Amazon Subscribe & Save Abuse: How Shoppers Manipulate the System and What Sellers Can Do
Keren Dinkin, Copywriter
8 min read -
Updated:Like most programs of the world’s largest online marketplace, Amazon’s Subscribe & Save was designed to benefit both buyers and sellers.
For the shopping community, the scheme ensures they regularly receive their favorite items without the hassle of reordering while also enjoying cost savings.
Meanwhile, it opens the door to a more predictable revenue stream for sellers and gives them an avenue to foster long-term customer relationships.
Unfortunately, some shoppers have learned to game the system to the detriment of sellers.
If you’ve been on the short end of this racket, know that there are steps you can take to throw a wrench on it. The first is to understand how your customers carry it out.
We’ll discuss both here. Read on.
What is Amazon Subscribe & Save?
This subscription service allows customers to receive regular deliveries of specific goods at a discounted price. It’s particularly useful for household essentials such as toiletries, groceries, and health products. Customers can choose the delivery frequency that best fits their needs, ranging from monthly to every six months, which ensures a steady supply of their preferred items without placing repeated orders.
To participate, customers simply add eligible products to their subscription list and select the desired delivery schedule. Discounts are applied based on the number of items in a single delivery, incentivizing customers to subscribe to multiple products.
Amazon offers the Subscribe & Save program for free to FBA sellers who meet the following eligibility requirements:
- A Professional Selling Plan with Amazon
- Active FBA account for at least 3 months
- Minimum seller feedback rating of 4.7
- Consistently high-performance metrics like order defect rate, cancellation rate, and late shipment rate
- The product should be under a brand listed in the Amazon Brand Registry
- In-stock rate of at least 85% for 26 out of the past 30 days
These are the product categories eligible for the program:
|
|
From an operational standpoint, Amazon handles the logistics of packaging and shipping. You will receive a reminder email prior to each shipment, which includes changes your customer has made, such as skipped delivery.
To manage your subscribed products and set their corresponding discounts, you can access the Subscribe & Save page in your Seller Central account. By default, the products are enrolled at a 0% seller-funded discount, which you may increase to 5% or 10%. On their end, Amazon funds 5% on orders of five or more items.
As we explore further, you’ll understand both the benefits and potential pitfalls of Subscribe & Save and how to leverage it to your advantage.
Subscribe & Save Benefits for Amazon Sellers
Offering subscriptions secures repeat customers, and products discounted at 10%-15% can deliver an average of 1.8 times increased conversion. Thus, higher sales volume and a more stable income are two of the most immediate results you can expect from the program.
Repeat purchases also enable you to automate orders, and this predictability helps in more efficient inventory management. Knowing which products are in demand helps sellers maintain optimal stock levels, reducing both overstock and shortages.
Additionally, the tiered discount system encourages bulk purchases. By making it financially advantageous for buyers to maintain ongoing subscriptions, it enhances customer retention. And if you combine their cost savings with excellent product quality and customer service, you will gain brand loyalty as well.
Advantages of Subscribe & Save for Amazon Shoppers
It’s an efficient way for customers to schedule regular deliveries of essential goods with the flexibility of selecting their preferred delivery frequencies. They can also manage and cancel their subscriptions, change quantities and delivery frequency, and skip a delivery at any time.
The convenience factor cannot be overstated. Automatic deliveries mean that consumers no longer have to worry about running out of necessary items or making last-minute store runs. For frequent online shoppers, this service simplifies their shopping routines.
But the most appealing aspect is the cost savings through discounts. Customers who subscribe to five or more products in a single order can achieve a tiered status, which provides an additional 5% Amazon-funded discount on all items in that delivery. The discount is available even for non-Prime members.
However, Amazon Subscribe & Save is not without its complexities. While convenient for customers, they can also manipulate it, creating challenges for sellers.
Shopper Manipulation of Subscribe & Save
Below are two examples of how Amazon buyers exploit the program.
The flexibility of managing subscriptions, while designed to offer convenience, can be misused to secure discounts without any long-term commitment. Some sellers have seen cancellation rates upwards of 400%, or an average of 9 canceled orders per day.
One common tactic involves customers subscribing to multiple items to achieve bulk discounts and then canceling or modifying their subscriptions after receiving the discounted products. This not only disrupts the sales predictability for sellers but also complicates inventory management.
Another customer strategy includes frequently altering delivery schedules to align with promotional periods or to stockpile discounted products. Such sporadic purchasing behavior makes it challenging for sellers to accurately forecast demand and manage their stock efficiently. The impact is twofold: sellers end up with overstocked items not purchased regularly, or they face stockouts during peak demand periods.
Some shoppers maneuver the system by creating multiple accounts to take advantage of new subscriber discounts repeatedly. This practice further exacerbates the issues of unpredictable revenue and stock management as sellers struggle to differentiate between genuine long-term subscribers and those merely cycling through accounts.
Sellers must also contend with the logistical complications. Cancellations and changes in delivery schedules where they need to frequently adjust shipping and handling processes can lead to increased operational costs. This not only affects their bottom line but can also degrade the overall customer service experience due to potential delays and stock inconsistencies.
Recognizing these manipulation tactics is essential for sellers to devise effective countermeasures. By understanding how shoppers might exploit Subscribe & Save, you can better prepare to mitigate the financial and operational impacts of such behavior. Implementing a plan of action to address them will enable you to maintain a stable and profitable participation in the program.
Strategies for Sellers to Counteract Manipulation
You can tackle the abuse of Amazon Subscribe & Save through several measures:
Implement Stricter Return Policies
While you can’t control order cancellations or skipped deliveries on Subscribe & Save subscriptions, you can make it difficult for customers to return them. Amazon’s standard window is 30 days, and all you need to do is strictly adhere to it without granting extensions.
Certain restricted items are not allowed by Amazon to be returned, such as groceries, consumed goods, and personal care products. If your subscriptions fall under any of these categories, don’t accept returns under any circumstances.
You may choose to be a bit more lenient to other customers who aren’t in the program.
Maintain High In-Stock Rates
To further enhance control, ensure your products are consistently stocked. This way, you have a steady flow of available products that meet the Subscribe & Save requirement, manage inventory effectively, and meet customer demands consistently.
Impose Subscription Limits
Another effective strategy is to require minimum commitment periods before discounts apply. It could reduce the likelihood of customers signing up solely for short-term gains and encourage a stable customer base genuinely interested in long-term subscriptions.
Offer Exclusive Benefits
This approach could deter manipulation while rewarding your loyal subscribers. You can offer incentives like early access to new products or special discounts to customers who maintain their subscriptions for a long period.
Regularly Analyze Indicators
If you wish to identify trends and irregular patterns that indicate manipulation, look into your subscription data and monitor your customers’ buying behavior. Use analytical tools to gain insights, and then adjust your plans accordingly. With a data-driven approach, you will arrive at more informed decisions. It will also help you address issues before they significantly impact your business operations.
Use Advanced Metrics to Spot & Stop Abuse
While tactics like stricter returns or subscription limits are effective, sophisticated manipulation tactics require data-driven countermeasures. By analyzing key metrics, sellers can detect patterns of abuse early and take targeted action. Below is how to use Sellerise S&S tool advanced analytics to protect your Subscribe & Save program:
- Monitor SNS units: This metric shows what percentage of your total sales come from subscriptions. If this drops suddenly, it could mean mass cancellations. Compare SNS units with overall sales trends. If total sales stay steady but SNS units drop, subscriptions are being canceled post-discount.
- Analyze actual SNS sales vs. forecasted SNS: Compare SNS sales and SNS units with their forecasted counterparts. Sharp discrepancies between what you’ve historically sold and current forecasts can signal unusual cancellation or modification patterns.
- Track Refund Rate: High refund rates on subscriptions suggest buyers are claiming discounts, using products, and then falsely reporting issues to return them. (e.g. claiming a product was damaged to return it after using the discount).
- Study trends: Analyze trend graphs for seasonal spikes or drops in SNS sales. If actual sales diverge wildly from forecasts, there is a high chance that buyers are likely gaming the system.
- Track estimated lost revenue due to out-of-stock rate: High stockouts during forecasted “low demand” periods could be a signal for manipulation.
- Track new customers vs. LTV: Track first-time subscribers, LTV measures their total spending over time. If new customers surge but LTV stays low, buyers might be creating fake accounts for one-time discounts.
- Track average net profit: Regularly monitor your net profit from SnS program. Fake accounts often have lower average net profit due to excessive discounts, so by continuously tracking this metric and comparing it with previous proven numbers, you will be able to spot abnormal activities from buyers.
Maintain Transparent Communication
Encourage a more responsible customer base by educating them about the benefits of maintaining their subscriptions. Explain to them as well that their frequent changes or cancellations negatively impact your business. Provide clear guidelines to avoid misunderstandings and promote a healthier relationship with your subscribers.
Utilize Automated Solutions
Subscription and inventory management automation can streamline your operations and reduce the time spent on repetitive administrative tasks. These tools can help you track subscription changes, accurately forecast demand, and ensure prompt fulfillment. With more efficient processes, you will be able to enhance customer experience and better manage the Subscribe & Save program.
Final Thoughts: Detect and Deflect Subscribe & Save Abuse
Participating in the Amazon Subscribe & Save program offers sellers the opportunity for steady growth, but it also necessitates diligence and careful planning. The flexibility meant to assist customers can occasionally be misused, and you need to address this issue proactively.
Engage with the Amazon sellers community to stay updated on tactics customers use and apply effective strategies to mitigate them. Promptly detecting abuse of the system can prevent customers from exploiting it.
Remember, Amazon sends customers a reminder email before each shipment, allowing them to modify their order or skip deliveries. This feature shows the importance of staying vigilant to ensure the program also operates favorably for you.
Maintain profitable participation in the Amazon Subscribe & Save program by facing these challenges head-on.
