director of 7-Eleven.

Giveaways like Slurpees attract the masses but even if it’s free, no one would sit in the store and continue refilling their small cup until they’re full of this sugar fix.

Instead, they go for the free Slurpee and buy some things along the way which explains why sales spiked amid this giveaway day!

You see…

This is just one of the many proofs that human minds are hard-wired to positively respond to something FREE, DISCOUNTS, and GIVEAWAYS…

But we humans subtly realize that these things have a way of opening not only our minds but our wallets too!

We get attracted to giveaways but momentarily feel obliged to return favors which is why big corporations like 7-eleven spend millions of dollars on promotional events cause at the end of they day, they’ll make all that money back (and more).

And it is for these reasons why most Amazon sellers think that GIVEAWAYS will make their product launch a hit!

They think that by giving away their products, they can create the buzz their product needs, increase brand awareness, and get connected with curious consumers who could potentially be their next rabid buyers.

They would go to social media platforms…

Offer their coupon codes to people who might buy….

And offer discounts (ranging from 70-90%) in hopes that it would draw customers to their Amazon product pages, entice them to buy,  and in return increase their product ranking.

But here’s the thing…

IT DOESN’T WORK THAT WAY WITH AMAZON.

The success of 7-Eleven doesn’t guarantee the same for the online retail giant.

Just take a look at Yelena’s experience…

“I launched a trial product on FBA but was struggling to make sales. I gave away coupon codes with discounts hoping that would help my product propel to the top. For the first few days I was getting some sales but after a week of running my campaign, nothing more followed! 

The product has been on the store for months now, and I cannot understand why it’s not selling. A generic product in a high sales category much cheaper than the competitors’ products should be selling, right?”

What we can learn from Yelena’s story is this…

When it comes to Amazon, product giveaways don’t work long-term!

For one, it costs you so much money cause you’re selling your goods at a 70-90% discount. 

Besides not earning any profit, you’re burning your hard-earned capital!

Two, you’re getting a false sense of success cause remember, you’re not selling at it’s full price and thus not attracting the “real” buyers.

And lastly, you’re betting on a specific keyword with no idea if it resonates with the customers at all.

I guess what I’m trying to say is…

Sure, giveaways can give you quick buyers and spike up your Amazon rank short term.

But is this strategy for the long haul?

Are you willing to offer discounts and operate at a loss for the rest of the launch?

Or would you rather find a SUSTAINABLE alternative?

Well if you prefer the latter, READ ON!

The Amazon Giveaway Program

Before we dig into the specifics of a more sustainable product launch approach on Amazon, let’s first understand how giveaways work.

Statistics shows that 95% of Amazon shoppers refer to product reviews and ratings during shopping while 86% of purchasing decisions are triggered by good reviews.

This puts new products with few or no history of positive reviews in a more disadvantageous position making them repel the vast majority of potential buyers.

So for new Amazon sellers and new product launchers to get a piece of the Amazon sales cake, they need good reviews – which prompts them to turn to giveaways.

Yep. Giveaways has become the most popular method of generating reviews on the platform.

And you can’t blame the sellers for doing so. After all, Amazon started it in the first place.

You see, there was once an initiative called the Amazon Giveaway Program.

And through this initiative, Amazon sellers give their products away as FREEBIES and then receive a REVIEW in return.

With the overwhelming response towards the Amazon Giveaway program, many sellers have used it to launch new products.

  • You buy your items at full cost.
  • These are given away to customers for free.
  • You choose how many items to give away and the number of entries to accept (i.e. 1 prize for every 100 entries, 1 for every 500 entries, etc.)
  • Amazon customers participate in your contest for free but you can select a requirement for them to sign in such as watching product videos or giving email addresses.
  • You can offer non-winners a discount code to purchase the product.

At some point you would think that this has been an avenue for soliciting biased incentivized reviews…

Which is why Amazon later chose to end this program last November 2019. 

However, its shutdown didn’t mean the end of freebies on the online platform.

In fact, sellers can still offer coupon codes but instead of giving items 100% free, they can give as much as 70-90% discounts during their product launches.

At the surface, discounts still seem a perfect solution.

 Discounted price = More customers = Higher ranking and chances of landing Page One

But I repeat…

  • Giveaways are costly;
  • They present false sense of success and;
  • Make you bet on baseless keywords

In short, they won’t work in the long run!

So the big question now is…

What is the better and more sustainable alternative?

Product Launch Using PPC As a Sustainable Alternative

If you’re a seller looking to introduce a product on the Amazon market, there is a way to launch a product at FULL price (without giveaways) and sell to REAL buyers.

And that is through sponsored Ads – aka PPC.

As we all know, Amazon PPC is a well-known advertising platform that helps sellers amplify their product sales online.

Consequently, Pay-per-click (PPC) advertising is a method where an advertiser only gets charged once a potential buyer clicks and views the product.

With this approach, instead of giveaways, you’ll be banking on PPC together with the following to make your product launch a blast:

  • An optimized Product Listing equipped with eye-catchy product title, compelling descriptions, informative  features, and highly-converting images;
  • The right keywords to rank for; and
  • Targeted keywords placed in prominent locations.

And adopting this strategy comes with so many advantages:

  • Ease of tracking. In comparison with giveaway campaigns, PPC advertising makes tracking campaigns a lot easier and more transparent. Not only do you get to monitor everything effortlessly, you gain access to valuable metrics that allow you to identify what’s working and isn’t.
  • More targeted advertising. Unlike giveaways which only attract those interested in freebies, PPC campaigns are highly targeted and bring you right in front of real buyers in a short period of time. On top of that, it allows you to quickly target potential customers that are outside of your sphere of influence.
  • More Control. Aside from detailed targeting options, you also have full control over your Ad spend. You can set your budget with as little as $5 a day and make changes to your campaigns while they’re running.
  • Customer interest-driven. With PPC, you only pay when a customer clicks on your Ad and gets redirected to your product page. And mind you, you’ll be spending on potential customers interested in your product and have a high likelihood of buying it at full price. This isn’t the case for those leads brought by coupons who only have interest in freebies.
  • Second Chance With Missed Connections. PPC advertising opens the door for a second chance with customers that only visited your site once through its remarketing ads which  keep them engaged with your brand.
  • Increased Traffic & Sales. As your campaign is running within Amazon, PPC marketing can instantly drive traffic to your product page. And if you’re willing to pay for it, you can gain Page One exposure in less than a day! On the other hand, giveaway promotions on social media often take a long time to work. 

And on top of all these…

With giveaways, you spend 70-90% of the cost of your product. Let’s say your item is priced at $50 and you’re about to give 100 coupons at 90% discount… 

This means you’ll be spending $4500 for the merchandise to be given away to people who are most likely only attracted by the discount –  a band-aid solution to driving traffic and boosting ranking.

Whereas if you invest on PPC, the average cost per click (CPC) or the amount of money a seller pays for someone to click their Ad is around $0.77 (note that this is an average representation  and advertising costs on Amazon vary widely).

So if you get a 100 clicks, your CPC is roughly less than a hundred bucks (and still less than $1000 if you factor in the fees for PPC service).

And not only that, you’re reaching out to real buyers who are interested and willing to spend to get your product – a deep contrast from those attracted just because of discounts.

Amazon PPC Advertising is hands-down one of the most effective ways to get your product in front of customers in a competitive marketplace.

And the good news is…

It can be done for you by ZonBase and you don’t have to lift a finger!

Not only can it spearhead and manage your PPC campaigns, our team of Amazon Experts can take over your entire launch including all the preparations needed such as optimizing your listing, grooming your photos, and uncovering winning keywords.

To start, the ZonBase team identifies your closest competitors, and the keywords they are ranking for.

Next, we apply the best campaign architecture anchored on machine learning bids.

We then spend a small portion of the budget on finding “new keywords we do not yet have”. Once we find a working keyword, we dominate it on the Performance Campaign.

  • Research Campaign- finds new and untapped keywords to dominate.
  • Performance Campaign- find keywords that perform.

But if the initial keyword chosen isn’t working, we quickly change to a more profitable keyword so the bulk of your PPC budget gets spent only on keywords that PERFORM.

Watch the YouTube Video – https://www.youtube.com/watch?v=LCm3YAtyfH0

Furthermore, we adjust and monitor your bids 24/7 so your ACOS goes down as your sales increases.

With these, you get to Page One sustainably and organically!

No need to spend a significant amount of your capital by giving away your products for FREE (almost) in exchange for reviews…

Cause with the PPC method, you’ll be selling right in front of interested real buyers who can pay at full price!

Want to know more about launching a product?

Talk to our experts here.

You may also like