If you’re a brand in the Consumer Packaged Goods (CPG) industry, chances are your customers repeat their purchase when running out of supply.
But they won’t necessarily buy again from your brand. Your rivals compete on price and for similar keywords in the search on Amazon. Increasing the risk of losing the sale to one of your competitors.
Does this mean you have to spend millions of dollars to win search placements on the virtual shelf?
No it doesn’t.
Thankfully, Amazon offers a programme called ‘Subscribe and Save’ to help keep existing customers loyal to your brand.
So in today’s article, we’ll cover:
- What Subscribe and Save is
- How 1P Vendors can leverage SnS
- How to assess your SnS performance
- Frequently Asked Questions (FAQ)
Let’s get to it.
What is Subscribe and Save?
Subscribe and Save is a customer retention programme that allows shoppers to setup auto-scheduled deliveries in exchange for a discount.
The programme is designed to let shoppers easily opt in or out of a subscription. Buyers can decide how often they would like to receive their products. SnS order intervals range from every 2 weeks to every 6 months.
SnS discounts range from 5% to 15% on most products and up to 20% on selected items (e.g., diapers).
Shoppers typically receive an initial 5 or 10% discount on their first order and 10 or 15% for every order thereafter. Shoppers also qualify for a 15% discount if they subscribe to at least five products sent to one address.
While default discount structures are determined by Amazon, brands can chose to offer additional Coupon savings to stimulate SnS orders.
Why should brands consider Subscribe and Save?
Offering Subscribe and Save can help reduce your dependence on deals during sales events and also reduce your customer acquisition costs.
Instead of having to retarget shoppers via expensive ad campaigns, you can offer them a discount to automatically repeat the purchase from your brand.
Categories with consumables or single-use products that need replacement promise the best return of investment in Subscribe and Save.
For example:
- Grocery
- Beer, Wines & Spirits
- Luxury Food & Drink
- Pet Supplies
- Health & Wellness
- Beauty & Personal Care
- Baby Care
- Household & Home Care
- Office Supplies
- Automotive Parts & Tools
- Home Improvement
But Subscribe and Save isn’t just a sales tool for sellers and vendors!
It also allows Amazon to pool orders of otherwise individually sold items, reducing the variable handling and shipping costs for the online retailer.
How can 1P Vendors invest in Subscribe and Save?
Amazon will ask vendors in relevant categories to invest in Subscribe and Save to maximise their growth potential. So let’s take a closer look at the contractual options and types of SnS investments:
Flex Agreement vs Fixed Accrual Percentage
Vendor Managers can offer you two ways to invest in SnS: Either via a Flex Agreement or Fixed Accrual.
A Flex Agreement compensates Amazon for every SnS discount redeemed by end shoppers. This means that if a shopper receives a 5% discount, Amazon will bill you for the equivalent dollar value.
With the Fixed Accrual, Amazon bills you a fixed percentage of your net sales to activate Subscribe and Save.
The main advantage of a fixed accrual is that Amazon assumes the risk if the redeemed discount value exceeds the funding amount during the contract period.
For example, if customers redeem SnS rebates worth 6% of your total net sales, but you have only compensated Amazon with a 5% trade term, Amazon will foot the bill for the 1% difference.
This makes fixed accruals an attractive option if you have not previously invested in SnS and wish to limit your initial investment during Annual Vendor Negotiations.
Vendor Powered Vouchers / Coupons
Next to the default SnS discounts, vendors can choose to run Vendor Powered Vouchers (VPVs), otherwise known as SnS Coupons.
VPVs allow you to increase subscriptions by offering an extra saving on the first sale or rewarding existing SnS customers to maintain a subscription.
You can request their setup through your Vendor Manager or AVS. If you don’t have a Vendor Manager, you can request the setup of VPVs in Vendor Central under Contact Us » Promotions and Marketing » Subscribe & Save.
Caution: Any coupons or other promotions also apply to your Subscribe & Save products. For example, if you run a promotion offering a 20% discount on a product that is also available through Subscribe & Save, that discount will be added to existing subscriptions and will result in a total customer discount greater than 20% for subscriptions.
Understanding your Subscribe and Save performance in Vendor Central
Amazon offers a detailed dashboard that allows you to analyse your SnS performance at account and ASIN level. To acess it, navigate to Vendor Central » Merchandising » Subscribe and Save.
Once you’re in the dashboard, you can select the vendor code, product code, category, subcategory, and ASIN you would like to analyse. Vendor Central also lets you define the exact date range for any metrics to review.
The dashboard is split into four reports:
Sales Performance Report
The Sales Report displays your SnS revenue and number of active subscriptions. It lets you easily spot seasonality effects and how your subscription business performs year over year.
Amazon also lets you dive deeper into the profile of subscribers. Outlining the number of customers who have cancelled SnS after just one delivery and those who remain subscribed or have received 2 or more SnS orders.
A KPI you want to keep close attention to is your Subscriber Retention Rate. Specifically, Amazon allows you to track the number of SnS shoppers that stay subscribed for more than 30 and 90 days.
A good benchmark is to keep your retention rate at or above 90% after 30 Days and above 75% after more than 90 Days.
The last block of data insights relates to the performance of Subscribers vs Non-Subscribers. The dashboard allows you to assess the Average Revenue per Subscriber, as well as the Average Number of Reorders of each customer group.
Coupon Performance Report
The Coupon Performance Report lets you assess how much SnS Coupons contribute to your SnS revenue over a given time period.
Vendor Central also displays the Share of Coupon Subscriptions. In other words: How many customers choose SnS for your brand because of coupons versus the standard discount on the product detail page.
Inventory Performance Report
The Inventory Performance Report displays the impact of stockouts on Subscribe and Save. Specifically, it highlights how many product units were out of stock and the resulting revenue loss in dollars.
Vendors should avoid running out of stock where possible, as this prompts customers to cancel their subscription and look for alternatives.
ASIN-Level Performance Report
Need more granular data at product level? Amazon has you covered. The SnS dashboard in Vendor Central now allows you to view and download a detailed list of your ASIN performance.
Available metrics include:
- Revenue Penetration
- Subscription Revenue
- Subscriptions
- Subscription Units
- Not Delivered due to OOS
- Discount Tier
| Metric | Definition |
|---|---|
| Revenue Penetration | The share of Subscribe and Save in your total account revenue. Revenue Penetration = Total SnS Revenue / Total Product Revenue. |
| Subscription Revenue | The sum of revenue from shipped subscription orders over a given period of time. |
| Subscriptions | The count of subscriptions that are active at the end of the time period. |
| Subscription Units | The sum of units from shipped subscription orders over a given period of time. |
| Not Delivered due to OOS | The % of units that were not delivered because the ASINs were out-of-stock. An increasing trend in this metric is considered a defect. |
| Discount Tier | The default discount structure offered to customers. |
Frequently Asked Questions (FAQ)
If your product goes end of life, Amazon will notify customers that their SnS subscription will end and may offer them alternatives to subscribe to. You can work with your Vendor Manager or the Amazon Vendor Service (AVS) to switch existing SnS customers to any successor item. However, the new product must be similar to the item it replaces for this strategy to work.
Subscribe and Save is a seller-specific offering. If you lose the Buy Box, Amazon will still fulfil Subscribe and Save orders to existing SnS customers. However, new SnS customers will be directed to the seller winning the Buy Box.
Yes and No. Offering SnS can help increase your conversion rates, which indirectly increases your chances of winning the Buy Box. However, if Amazon can’t offer the product at a profit, you may still lose the Buy Box to 3P Sellers.
Amazon may self-fund SnS discounts on products repurchased by customers. As this discount (typically 5% of the purchase price) lowers Amazon’s profitability, your Vendor Manager is tasked to recoup the investment. It’s best to review your current SnS performance in Vendor Central to assess whether funding the programme will return a good investment for your brand.
The required investment depends on several factors: The number of existing subscriptions, the discount offered, and the profitability of your vendor account. If in doubt, it’s best to carry out a limited trial of several months to understand the return on investment.
Yes! Subscribe and Save and Vendor Powered Coupons form part of your vendor negotiations with Amazon.
Amazon claims that funding at 10% SnS discount can drive up to 1.8x more conversions over no discount at all. Amazon also states that investing $1 in coupons generates an average of $19 in PCOGs over an 18-month period.1
1 Based on documents shared by Amazon with Consulterce clients.
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