How to Use Amazon Giveaways to Increase Sales

Update [October 11, 2019]: Amazon announced that Giveaways are no longer being offered.

Want to get initial sales velocity for your products and dozens of paid sales you wouldn't have gotten otherwise? Then try doing product giveaways on Amazon.

Giveaways on Amazon ended with the no-incentivized review apocalypse, right? Think again.

Amazon Giveaway Promotion Tab

The basic overview of how Amazon giveaways works is as follows:

• You buy your merchandise at full cost (but you get credited for these purchases as you would a regular purchase)
• This merchandise is given away to customers for free
• You choose how many items to give away. You also choose the number of entries to accept (i.e. 1 prize for every 100 entries, 1 for every 500 entries, etc.)
• Amazon customers enter your contest free of charge but you can require them to also watch a video of your product before entering
• You can offer non-winners a discount code to purchase the item

You can see how giveaways work for yourself by going to the Amazon Giveaways page. You'll likely find that, as a customer, these contests are actually quite addictive. Are they effective for sellers? That's a question we'll address shortly.

When you run a giveaway you are first required to purchase your items at full cost. However, you will be credited with these sales later as if they were regular orders. This means that you're essentially only paying the cost of goods plus Amazon fees for each product you give away.

The real key to running a successful giveaway though is to make it in conjunction with forcing customers to watch a video along with a coupon code. While you get some benefit from doing purely giveaways, the real bang for your buck comes when non-winners go on to purchase your item.

How Effective are Amazon Giveaways?

We've experienced the entire spectrum of success with Amazon giveaways–everything from complete failures (i.e. no non-winner purchased our items) to complete successes (i.e. LOTS of non-winners purchased our items). Below is an example of one of our more successful giveaways. In this contest, we gave away 21 products (our average cost was around $10 per item) BUT we received 161 purchases with a 25% discount.

Ultimately you need to offer a fairly significant discount (25% is a good starting point to really move the needle) and there is the cost of the giveaways as well. If you're not able to do any discounting on your products (because of profit margin constraints or other factors), giveaways may not be right for you. However, if you are able to do product discounting, giveaways can be extremely effective, especially for product launches and resurrecting dead listings.

How to Set Up Amazon Giveaway

You can access Amazon Giveaways by going to Advertising > Promotions (as seen below).

1. Select a product to give away from your giveaways page. It sometimes takes Amazon a few minutes to populate the page with all of your products if this is your first time running a giveaway.
   
2. Select your contest type. I generally choose Random Instant Win with a 1 in 2000 chance of winning. If you give away 10 items this means 20,000 people would see your contest. Unless you just feel like being overly generous, I cannot see a downside to making the odds of winning worse (i.e. a 1 in 2 chance of winning means your contest would only be seen by 20 people in the above example).
   
3. Select a requirement for people to enter your contest. For ecommerce sellers, this generally means requiring users to watch 30 seconds of a video. Of course, the big catch here is that you need to have a product video for them to watch.
   
4. Offer contestants the ability to purchase your product at a discount. Without offering a discount your contests will be much less effective. To offer a discount, you will need to follow the normal steps of setting up a promotion within Amazon.
   For the promotion ID, you will find this by going to the Manage Promotions page and clicking the desired promotion that you've previously created. See below for an example.
   
5. Finish setting up your contest, including paying for your items at full price. As mentioned before, at this point you will be purchasing your items at full price BUT you will receive this money credited back, minus regular Amazon fees later.

Conclusion

Amazon giveaways can be a fantastic way to get sales velocity for your items, which is especially important for product launches and resuscitating stale products. There can be a significant cost for running the giveaways, both in terms of discounts to non-winners and the cost of the giveaways themselves. However, this cost relative to, for example, a paid Facebook Ads campaign, can often be much less expensive.

Have you tried using Amazon Giveaways? If so, were they successful for you or not successful? Share your comments and thoughts below.