What is the Amazon Subscribe & Save program?
A little-known feature on Amazon has been on their site since 2007. Amazon’s Subscribe & Save program gives shoppers the opportunity to receive routine and scheduled deliveries of household necessities at a discounted rate. It’s an excellent way for shoppers to save money on their most-used items at home and gives FBA sellers a chance to improve their customer retention.
Customers select products to be delivered every one to six months, and they are provided a discount with every order that successfully gets delivered. They can cancel any order they don’t need without penalty, and those that place orders for five or more products in a month are given an even steeper discount.
Subscribe & Save Updates
In Q1 of 2020, Amazon released three primary new updates to their Subscribe & Save program. They are:
- Product Enrollment
- Tiered Discounts
- Who Funds the Discounts
Product Enrollment: In the past, Amazon used to rely on sellers to choose which of their products to offer subscriptions. With this new update, Amazon automatically chooses what items are the most applicable to regular use and enables the Subscribe & Save program at a flat 0% discount. This change means items listed on a seller’s page could end up below their Minimum Advertised Price, but Amazon gets around this complaint by not showing the discounted price on the product detail page. The discount is only applied if a customer fulfills five or more orders of that item in a month (they would get a 5% Amazon-funded discount.) For sellers who want to offer a 5% or 10% discount, they must contact the Amazon Subscribe & Save team to check their eligibility or to remove themselves from the program.
Tiered Discounts: As previously mentioned, sellers can now offer a 5% or 10% discount to repeat customers. Amazon asserts those who offer the 10% discount can increase their conversion rates by 1.8X as compared to not offering a discount at all. Sellers who have the ability to provide those discounts can alter their selling strategy based on varying industry factors, and those that offer the 10% discount gives sellers a substantial competitive edge over other competitors who offer none.
Who Funds the Discounts: Previously, sellers saw no benefit for paying for the higher discount rates for their customers in the Subscribe & Save 5+ monthly subscription program. Those subscriptions didn’t have to be from the same seller, so sellers were essentially paying for consumers to be loyal to Amazon (and not them). Starting in Q1 of 2020, Amazon is now taking responsibility for the additional discount, by making it a standard 5% above the seller discount. In this manner, sellers are responsible only for the 5% they’ve agreed to (and if they want to offer a 10% discount, they’ll have to talk with the Subscribe & Save team.)
If you have any more questions on the Subscribe & Save program or selling on Amazon, we’re here for you. Contact us – we welcome the opportunity to help you in this trying time.