My contribution to Levanta’s holiday guide was arranged through OMG Commerce.
Before you touch a holiday promotion, answer one question: is Amazon a distribution channel or an acquisition channel for your brand?
That question is at the center of the chapter I contributed to Levanta’s playbook, 9 Plays to Defend Your Margin This Holiday Season.
Too often, brands leave the answer undefined. They run Amazon as both a distribution and an acquisition channel, then judge the result against a blended ROAS target. That number can leave them with very little visibility into which products are contributing once fees, advertising and promotions are accounted for.
Decide what Amazon is supposed to do.
If Amazon serves primarily as a distribution channel, protecting price and margin should shape the plan. If it serves as an acquisition channel, the business needs to make a deliberate decision about what it will pay for a customer and understand that customer’s value beyond the first order.
A brand can pursue both roles. The financial expectations for each still need to be explicit. Otherwise, an acquisition investment and an unprofitable sale can look very similar in a sales report.
Calculate the economics of each promoted product.
Before approving a promotion, work through the costs at SKU level: referral fees, FBA fulfillment, storage, PPC, coupons, deal fees and returns. Use consistent definitions so costs are accounted for once and the products can be compared meaningfully.
The question is what remains after those costs. Account-level performance provides the context, but it cannot substitute for understanding the economics of the individual products you plan to promote.
Let the economics shape the promotion.
A favorite “hero SKU” does not automatically deserve the biggest holiday push. Its role in the promotion should follow its economics and the objective it serves.
For an acquisition-led promotion, that includes the evidence behind repeat purchasing and customer value. For a margin-led promotion, the immediate contribution needs to support the plan. A ROAS target alone does not settle either decision.
Look beyond the holiday sales window.
Q4 can put pressure on margin in several places at once: discounts, fees, advertising costs and returns that arrive in January. The promotion should be evaluated with those costs in view.
My approach is to establish the channel’s purpose, understand product-level contribution and use those economics to decide what gets promoted. That gives the holiday plan a financial foundation before the spending begins.
Thank you to Levanta for the invitation, and to Chris Brewer and the OMG Commerce team. The playbook also includes contributions from Triple Whale, CommerceIQ and others.