Amazon updates millions of products’ pricings every 10-15 minutes so, why wouldn’t you?
According to the last known public statistics published by Business Insider, Amazon makes 2.5 million price changes per day. And this data corresponds only to the Amazon Retail division! This means that, as of today, these 2.5 million changes will have multiplied, for sure.
Amazon Retail (the division of Amazon that buys products and sells them directly) has its own repricing algorithm that scans prices of direct and indirect competitors inside and outside Amazon to always get the lowest price.
In addition, on Amazon’s Marketplace and from your Seller Central console, an Amazon Seller is able to update his prices and even do basic repricing by setting a minimum and maximum price for the product. As Amazon Sellers, we can also automate repricing from the Seller Central dashboard.
To give you an idea of how important price changing is for Amazon, the first public patent assigned to the company where repricing is mentioned is from 2003 and is called “Collecting competitive pricing information via a merchant web site for use in setting prices on the merchant web site“. This means that Amazon was probably already doing repricing before 2013.
One of the sentences that strikes me the most is
In some embodiments, the report indicates a relative urgency for repricing the items shown in the report based upon the number of shopper price submissions submitted for each item
In other words, as early as 2003, Amazon’s patents were already talking about the urgency of repricing a product.
What is repricing?
Repricing is a strategy used by Sellers and Merchants to manage their prices and try to always have the best offer compared to their competitors.
Repricing can be done within Amazon as well as on Walmart, eBay, your own ecommerce and other platforms.
There are specific tools to manage these price changes such as SellerSnap, BQool or RepricerExpress (for Amazon) or to modify prices on your own website, such as Boardfy, Prisync, NetRivals… Scroll down to the end of the post if you want to find more tools.
These tools are called Amazon Repricers or repricing software and follow a series of automatic and user-defined strategies.
These tools and strategies allow sellers to maximize their sales and conversion rate, as well as to gain more Buy Box share in product files where there is more than one seller. Some of the most typical repricing strategies are:
- manual repricing
- dynamic repricing
- automated repricing
- and repricing based on vendor’s own rules
Why it is necessary to reprice on Amazon
Well, basically, because your competitors do it too and having the best price will increase:
- your number of sales for being the best priced seller
- your conversion rate
- your Buy Box quota earned
And, to define our ideal price, we must take into account not only the price of competitors, but also the following points:
- COGS (Cost Of Goods Sold): how much it costs to manufacture and/or import our products
- Competitors: supply and demand
- Amazon Commissions and Fees
- Costs of creating offers on Amazon
The initial cost of your product, either manufactured from scratch (Private Label) or purchased from a distributor or wholesaler (through Alibaba, a dropshipping site, etc).
This cost will be part of your P&L or income statement. Other factors that can affect the P&L and that would fall under COGS are:
- Market research costs to find the product
- Product design costs
- Costs of patenting the product or patenting its design, functionalities…
- Manufacturing costs
- Cost of development materials (raw materials, for example)
- Product inspection costs
- Transportation costs (e.g. to ship the product from China to your country)
- Customs costs
- Costs of shipping the product from your warehouses to Amazon FBA warehouses (i.e. inbound shippings costs).
Supply and demand
If you are one of the first sellers to sell a product that eventually turns out to be a top seller, you can charge a higher initial price.
But, if you are a merchant selling products similar to those of your competitors, you will not be able to raise the price unless you introduce some significant change, such as premium options, better manufacturing materials than the competition….
In other words, the price of your product will be determined by the prices of your competitors and also by the demand for the product.
The more sellers, the lower the price. The less demand, the lower the price.
This is an important chapter in which you should use an Excel or FBA calculator.
Amazon’s fees play a very important role in your final price. Take into account costs such as:
- $39.99 per month for selling on Amazon’s Marketplace
- Between 12% and 15% average commission on each sale
- Advertising expenses
- Logistics costs, either with own logistics (FBM) or from Amazon (FBA or Seller Fulfilled Prime)
- Warehousing costs at Amazon’s fulfillment centers
- Costs of moving our SKUs between different Amazon warehouses, since not all inbound shipments will end up in the same warehouse, nor will those SKUs stay in that warehouse forever.
- Other Amazon fees: closing fee, cost of gift wrapping, Amazon Vine fees, etc.
- It is also important to consider the costs of returns and refunds, at least for a % of our sales.
- Amazon FBA’s taxes
Costs of creating Amazon offers
Creating a Flash offer, 7-day offer, discount coupon, BOGO (Buy One Get One), etc on Amazon is not free.
In addition, there are several peak seasons in which we will have to create offers: Black Friday, Prime Day, Cyber Monday, Christmas, etc.
These costs must be taken into account since at least two of them directly affect the final price and our clean margin:
- Cost of creating the offer
- % discount we will offer in the offer
This is also valid for the creation of Subscribe & Save promotions, which usually offer between 5% and 10% discount for subscribing to the product.
Price is the number 1 sales driver
Indeed, this is true in all countries. Price + convenience. In other words: price + fast and, if possible, free shipping.
But there are other factors that also affect the price we can charge:
For me, this involves several aspects
- Product feedback (reviews)
- Seller Feedback (reviews in seller’s profile)
- Number of questions asked and answered in the listing
The higher the number of positive reviews, the more we can raise the price of the product, since it is assumed that it will be better than that of the competitors. Of course, making sure that raising the price does not affect our CVR (Conversion Rate).
Not all your competitors are your competitors
Don’t lump everyone who sells a product similar to yours together. Compare their:
- Look at how many unverified reviews there are.
- And the fake reviews number. Use Fakespot.
- How many reviews include image and video
- Also if the video reviews have generated a carousel of video reviews. That usually means: TOP product
- Negative reviews (painpoints and weaknesses)
- Estimate your % of returns based on negative reviews
- Seller feedback, especially negative feedback
- Seller’s country of origin
- Quality of your listings: texts and, above all, images
All of this can help us narrow down who our true competitors are, as well as who the sellers are who can truly compete with us for the Buy Box of the same ASIN.
Amazon Retail and Amazon private label
While we’re on the subject of the Buy Box, as you may know, Amazon Retail usually wins it 9 times out of 10 when they are selling the same product as you or other Sellers.
But the good news is that there are ways to gain Buy Box share. In fact, Amazon Retail itself is willing to share a % of Buy Box with the other Sellers so that they too can sell units of that ASIN.
There are also ways to beat Amazon Retail in the Buy Box, for example, repricing and being cheaper than them. But, of course, you will have to be very aggressive with price reductions and without losing sight of the fact that Amazon Retail, in many occasions, loses money selling products.
In fact, 2022 was the first year that Amazon Retail presented its income statement separating Advertising from Operations. And, oh, surprise, it turns out that Amazon Retail is not very profitable.
In the fourth quarter of 2021, Amazon’s retail operating loss was $1.8 billion, the highest loss in over six years. It would have been an $11.6 billion loss if not for advertising
Therefore, we can compete against Amazon Retail to win the Buy Box but we can also lose a lot of money in that battle.
You won’t compete directly against them, but leep in mind Amazon’s Private Label brands, such as Amazon Basics, Solimo, Stone&Beam, Amazon Elements… This is important when you’re using a repricing strategy such as “Follow competitor / Lowest competitor / Multiple competitors”, which we’ll discuss in no time.
Here we are talking about new products vs. second-hand or reconditioned products.
Keep in mind that you have to compete in the Buy Box against sellers selling the same product and with the same condition. You cannot, for example, compete on pricing with a new product vs. a refurbished product being sold by Amazon Warehouse.
That is, it is important that, in your repricer’s seller exclusion list, you make sure to include Amazon Warehouse and other second hand sellers.
Delivery time is also a determining factor in winning the Buy Box. The faster the product arrives (and with free shipping), the better. A clear example of this is the famous “Arrives before Christmas” that we can see in many listings in December. Without that promise of delivery, conversion will drop dramatically.
This is not true 100% of the time, as there are some products that cannot be put into FBA or Seller Fulfilled Prime. For example, perishable products, products that require customization, etc.
Stock, Stock, Stock
There is a very simple principle: Amazon is an online store, so you need stock for its customers to buy from you. If you don’t have stock, you can’t win the Buy Box.
This implies several things:
- No stock-outs
- If you break stocks, keep it to a minimum, since the breakage history is also important to win the Buy Box.
- Maintain a healthy IPI Score (Inventory Performance Index).
- This index evaluates the efficiency of inventory management and is high when there are no overstocks or stock-outs.
Remember Seller Feedback
When you match the lowest price + most competitive shipping costs + best logistic option with other sellers, there is a key factor to win the Buy Box.
In case of a tie in pricing, fulfillment and “shipment speed”, Seller Feedback breaks the tie.
The higher the number of Seller Feedback reviews and their higher average rating, the more chances you have to win the Buy Box. It’s as simple as that. A high fulfillment rate along with a low number of A to Z complaints, returns and refunds will help you earn Buy Box quota.
Use your data and experience as a salesperson
While a repricer will do much of the work, it can never match the experience you have selling your product and the historical data you have to make decisions.
For example, when you know what your competitors are doing, when you know what’s happening in peak seasons, when you know how consumers behave… all of that can help you make pricing decisions that a repricer can’t make for you.
Don’t change your strategy every day
One of the big problems selling on Amazon is not having patience. “Geez, this isn’t working for me, I’m going to change strategy” and do this every 8h or every 24h or every 48h.
Changing strategy so often only causes us to lose focus and, above all, we do not consolidate our prices or allow them to produce results so that we can analyze what is going on.
Sometimes, it is better to let the repricer run its course and focus on other aspects such as marketing, sales, Sponsored Products / Brands / Display campaigns, attracting traffic from outside Amazon to our listings, analyzing the competition…
18 Repricing strategies
Now, at last, we are going to see all the repricing strategies that exist, or at least the ones I know about.
1. Using AI Repricer rules
Artificial intelligence and algorithms are advancing at a tremendous speed and can learn from customer and competitor behavior.
There are many repricing software programs that have AI-based rules, allowing you to automate pricing faster and avoid errors.
2. Manual repricing
A classic that has been used by Amazon since the dawn of time. In fact, Amazon’s own repricer works like this.
However, it is not very scalable. Manual repricing of 50 SKUs is not the same as manual repricing of 2,000 SKUs.
In addition, manual changes are slow and can cause errors.
3. Create custom rules
In this case, it is a matter of creating a repricing target/goal and creating rules to set the final price.
Most repricing tools allow you to create “if this, then do that” conditions.
For example, if my main competitor is selling below MAP, we can tell the repricer not to match that price, as we would lose money.
4. Fixed price
In this case, there is not much of a secret. It is simply a matter of not making any changes to your prices.
5. Competing against yourself
This is a strategy only found on Repricer.com’s repricer. It is that your Private Label products (those that are very similar) compete with each other and reprice each other. Very interesting to experiment how much one product is capable of stealing sales from another.
6. Follow BuyBox
This strategy consists in following the seller who has the BuyBox to immediately choose a quantity or a percentage to compete against him in each of the Fulfillment methods: FBA, FBM and SFP.
For example, you can tell the repricer to “Follow BuyBox” and, if the Seller who has the BuyBox is FBM/FBA and we are FBA/SFP, to increase/decrease our price by a fixed amount or %.
7. Follow competitor / Lowest competitor / Multiple competitors
This strategy allows you to enter a seller ID of a competitor, including Amazon Retail itself, and choose a fixed % or amount to compete against.
If you don’t know how to find that ID, here is a post: Find your Amazon seller ID and merchant token
8. Follow SFP / FBA / FBM highest / lowest competitor
A strategy similar to the previous one, but this time it will follow the seller who wins the Buy Box using any of the three fulfillment methods.
This will allow us to establish rules such as:
- If the Seller who has the BuyBox has Fulfillment with FBA, increase / reduce my price by this fixed amount / %.
- If there are several Sellers sharing BuyBox quota, one is FBA and the other one too, but one has a higher price and the other one has a lower price, follow the one with the lower price and increase / decrease my price by this fixed amount / %.
- If there are several Sellers sharing BuyBox quota, one is FBA, the other FBM and the other SFP and they have 3 different prices, follow the one with the highest price and increase / decrease my price by this fixed amount / %.
9. Follow several related ASINs
Repricing is still possible if you are the sole seller of your products (private label).
This strategy tries to identify which products compete with you and reprice them in order to be the most attractively priced product.
A good way to get your competitors is to enter your main ASIN in Helium 10’s Cerebro and hit the “Get competitors” button.
10. Periodic price changes
This strategy tells the repricer to change the price by X amount or percentage every X amount of time.
It is useful for Private Label products where we are the only seller.
11. Repricing based on the last sale
This strategy is especially useful when we have not made any sales for a few hours or even days.
What we say to the repricer is something like “if I haven’t made a sale in 24 hours, match the price of the product to the price of the last sale that was made”.
It is possible to establish a condition and a pre-adjustment of prices based on when the last sale was made.
12. Sales Velocity Repricing
This strategy tries to change prices based on how quickly your products sell.
For example, increase the price if the sales velocity is good or lower it if the sales velocity is slow. The secret of this strategy is to find the ideal price according to market demand in real time.
13. Inventory-based repricing
This repricing strategy is adjusted according to the available units we have in FBA or FBM and the speed of sales in the last few days.
In addition, we can add the Inventory Age factor, to liquidate products that have been in Amazon warehouses for more than 3 months, for example. Also, products that are about to incur penalties for long-term storage fees should be liquidated.
Some repricer even include the option to plug-in your inventory management software to use this strategy in real time, for example:
- BQool integrates with InventoryLab
- Repricer.com integrates with SKUbana, Linnworks or SKU Grid
- SellerSnap integrates with InventoryLab and SKU Vault
14. MAP-based repricing
When you are reselling some brands, you have obligations regarding the Minimum Advertised Price.
If we give that MAP Price to our repricer, he will know that he must not exceed it, so as not to have legal problems with the brand.
Some Sellers take advantage of the fact that on weekends the Key Account Managers of the brands have free time and are not monitoring prices, to exceed the MAP by undercutting it, making aggressive discounts.
15. Suppresed Buy Box repricing
Occasionally, Amazon deletes a BuyBox because it finds the same or very similar product on or off Amazon at a more attractive price. Or because our product is priced too high and is not competitive.
This strategy seeks to perform repricing actions at the moment when Amazon deletes the BuyBox. If we do this using the IA, the repricer will search and identify the last time the Buybox was not deleted and match that price.
16. Maximum price / Minimum price
A repricing classic and the type of repricing we can do from Seller Central without using tools.
Our final price will fluctuate between a minimum price (floor Price) and a maximum price to always try to win the BuyBox.
17. BuyBox win repricing method
This repricing method (which is quite aggressive) seeks to gain as much BuyBox share as possible.
The repricer will find the lower price and try to match or beat it. This is a dangerous strategy for our commercial profit margin.
18. Yo-Yo method
Last but not least. This is a method found in repricers such as SellerSnap that seeks to create a virtuous loop by increasing the price to the maximum and then returning to an automatic repricing method such as, for example and in the case of SellerSnap, Game Theory Repricing.
As we have already demonstrated throughout this post, there are various repricing softwares available depending on your requirements. Here is a list of the ones we think are the best. They are listed in alphabetical order:
- Aura Repricer
- Informed.co (formerly, Appeagle)
With all this information, we hope you have discovered the best strategies and tools for repricing so… let’s repriceeeeee!
About the author
I work as an independent eCommerce and Amazon consultant.
I work for: Estrella Damm, Intersport, Bella Aurora, Lladró, Textura Interiors, Nice Things Palomas, Castañer, Due-Home and many other clients.
I teach and have been a speaker at: Meet Magento, Prestashop, Prestashop Day, SEMRush, Cambra de Comerç Barcelona, ClinicSEO, Ecommbeers, Ecommbrunch, Ecommercetour.com, Ecommfest, EOI, ESIC-ICEMD, Foxize, Generalitat de Catalunya, Inesdi, Quondos and The Valley.
In addition, I have done in-company trainings for brands such as Orange and Adidas.
Finally, I collaborate writing articles for Helium 10, Carbon 6, Shopify, SEMRush, Prestashop´s official blog, Brainsins, La Vanguardia, eCommerce-news.es, Marketing4ecommerce and other blogs and media.