Oh, the mystery of Amazon’s Financial Threshold Notifications.
If you sell on Amazon Management Services (AMS) and you’ve received one (mine arrive in my inbox on Sundays, so they are one of the first things I see Monday morning), you know my pain. If you haven’t, then beware because it may be only a matter of time.
Being on the brink of the holiday shopping season, I’m going to take you on my recent journey to uncover the meaning behind this warning and what we’ve done about it. I hope this helps you either preventing this from happening to your campaigns or enables you to get them back into play.
A Little History
One of my clients started advertising products on AMS in February 2016, but we really ramped up the campaigns in August 2016. We maintained the campaigns regularly and enjoyed a profitable advertising cost of sales (ACoS). Everything was going well until August of 2017. That’s when we received our first financial threshold notification.
After doing a quick Google search, I found that countless others had also received this warning, but unfortunately, no one really had any clear ideas about what to do about it. I kept digging around and here is what I’ve been able to uncover.
What Is Amazon’s Financial Threshold?
It’s always best to go right to the source for help. So that you can read it for yourself, here is the exact excerpt from an email I received from an Amazon Vendor Support rep:
This confirms what I have read online about an algorithm that Amazon uses to determine if your products provide enough profit for Amazon to want to sell more of them.
This algorithm takes into account a wide variety of factors based on Amazon’s years of selling experience. The outcome of the how the numbers are crunched determines if Amazon wants you to keep advertising your product to get more sales for both of you… or not. This algorithm completely ignores your profitability. Meaning, your ACoS and profit margins might be fantastic on your end and that doesn’t matter to Amazon.If your products crossed their profitability margins, it’s out. If any of the factors change, the algorithm might decide that your product is viable again and the threshold ban is lifted.
The Financial Threshold In Other Words…
CRaP.
If you haven’t heard this acronym before in regards to Amazon, then you need to familiarize yourself now. The first time I read it in an article, I laughed out loud. Then, I kept reading to realize how serious this acronym is. CRaP stand for Can’t Realize Any Profit. Amazon doesn’t want your CRaP in any and every sense.
This concept is what has fueled the Financial Threshold issue and the number of those impacted by it has skyrocketed. This metric isn’t going away. You don’t want your products to be on this list.
How Amazon’s Financial Threshold Impacts You
As a vendor, you can still sell your products on Amazon through Vendor services. The big deal is that you cannot advertise them via AMS. When you try to, you will receive warnings that this product is ineligible.
If you already have campaigns set-up and every product in the campaign becomes ineligible, your entire campaign ceases and becomes ineligible.
For example, if you have a Sponsored Product campaign with just one product in it or a Product Display campaign with a product that becomes ineligible, the entire campaigns in ineligible (example below). This also happens if you have a Sponsored campaign with multiple products and all of the products are ineligible. However, if your product (s) become eligible again, depending on the type of campaign you have, the campaigns will become active again.
Where this gets frustrating is mostly Headline Search campaigns which require multiple products. If just one of those products becomes ineligible, the entire campaign is now ineligible. Unfortunately, you can’t just edit the campaign to assign a new product. You have to copy the campaign to start a new one.
What Can I Do About Amazon’s Financial Threshold?
That’s the question! Here are three ways I recommend you try. They may or may not work for you since how Amazon determines your CRaP is different than how they determine my client’s.
Whitelisting
Get all of your eligible products whitelisted. I filled out the “Contact Us” form with this request and the ASIN #s of some of our products. The Amazon team responded quickly that my request was fulfilled and we haven’t experienced an issue with those products again.
When I submitted a second request for products that were already ineligible, they denied the request since the products didn’t meet the financial threshold. So, doing this sooner than later for as many products as possible may help you.
Monitor Pricing
Of course, Amazon advises you to drop your pricing. They want to be the most competitive so consumers will buy from them. Their algorithm is watching pricing from your own website, from other 3rd party sellers (on Amazon and elsewhere), etc.
If you have your products on Amazon Seller as well, consider increasing your prices slightly there to make your products on Vendor more competitive. Play whatever pricing game you have to. That might mean dropping your prices for the Q4 shopping season more than what you want to, knowing that the competitive price bidding should ease up in Q1. It’s worth trying since a few pennies might change your product’s status.
Create Combos
If you have a key product that has become ineligible, try bundling it with another eligible product. This new combo is now available for you to advertise on AMS. This is key if your ineligible products are among of your most profitable ones. Your other product could be a loss-leader of sorts just so you can get back to advertising your featured product.
This idea may help you greatly if you are in a competitive industry and/or the shipping for your lead product is cost-prohibitive (think high weight, low-cost items like dumbbells or wood stove pellets; items that are an awkward size or have special shipping requirements).
Remember, Amazon is battling with Wal-mart. Other chains like Costco are jumping in as well.
Now is the time to make sure your AMS ads run as you intended without letting the Financial Threshold get in the way.
Have you encountered the Financial Threshold issue as well? Comment below to let us know how you overcome your ineligibility issues.
