Repricer at Amazon: According to the study, these are the most successful methods for the Buy Box profit
The study “An Empirical Analysis of Algorithmic Pricing on Amazon Marketplace” by Northeastern University Boston has determined how online retailers use Repricer, their pricing strategies, and how widespread Repricer is on Amazon. The research team chose Amazon because the online giant has become the world’s largest marketplace for online retailers from the USA, Europe, and Asia.
Over a period of four months, the research team collected public data from nearly 1,700 bestselling products on Amazon. This allowed for the identification of 500 online retailers who are very likely using an Repricer. Subsequently, methods were developed for the study to recognize and analyze the pricing algorithms as well as the behavior of the Repricer on the marketplace. The study team investigated the characteristics of the online retailers and characterized the effects of the repricing strategies on marketplace dynamics.
For anyone who needs a little refresher at this point, you can find everything on the topic: “What is Repricing and what are the 14 biggest mistakes that retailers should avoid?”
The theoretical buyer is shopping without a Prime account
Although the US company Amazon has recorded over 150 million Prime users worldwide, the researchers from Northeastern University Boston chose a non-Prime user account for data collection. FBA shipping has a significant impact on the allocation of Buy Box shares. From the scientists’ perspective, the offers of online retailers that do not provide Prime shipping would likely have been excluded by the Amazon algorithm. This would significantly alter the study’s results.
What immediately catches the research team’s eye?
During the study, the scientists observed that online retailers using an Repricer seem to be more successful than sellers who do not use one. The first group of sellers offers fewer products but receives significantly more customer feedback. This suggests that a much higher sales volume is achieved as a result.
Summary of the study results
Conclusion
As we have already reported, the lowest price on Amazon is not a guarantee for winning the Buy Box – it is more about the strategy. The study from Northeastern University Boston confirms that only sellers who engage with the key metrics of Amazon, know the marketplace inside and out, and position their products correctly are successful on Amazon. The use of Repricer is part of the strategies of successful sellers. Especially when the goal is not only to win the Buy Box but to sell at the best possible price. When competing directly with Amazon, the use of Repricer is essential.
When selecting an Repricer, the Amazon retailer must not only consider the advantages and disadvantages of each provider but also engage with the respective technology. There is a distinction between rule-based and dynamic Repricers. If you want to maintain full control over your repricing strategy, a rule-based Repricer is the right product – but it requires a lot of time. A dynamic Repricer collects data, analyzes it, and continuously adjusts the repricing strategy.
Dynamic Repricers are often more profitable – rules can contradict each other and often lead to prices being adjusted only downward. In dynamic pricing, the rules are determined and adjusted by the Repricer itself – depending on the market situation.
*Source: Chen, L., Mislove, A., & Wilson, C. (2016). An Empirical Analysis of Algorithmic Pricing on Amazon Marketplace. Proceedings of the 25th International Conference on World Wide Web.
Image credit: © Feng Yu – stock.adobe.com
