Repricing on Amazon – How to Increase Revenue and Decrease Stress
What do you think are the most important selection criteria for potential customers when they search for a product on Amazon? Product quality? Customer service? Delivery speed? If the price was among your first three options, you are definitely not alone. It is for good reason that the final price (product + delivery cost) is the most important metric for Amazon merchants who want to place their products behind the coveted “Add to Cart” field – also known as the “Buy Box”. In no way do we intend to downplay the relevance of other sales criteria such as delivery time or return rate, but at the end of the day, one thing is certain: a competitive final price will increase your chances of winning the Buy Box. This is where price optimization – or “repricing” – on Amazon comes into play.
What Is Repricing on Amazon and Why Is it so Important?
Before we lose ourselves in the depths of pricing strategy tactics for Amazon, let’s take a quick look at the basics of our topic today. We already mentioned one or two words in the first paragraph that may require some explanation if you are new to Amazon. For those of you who already know their way around the Amazon environment, here’s an article that goes more into depth regarding your repricing strategy.
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The Buy Box
The orange/golden button on Amazon which is labeled “Add to Cart” is colloquially known as the Buy Box. You can find this button on the right-hand side of any Amazon product detail page when you are browsing the online platform.
If you sell on Amazon, you will have noticed that the competition regarding this Buy Box is very fierce. Why is that the case? That is because the Buy Box can only be held by one seller at a time and about 90% of all sales occur through this golden “Add to Cart” field. Consider this: When was the last time you went to Amazon and actively searched for alternative sellers of the same product instead of using the Buy Box?
Winning the Buy Box is no child’s play, but the investment is worth it if just for the resulting visibility and profit. We wrote a workbook on how to get into the Buy Box in 13 steps. You can read it here.
How to Price on Amazon
So, what is repricing? Well, Amazon’s pricing strategy is basically built on price optimization, i.e. the adjustment of one’s own product prices to the conditions of the marketplace. These conditions include the final price of the competitions’ products, supply and demand of relevant products, the impact of trends or seasons on the marketplaces, and many other factors.
When repricing on Amazon, merchants can apply various methods. Most professionals outsource this time-consuming task to an Amazon repricing tool or software. Others, however, like to do their market research without the help of a solution and adjust their prices manually. Both methods have their benefits and drawbacks. It is also important to note that not every repricing tool is the same on Amazon. But more on that later.
As a general starting point, a solid pricing strategy always requires that you ask yourself this question first:
Taking all relevant factors into account, how do I adjust the final prices of my products on Amazon so that they sell optimally?
Let’s take a closer look at the different methods that can be applied when repricing on Amazon.
Manual Repricing on Amazon
This form of repricing entails that you do not use any software for your Amazon pricing strategy or analysis at all. It requires the sellers to monitor their competitors’ prices and the relevant marketplace conditions on their own.
The main benefit this method of repricing on Amazon has to offer is that you are in full control of your pricing strategy. Also keep in mind that most Amazon repricing tools are not offered free of charge. Sellers that don’t use a repricer, are not burdened with these additional costs either. Another question is whether this compensates for the time you have to spend constantly adjusting your prices.
Where is the disadvantage? As you might have guessed, repricing on Amazon without software will take up a lot of your time. To be precise, repricing without software will take up all your time if you want to keep up with other merchants who use automated repricing software. Every day, 2.5 million price adjustments occur on Amazon, with Amazon changing the prices of its own products up to 8 times per hour. Those who manually engage in such a task do not have much time for other things at the end of the day, which leads to other metrics being neglected and a dip in their overall seller rating.
Static Repricing on Amazon
Static or rule-based repricing means that you use software for your pricing strategy which identifies the price needed to win the Buy Box and then automatically adjusts your product prices to that amount.
The advantage of static repricing on Amazon is that you will win the Buy Box more often than before and therefore be able to sell more items. In addition, you no longer have to spend many hours a day manually adjusting your prices to keep up with the competition, but let the repricer do the work instead. This now leaves you with much more time to do other things. Regarding the costs: Amazon offers a repricing service for sellers and they do so at no charge. But where’s the catch? Even though the Amazon repricer is free, the rule-based algorithm it works with holds a few disadvantages.
Due to the increased Buy Box share you may now be selling more products than ever before – but at what price? The Amazon repricer reviews the prices of your competition and then applies a single formula: Underbid the competition at all costs (literally). The results are fierce price wars between the sellers. While this is good news for the customers, there is no winner in these price wars from a merchant’s perspective.
Dynamic Repricing on Amazon
When it comes to dynamic pricing strategy on Amazon, there is a wide array of tools that can help your online business gain momentum. Much like a static repricing, dynamic repricing on Amazon determines the price you need for the Buy Box. It then sets your prices to this amount, but then gradually increases your prices to the highest possible amount you can charge without losing the Buy Box.
The advantage with this form of pricing is that you are in the Buy Box more often while selling at the highest possible price.
However, the disadvantage, which some sellers point out, is that your pricing strategy is heavily software-driven and therefore lacks “a human touch”, if you so will.
That is not always the case.
Repricing on Amazon does not necessarily mean that the merchant has to give up control over the pricing strategy. You are free to analyze the market and your competitors’ prices as you see fit and adjust the dynamic repricer according to your findings. This may even lead to better results. However, most merchants simply tend to rely completely on their repricers because it is the most convenient solution, allowing them to move on to other more pressing matters. A good repricer can also offer you several strategies to choose from, ensuring that your immediate business needs are always covered.
Repricer ≠ Repricer
You are about to start repricing on Amazon but don’t know where to begin? There are several questions in regard to what kind of repricer you should get for your business. As we already discussed, a dynamic repricing solution is the option that holds the most benefits. However, not every solution is the same.
There are several things you can plan in advance when you start your Amazon repricing software comparison. Working with an international team? Check whether the repricer has all the necessary language options your team requires and – more importantly – whether the company offers customer service in aforementioned languages. In addition, every repricer specializes in different business models. So, before you decide on a specific software, first check whether you can use it to implement all of your company’s planned pricing strategies to achieve the highest profit.
In the past, repricing on Amazon was a lot easier. It was enough to keep an eye on the prices of the competition and adjust your own item prices accordingly. However, the great growth in online trade has now led to a situation where a lot of time has to be planned in if you want to have a suitable Amazon repricing strategy ready for every eventuality.
If you want to do this manually, you have to reckon with the fact that you won’t get much else done. Those who work with a static repricer will sooner or later have to deal with a price war in which everyone profits, except the sellers.
At the end of the day, dynamic repricing remains the most favourable of all these options. Even though they are not free of charge, the benefits of winning the Buy Box and selling on Amazon at the highest price will more than make up for the cost of the service.
Well, Amazon’s pricing strategy is basically built on price optimization, i.e. the adjustment of one’s own product prices to the conditions of the marketplace to win the Buy Box or to get a higher ranking among the Amazon search results.
Yes. Very legal.
It depends on your business model. Some sellers might be happy with static or even manual repricing tools but most professional sellers should use a dynamic repricer with several intelligent strategies, like the SellerLogic tool offers.
For sellers of wholesale, for example, we offer fully automated optimization to the Buy Box. Private label sellers, on the other hand, benefit from time-based and sales-based strategies. These are just a few of many different strategies, which all are included in the price.
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