According to studies, product price is the top consumer consideration when making a purchase decision. Eighty-six percent (86%) of shoppers would willingly compare prices for the same product from different sellers to get the best deals. Most sellers assume that offering a product for the lowest price is the best strategy. However, this isn’t always the case, especially for retailers on the world’s biggest marketplace, Amazon.
Frequent Amazon shoppers would be surprised to learn that 2.5 million price changes happen on the platform every day. This process is called Amazon Repricing, and it is an invaluable tool for sellers designed to edge out the competition. For the most part, pricing changes go unnoticed, but they should be a critical part of a seller’s sales strategy.
This article will tell how important Amazon Repricing are and learn about the best repricing strategies. Plus, you’ll get to know the most effective ways to implement them on the world’s number one marketplace.
What is Amazon Repricing Strategies?
Amazon repricing strategies refers to the changes in prices within the marketplace. It’s a tool the seller must utilize to remain competitive on the platform. It hinges on the premise that shoppers compare the prices of different sellers for the same product before making a purchase. If a retailer’s price isn’t competitive, another more strategic seller is bound to make the sale.
Because Amazon has high volume every day, pricing changes also happen massively. On average, prices change once every ten minutes. Several factors influence repricing strategies which will get discussed further below.
Factors that Affect Product Prices
Nothing is set in stone in retail, which is doubly true in Amazon eCommerce. The price for raw materials fluctuates, the demand for certain products ebbs and flows, and the eagerness of consumers to shop changes – hence the Amazon Repricing Strategies. Below are the most common factors that affect product prices:
- Inventory Costs
Whether a retailer manufactures its products or resells pre-made goods, inventory costs are one of the most crucial driving factors in Amazon repricing strategies. Any fluctuation in the price of procuring inventory, including but not limited to research and development, manufacturing, or raw material sourcing, can affect a company’s profit margins. Adjusting prices can improve or maintain a retailer’s bottom line.
- Supply and Demand
More than the overhead costs of running an eCommerce business, the demand and supply for an item is also a factor that contributes to repricing. Sellers who can offer high-demand products can charge more for the items. As more sellers offer the same product, adjusting the sticker price is ideal.
- Fluctuating Amazon Fees
Amazon has been an excellent tool for small and medium businesses and even allows sellers to target more consumers and expand their reach. But these services aren’t free. All sellers pay the platform to maintain a presence regardless of the type. The cost of being on Amazon is another factor that needs to be considered when pricing and repricing items. When there is a hike, product costs should increase as well.
- Sales and Offers
Especially in the US, eCommerce retailers look forward to several shopping holidays. During these events, shoppers expect large discounts and amazing deals. To make the most out of demand, Amazon sellers are inclined to reprice their items and offer promotions to boost their sales.
Repricing Strategies: Manual versus Automatic
Generally, there are two ways Amazon sellers can effectively reprice their items – manual and automatic repricing. Through manual repricing, sellers have complete control over the number they settle on for a product. This option is tedious and has a considerable margin of error, but it is an excellent choice for those with significant experience in the eCommerce industry.
Consequently, there are Amazon repricing strategies and tools that sellers can choose to use to alleviate the burden of data and research. Most instruments are AI-powered and require very little supervision and know-how.
Amazon Repricing Strategies
Whether a retailer has one or a thousand products on Amazon, developing a pricing and repricing strategy can help optimize the operation and increase monthly sales. Below are the best methods to take note of:
- Study Competition
There are plenty of retailers that sell the same products on Amazon. Often, the price is the only thing that sets each of these operators apart. But, you don’t have to compete with everyone. If a retailer vies for the Buy Box, they should focus on edging out other FBA sellers. Determine the competition that deserves a follow – ideally, an operator with plenty of sales on the specific product.
- Price According to Data
Guesswork has no place in Amazon repricing strategies. All reprising decisions should hinge on previous sales data. It is also crucial for a seller to compete with their historical sales more than with other sellers.
- Leverage Holidays and Shipping Events
As mentioned earlier, shopping holidays are vital to Amazon’s repricing strategies. During these events, sellers should lower the cost of a specific product as they can quickly recoup through the sheer number of orders.
- Don’t Race to the Bottom
Contrary to popular belief, offering a product at the lowest price isn’t the best way to attract shoppers. Consumers tend to avoid the cheapest listing because of concerns over the product’s quality.
- Win the Buy Box
Winning the Buy Box is the single best thing that can happen for an item on Amazon. Winning the Buy Box allows sellers to price their products higher than usual. Customers are still likely to patronize the seller that wins this perk despite the price.
There is no specific formula that guarantees a sale on Amazon. Different repricing strategies work at different times and for different target markets. It is crucial to try what works for an operation. Eventually, you’ll find your Amazon sweet spot.
Interested in learning more about selling on Amazon? ZhenHub can help. With decades worth of combined experience, we have developed logistics strategies to help you stay ahead of the competition. Reach out to us today or request a free quote to discuss what we have to offer.