Guest post: How Amazon Repricing Can Increase Your Sales and Profits

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seamus-breslin-repricerexpressSeamus Breslin of RepricerExpress talks about what exactly repricing software does and how your online business can get a slice of the $60 billion Amazon Buy Box pie.

What is repricing software?
Repricing software essentially allows Amazon sellers to automatically compare their product prices to those of competitors’ and adjust them accordingly (within their own set upper and lower limits).

Sellers’ prices are so closely linked to their sales performance and product visibility on Amazon that they need to continually ensure their products are priced competitively—and doing this manually if you have hundreds or thousands of products, simply isn’t viable.

Sellers set the min and max prices they are willing to sell their products at so the software knows never to go below or above these limits. When Amazon sends a price notification change for any product, the repricing software will adjust yours where necessary with the goal to win the Buy Box or rank highly in search results.

With an increasing number of sellers using repricing software it is very much becoming an essential part of your ecommerce business rather than a nice tool to have.

What’s the Amazon Buy Box?

When purchasing a product on Amazon, both it and third-party sellers may be responsible for selling that product. When a customer reaches the product page, Amazon places one seller’s details (often itself) and price in the Buy Box.

repreicer express graphic

Because the Buy Box is so prominent and linked to the ‘Add to cart’ button, any seller with placement in it, will be almost guaranteed more sales for the seller that wins it. If you compare it to a Google search, the Buy Box is effectively the first result of a customer’s search for a specific product, and the one that they are likely to click most to complete a purchase.

In 2013, Amazon’s revenue almost topped $75 billion, and $60 billion of that came through the Buy Box—of that, $30 billion was sold by third-party Amazon sellers. With those figures, it’s clear to see why selling on Amazon and getting your share of Buy Box spots is so important for many online sellers.

How can a seller win the Amazon Buy Box?
Your eligibility to win the Buy Box is linked to your seller performance.When you exceed Amazon’s standards you’ll obtain the Featured Merchant status—a prerequisite to Buy Box eligibility.

When that’s in place, your placement within the Buy Box can be largely governed by price, which is why anyone seriously selling on Amazon needs to put repricing strategies in place to consistently maintain healthy sales.

Buyers with purses open!
An area that small online sellers often overlook is the huge audience of 237 million ‘ready to buy’ consumers that Amazon has globally. Couple that with the fact that those consumers trust the site and can purchase with one-click and you’ll see why millions of sellers find success on the marketplace.

Any small or medium sized online seller with their own website is never going to be able to bring that size of audience to its own site or address trust and one-click buying as effectively. Addressing any of these issues, particularly the need to bring a steady flow of traffic to one’s site is a costly affair, and one that many small online retailers fail to budget for. In fact many experts believe that the benefits of selling on major marketplaces like Amazon and eBay far outweigh the lure of your own webstore.

What are sellers’ biggest fears of using repricing software?
The number one fear of sellers is that repricers will lower prices too far and get them embroiled in price wars, but the truth is that sellers can’t reprice without inputting minimum and maximum sell prices—so if you set a minimum sell price for a football to £7 (including shipping) your price will NEVER get pushed below that.

A modern repricing solution will increase your prices where possible. If your min and max prices for the football are £7 and £15 respectively and your competitor sells out of stock or there the other sellers can’t match your Featured Merchant status, the repricer would push your price up to maximise your profits on any new sales.

There are so many myths about repricing software but the truth is, the practice has been going on in retail for decades, albeit in a different way. In any competitive market (particularly one such as Amazon that is renowned for competitive prices), you’re going to have to compete on price in some regard, however, with an effective repricing solution, you get to compete on your terms where you can win a sale at a profit.

Have you any advice on executing a repricing strategy?
Remember that a repricer is still only a tool and you’ll get the best results from it if you set your repricing rules to suit your overall business goals. It’s important your repricing software allows you to decide who you want to compete with and also who you don’t want to compete with.

Although there are many sellers on Amazon selling the same products, you can bet they are all quite different businesses, with different circumstances, goals and inventory lists— a modern repricing solution gives you the ability to set your repricing rules to sell your stock in the way you need to, at the price you’re prepared to sell at. Some sellers need a steady flow of sales, whilst others stockpile their inventory until they feel they can get the best price. This coming Christmas is a prime example of when toy sellers will be ready to get higher margins on some lines, and they’ll have their repricing rules in place to maximise their profits.

6 Responses

  1. Interesting article from man who’s company has repriced people entire inventory down to 1p, due to a “glitch” despite stating “if you set a minimum sell price for a football to £7 (including shipping) your price will NEVER get pushed below that.”. Interested to see what his company and Amazon is going to do for all the poor independent sellers who was using Fulfillment By Amazon and his repricing tool, who have had thousand of pounds worth or stock sold off for pennies an sent out by Amazon the very next day. How does he intend to help these sellers out, as potentially his cost them millions of pounds in loses, probably bankrupting a few?.

  2. The simple fact is that we don’t know exactly how many sellers this affected and how much that might have cost. So speculation is unhelpful.

    One thing we do know is that the problem was solved very quickly. So talk of it being ongoing are inaccurate.

    The nub of the question must be how the companies at fault make good on the problem.

    Dan Wilson


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