The Fundamentals of Amazon Repricing by Izabella De Souza of Appeagle
March 10, 2016 5 min read
We’re happy to feature Izabella De Souza, the Senior Marketing Manager of AppEagle as Skubana's guest blogger this week.
For the most part, Amazon tends to keep certain statistics quiet. As of 2015, however, we know that at least two million third-party merchants worldwide sell over 80 percent of all items purchased on Amazon.
These third-party sellers vary in size and volume, but something that the best of them share is the price intelligence acquired by the use of automated repricing.
On such a massive marketplace like Amazon, there will be multiple sellers for almost any product. Shoppers initially compare products as they review price after price; items that are priced too high have a much smaller chance of being purchased. If a seller’s item is not being purchased due to price, sales don’t happen. Therefore, sellers are motivated to price their items competitively.
Amazon has something called the “Buy Box” which is the ideal place for a product to appear. It offers prime visibility and increases the probability of that item being purchased. About 80 percent of all items purchased on Amazon come from the Buy Box. When a shopper searches for an item, keywords prompt relevant listings, which are usually then sorted by Prime availability and price by the shopper. However, listings that show up in the Buy Box are determined by a myriad of factors, one of the most important being price.
So simply put, repricing is the action of a product’s price changing to be able to compete with other offers within that exact product. It’s important to note that repricing can be done manually as well as automatically. However, as any seller can explain, it is close to impossible to effectively and efficiently reprice listings manually since price changes happen every fraction of a second.
Manually repricing each listing on Amazon takes about 8 steps per ASIN, making the process incredibly tedious for sellers. Still, a good repricer will grant a seller ultimate flexibility, and allow for manual repricing should a seller choose to do so. If you choose to do this, remember that it's your total price including shipping that gets sent to Amazon.
How Repricing Actually Occurs
Once securely imported from Amazon, a seller’s listings automatically populate into a repricer. After this, the software looks at the products and analyzes the offers from all sellers on a particular listing to determine a competitor(s). A repricer will not begin to reprice until a seller sets the desired “minimum price” for each listing. By distinguishing the lowest amount for which a seller is willing to vend an item, the repricer can automate price changes without selling below the desired threshold.
A great repricer allows a seller to narrow their competition by only competing with certain fulfillment types, sellers that are Buy Box eligible, item conditions, or sellers with a rating above a specified amount, to name a few examples. These customizations, combined with a minimum price per listing, does ensures profitability and maximum exposure.
Since the repricer syncs directly to the seller’s Amazon account, it will receive updates from Amazon when competition changes on a listing, and will react by repricing items according to the strategy settings that have been specified.
Set Pricing Thresholds
A repricer shouldn’t even begin to work unless all minimum prices are correctly entered into the system. This helps to protect profit margins. Remember that a minimum price reflects a product’s landed price, or the price inclusive of shipping. Just as minimum prices eliminate the risk of losing profits, a maximum price gives the repricer a point to jump to, for maximizing profit when competition falls off, sells out, or pulls you too far downward. Many repricers do not require a maximum price to be set, but going the extra mile can pay off—literally.
Narrow the Competition
A common misconception about automated repricers is that they drop a seller’s price in order to get the sale. This is completely avoidable. Stay out of the “race to the bottom” by excluding competition that would drive your listing’s price down. For example, if you’re an FBA seller on a listing, excluding non-FBA sellers with lower seller ratings—which would most likely cause your price to drop—is one way to keep your listing’s price steady while still capturing sales.
Get the Buy Box
As the most coveted space for an Amazon listing, the Buy Box is what every seller is after. Featured merchant sellers must make sure several factors—including price—are up to the Buy Box requirements in order to be eligible for it. Among the top criteria, landed price (base price plus shipping), fulfillment method, shipping time, and seller rating, must be well established and maintained for the best chances at winning the Buy Box.
Automated repricing of your products on Amazon or other E-Commerce marketplaces is the key to beating the competition and increasing sales. Repricing software makes the constant pricing war on Amazon as easy and manageable as possible. Your listings stay competitive without your ceaseless efforts to reprice manually. It also ensures that more potential buyers see your listings and that you attain the coveted Buy Box. Now that you understand Amazon repricing, go out and get a repricer of your own and see your sales soar!
Automated repricing of products on Amazon is the key to beating the competition and increasing sales. Without a repricer, sellers miss out on not just sales but perhaps most importantly, profits. Employing the right repricer is one of the smartest things a seller can do. Think of a repricer as an employee whose tasks include helping sellers stay competitive, protecting their bottom line, growing profit margins, and saving time for procuring new products and servicing an abundance of customer orders.
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