The Case for Repeat Buyers

Amazon is a transactional platform before a brand building platform. For CPG brands, repeat purchases are everything — and as Amazon has matured, it’s evolved into a platform with an expanding suite of tools to help brands grow customer lifetime value and increase repeat buyers

For owners and CxOs of CPG brands, understanding and investing in repeat purchasing on Amazon is a key strategic lever.

Why repeat buyers matter

It’s worth to briefly state the obvious: repeat customers are disproportionately valuable. On average, repeat shoppers spend 67% more than first-time buyers. Many brands barely break even on a customer’s first purchase, but profitability soars when that customer comes back for a second and third sale.

Higher Lifetime Value & Profitability is the biggest reason to focus on growing repeat buyer share. Advertising efficiency play into higher profit (since you pay to acquire a customer once).

Repeat buyers are also more likely to leave reviews, and in general serve as stronger social proof.

Benchmarks

Here are some benchmarks, combination of industry data, and years of my own experience of working with CPG brands.

Grocery: highest repeat purchase rates. About 40% of online grocery shoppers place orders every week, translating to very high repeat purchase frequency. Amazon’s “Subscribe & Save” is heavily used here: roughly 55% of grocery category shoppers on Amazon have a Subscribe & Save subscription for those items.

Health & Supplements: Nutritional supplement brands average around a 29% repeat customer rate. Beauty products show ~25–26% repeat rates on average, and Amazon data shows 42% adoption of Subscribe & Save in Beauty/Personal Care, second only to Grocery

Pet Supplies: ~35% of pet supply shoppers on Amazon use Subscribe & Save

Benchmarking recommendation: aim to have 30%+ repeat buyer rate to ensure profitable growth. I am yet to see a 7 figure brand that has a positive Amazon P&L AND repeat buyers below 25%. And it makes sense: investing in marketing inevitably means churn, and repeat buyers support margins and sales to balance off unprofitable ‘one and only’ buys that are part of operating on Amazon.

Opportunities to build your repeat buyer sales

 When I got into Amazon pace back in 2014 the only main tool for repeat purchases was Subscribe and Save, with virtually no data visibility. Today there is a suite of tools and data that makes building repeat buyer rate actually a possible strategy planning.

•  Subscribe & Save (S&S): High conversion uplift and future revenue visibility. Key to smoothing ad ROI and customer retention. Now Amazon offers discount for S&S customers up to 20% off. You can change/remove that discount anytime, which makes this a powerful and flexible lever for building up repeat buyers.

• Brand Tailored Audiences (BTA): Enables re-engagement with prior customers through Amazon-managed email. Effective in driving second and third orders. Abandon carts is a great follow up, especially after big events, like Prime Day

• Sponsored Display & DSP Retargeting: Recaptures lapsed or one-time buyers with lower acquisition cost. Allows follow ups with finer re-targeting (ex. ‘purchased product X 2 months ago’)

• A+ cross sells and virtual bundling. Allows driving through expanded content and cross sells. Very much a ‘low hanging fruit’, since pages optimization needs less handling than marketing

There is still a lot of challenges to navigate: structural limitations (no ownership of data), and intense competition (including Amazon’s private label brands, such as newly announced Amazon Grocery).

But through experience of working with brands to grow repeat and S&S sales, I can tell that opportunities expand, and make a tangible positive impact to the brands’ bottom line.

Strategies and Planning for “Customer for Life” Value

Building repeat purchase muscle requires a strategic, long-term mindset from leadership. An owner or CxO should approach it as an investment into customer lifetime value. But you also have to be pragmatic, i.e have level of confidence, and reasonable guardrails to ensure your investment in long term does pay off.

1. Model estimated LTV and acquisition targets. 

   Here is a formula to determine investment in LTV

LTV = Average Order Value × Gross Margin × Orders per Customer (in a 12–18 month period)

For example, if your average order is $30 and gross margin is 50%, a customer who orders 3 times in a year is worth $30 × 0.5 × 3 = $45 in gross profit. Knowing this, you can decide what you’re willing to spend to acquire that customer.

I recommend to have a minimum of 3:1 ratio of LTV:CAC ($3 gross profit for every $1 spent to acquire a customer). We aim for 5:1 ratio for brand with AOV less than $15, and a minimum of 10:1 for AOV higher than $15.

2. Protect experience, inventory, and quality. No retention strategy can overcome a poor product experience. Product satisfaction is the foundation of loyalty. Fortunately, these are fundamentals for any business, so as long as you stay focused on them, you will grow repeat business. However, when products go out of stock on Amazon, Subscribe and Save do stop. Though the program automatically restart when products are back in stock, there is high risk customers will find alternatives in the meantime.

3. Use Amazon retention tools, wisely. Amazon recently improved it’s S&S dashboard, including added benchmarking. Brand Analytics, AMC (Amazon Marketing Cloud) have repeat buyer data. Promotions targeting subscriptions, or repeat buyers show redemption rates. Between those data points it is possible to have enough robust data

4. Measure, experiment, iterate. Just like customer acquisition, retention improvement is an ongoing process. Establish a baseline repeat purchase rate (say your brand’s repeat customer % or the share of orders from repeats) and set incremental goals (ex: increase repeat order share from 20% to 25% over next 6 months). It’s important to treat retention experiments ( ex: specific audience discount campaign, event-specific discount, or a bundling offer) with the same rigor as ad campaigns.

Ultimately..

Even if repeat buyers currently represent a modest slice of your Amazon sales, they are absolutely worth growing. CPG brands thrive on loyalty – and Amazon’s ecosystem, while challenging, offers many levers to build that loyalty at scale. By understanding the data (benchmarks and customer behaviors), leveraging new programs (subscriptions, engagement tools), and strategically planning for lifetime value, you can shift the needle from one-time transactions to enduring customer relationships. The payoff is increased profitability, more resilient sales, and a brand that compounds in value over time, even on such ruthlessly competitive platform like Amazon

Strategic level guidance, and hands on management for CPG manufacturers on Amazon. Reach out for help.

Saludos,

Irina