A case for (less) promotions

Promotions and marketing are a core part of doing business. Always have been, always will be.

On Amazon, marketing comes in two forms: PPC (paid ads) and non-PPC promotions like coupons, deals, discounts, and BOGOs.

PPC is the obvious engine for growth — and if you’re not getting what you need from it, perhaps this will help. But today, I want to talk about the other side of Amazon marketing: non-PPC promotions.

Amazon just announced major changes to how promotions are priced and structured, effective June 2, 2025 — and I want to share thoughts on how to digest this change for your brand on Amazon. 

Summary of what’s changing: 

1. Performance-based fee model. Coupons and Deals will have a fee + % of sales (2.5% of sales for coupons, and 1% of sales for the Deals). Cap of $2,000 fee for Deals, but no cap for coupons. NOTE: Subscribe and Save, reorder coupons are NOT subject to the variable fee

2. Visibility-Based Pricing. Deals with broader reach (e.g. homepage, search) will cost more.  Low-visibility promos will cost less — tying cost to merchandising exposure

3. Peak event Pricing, such as Prime Day. Fees increase but there is no % of sales on top of a fee. For example, Prime Day Deal fee will be $1,000 per parent SKU

4. Longer deals duration. For Best Deals Best Deals on any day of the week, for a duration of your choosing, ranging from 1 to 14 days. Exception being peak events (Prime Day, Cyber Monday/Black Friday) 

In short, Amazon wants to be more of your partner and take % of sales. You know, the type of partner that participates in the upside of the performance, but without the responsibility of the  downside. 

But setting cynical attitude aside, I can summarize as this:

What this means for brands 

This marks the end of “just throw a promo and see what happens.” At least for brands that want to grow profitably on Amazon. 

If we are really honest about it, promotions are required, but often it’s a lazy and impatient way to bring customers. A short term fix. 

Building a brand is hard, keeping customers loyal to a brand is VERY hard (especially with gen Z and Alpha). Promotions bring sales. And sales bring cash flow — the jugular of any inventory-based business. So many brands rely heavily on promotions.

Now the brands will need to plan promotions the same way they approach advertising — with a clear ROI mindset. If you're paying $1,000 to run a Prime Day deal, it better be on SKUs that can justify the cost through velocity and margin.

This also hits during a moment of even broader pressure: the shockwaves of tariffs are raising COGS and forcing supply chain rethinks — but that takes time. Amazon’s change is immediate. Together these changes push brands toward the same outcome: more thoughtful merchandising, better margin discipline, and a sharper focus on product mix.

And maybe that is better for us as consumers? How many times we bought something tempted by BOGO, big discount, ‘just in case’, ‘it was such a good deal’? I don’t think anybody could argue against intentionality, less noise, and less stuffed garages and closets. 

But, we are here to sell products to a large market of consumers. So promotions won’t go away, and are an integral part of Amazon growth planning and execution. But with % of sales now digging into P&L of promotional sales events, there should be more scrutiny on how, when, and what to promote. 

Here is a combination of strategic and tactical perspective for CPG brands to adapt to:

1. Prioritize Hero SKUs for Deals

With deal fees now tied to performance, it doesn’t make sense to run deals on slow-moving SKUs — they won’t justify the new variable fee structure

2. Plan Promotions Like Paid Media

Treat deals and coupons like you would an ad campaign: estimate ROI, model expected lift, and define a success threshold.  This can be on your prior data. In absence of that, test with better performing SKUs

3. Revisit product mix planning for big events  

Prime Day, Black Friday, Cyber Monday, category specific events, etc. will carry fixed, higher promo fees. So it makes sense to treat  that space like premium real estate. Only put products forward that will move volume, support cross-sell, or contribute to long-term customer value. 

4. Don’t overlook S&S coupons

Retention and repeat purchase are core to any successful CPG strategy — and S&S coupons remain one of the most effective tools to support that. I’ve used this approach with brands to build S&S into a meaningful share of monthly revenue over time. The good news: S&S and reorder coupons are not shifting to performance-based fees — they’ll still operate on a flat structure

 So here we are: we still need promotions. Just fewer, smarter ones.

That’s the case for promotions. And the case for less of them. 

Saludos,

Irina

If your brand needs strategic support navigating Amazon, I advise CPG companies on growth, profitability, and channel planning. Reply to this email if you’d like to talk