Amazon’s pricing strategy for low-priced products that will never lose money

The core of low-priced products: price sensitivity

Consumers who purchase low-priced products focus primarily on price, so advertising strategies for high-priced products may not be applicable to low-priced products.

If you pursue profits, the profit margin of low-priced products is usually very small, maybe only 3-5 US dollars. Even if you make all the money, it is not meaningful, and the sales volume is unstable. Therefore, low-priced products need to adopt low-price spiral and low-advertising strategies to drive sales. As for how to achieve low prices and low advertising to drive sales and later profits, corresponding strategies need to be adopted, not just price increases.

Pricing strategy

4. On Amazon US, non-Prime members need to pay $5-10 for shipping if the order value is less than $25, which may cause buyers to give up the purchase. Therefore, if the seller's product price is slightly higher than the $25 free shipping threshold, the conversion rate of the product among non-Prime members may be higher. (For example, if your original price is 23.99 or 24.99, you can slightly raise the price to 25, try to meet the free shipping threshold, and sales may increase a little)

Bidding strategy

First of all, we can clearly see the characteristics of new product promotion for low-unit-price products, that is, the ACOS is relatively high and it is easy to place orders, so it is recommended to adopt a conservative launch test strategy in the early stage.

(The calculation formula for ACOS is: ACOS=Spend/Sales=CPC*Clicks/Average Order Price*Clicks*CVR=CPC/Average Order Price*CVR)

Option 1: $15 per day budget, use automatic advertising

This solution is suitable for the early promotion of most low-priced products. If it is a standard product, it is recommended to use close matching and adopt suggested bidding.

Bidding strategy: Fixed bidding, which can ensure that most of the exposure is obtained without losing control of ACOS.

Plan 2: With a daily budget of $15-50, use automatic advertising + manual precision*3, with a budget allocation ratio of 6:4

If you have enough budget, it is recommended to increase the delivery of precise words. Precise words can be highly relevant and high-traffic words in the category. Use up to 3 precise words and use the suggested bid * 1.2 as the bid. For new products, you hope to get more exposure, so you need a bid that is slightly higher than the suggested bid.

Plan 3: With a daily budget of more than 50 USD, use automatic advertising + manual precision*3 + SBV*1, and the budget allocation ratio of the three is 2:4:4

In addition to automatic advertising and precise keyword delivery, if the budget is sufficient, it is also recommended that sellers use SBV to achieve better exposure and conversion effects. Currently, SBV is one of the ads with better click-through conversion effects. You can choose the same keywords as manual precise keywords as SBV delivery keywords, and also use the recommended bid * 1.2.

The three solutions are different:

Solution 1 is more conservative. It starts with automatic advertising and then switches to manual precision advertising.

Solution 2 is in a balanced state, with automatic advertising and manual large-word precision cooperating with each other, and the ranking is rising faster;

Plan 3 is more radical, focusing on big-word traffic and using SBV to increase exposure and conversion rate.

Advertising strategy

1. Low-cost automatic keyword matching: For limited budgets, for categories with rich supporting products, you can adopt a low-cost automatic close keyword matching and inclusion strategy. On the premise of ensuring the required number of clicks, choose a lower CPC as much as possible. For situations with a large number of general keywords, you can turn off automatic close matching first and turn on automatic broad matching instead.

2. Core keywords: Run core keyword ads at the same time. It is recommended to use half of the CPC of the suggested bid for broad matching, and then conduct precise testing. By first conducting broad matching, preliminary testing and optimization can be carried out.

3. Precision long-tail keywords: Categorize precision long-tail keywords into multiple echelons, each containing five keywords, and then conduct manual broad matching and manual precision matching in batches. These keywords can be used to improve rankings, and manual precision advertising helps increase precise traffic sources.

4. Video ads: For keywords with high order volume, place video ads separately and enable three matching methods at the same time. For keywords with low order volume, place video ads in batches. For root words, enable broad match and exact match; for non-root words, only enable broad match.