Amazon Repricing Mistakes
Published by Julian in Amazon Repricer
Fact: all sellers want to make a profit. It doesn't matter whether you're a veteran on Amazon or a rookie, there is one decision you will have to make: what is the lowest price you are willing to accept to make a sale? Knowing what mistakes other sellers make will give you an advantage.
A lot of people think that catching a spot in the Buy Box only depends on who has the lowest price. However although is the most important, there are other factors too. Although you may always have lower prices than your competitors, your spot up there isn't guaranteed.
We are here to tell you about the six most common mistakes and what you should do to avoid them.
Forgetting price is the most important factor in getting you the Buy Box
Price is the most important factor when it comes to who wins the Buy Box. However, there are some other metrics as well that Amazon will take into consideration. Naturally Amazon will never share their real algorithm, but this approach is tried and tested.
If there is one competitor who made a late shipment, it might be just what you needed to get the Buy Box. As a matter of fact, even if your product's price is higher than theirs, you will still get the spot. Some other metrics that influence who gets the Buy Box include order defect rate (how many orders received a negative feedback compared to the total number of orders), late shipment rate, and pre-fulfillment cancel rate.
Forgetting about the fulfillment types
Being mindful of Fulfillment by Amazon (or FBA) will help you get more sales and decrease your fixed costs. Aside from this, if you become an FBA seller, you will gain access to millions of prime subscribers, who are known to spend 150% more than their non-prime subscriber counterparts. All this means that your products can have a higher price than the products of your competitors and you will still get the Buy Box if you use FBA and your competitors don't. In this case the shipping is included in the price of the item. You will be able to offer a $20 product with free shipping and be in the Buy Box while a competitor with a price of $15+$5 for shipping won't make it there.
As an added bonus, prime customers are actively looking for FBA listings because of the 2-day shipping, which will boost your visibility.
Forgetting about your costs
Have you ever heard about the so-called “race to the bottom"? This is a technical term, which describes the sellers who lower their prices little by little. In this practice they don't even realize it and they go below a profitable threshold, thus each sale generating a loss for them.
In order to avoid situations of this kind, you have to consider your direct and indirect costs. For sure you have direct costs like the price of the products, packaging, and shipping. The indirect costs include storage fees, the fee of the accountant, salaries of the employees, and other fees of running your business, including your internet bill. All this gives the real cost of a product. In some cases it is alright to go below this threshold, for instance, if you are consciously unloading inventory, but you have to know when to stop.
Every repricer software is the same
One misconception regarding the repricers is that they are all the same and all they do is to adjust your price so that it is one penny cheaper than the competitor's. What most sellers don't know is that having a price difference of only 2% compared to your competitors won't win you the Buy Box; you will only share it.
One of the most important aspects you will have to think about when choosing a repricer is that it has to work real time, just like Seller Republic. There are some repricers that work on an hourly schedule, which may result in profit loss. For example, if one of your competitors runs out of a product you carry, you want the repricer to respond immediately by increasing the price.
Another thing to consider is that the repricer must be able to handle FBA situations. This means that your software should ignore FBM (Fulfillment by Merchant) listings if you are an FBA seller and it should also ignore sellers with low ratings; these aren't really your competitors. In case you were selling with FBA, the repricer should increase the prices by 2-10% compared to the FBM sellers.
Going out of stock
While this isn't really a repricing mistake, it is a common problem. You have customized your software and the repricing is working just the way it should be, but there is still a problem: you are often out of stock, making your repricer useless.
As obvious as it may seem, if you run out of stock, you cannot win the Buy Box and you won't make sales, so you have to make sure you always have products on stock. Aside from this, if you have an FBM product you have an order for, you might get a negative feedback. Such negative feedback will ruin your chances of winning the Buy box on the long run.
Amazon Repricing - In conclusion
Now that you know how repricing affects your business, you should also know that it is only one factor Amazon will take into consideration.