How Amazon Repricing Works?
How does repricing work?
Repricing is a simple process that helps online sellers win the Buy Box by ensuring that they are always selling at a competitive rate. Outlined below are the steps to winning the Buy Box, as carried out by vreprice’s Amazon repricer.
1. You or your competitor makes a price change
2. Amazon notifies your integrated repricer of the change
3. Your repricer calculates the new price
4. Background safety checks are carried out to protect minimum and maximum prices
5. Your repricer notifies Amazon of the price change
6. Amazon’s Pricing Error System checks the new price
7. The new price is updated on Amazon
How fast do price changes occur with an Amazon repricer?
Repricers vary, ranging from hourly to 15 minutes to real-time. Here’s an example how a price change occurs with an automated repricer.
It all starts with a price change, which is activated either by you, or one of your competitors. Amazon notes the price change and this is picked up by your repricer. The price manager checks your rules, then carries out safety checks on your minimum and maximum prices. The repricer then adjusts your price to compete.
Win the Buy Box and always make a profit
When the final sale price is constantly changing in reaction to competitor price changes, and when your cost of sales, including Amazon fees and sales tax, depends on your landed sales price, you can run the risk of selling at a loss. However, we are not here to win the Buy Box at any cost – we are here to make more profit. Net margins are critical to any business success, so this is something you would need to consider when choosing a repricing tool. Repricers should manage your net margin, so you never make a loss, and always ensure a profitable return on your sales.
Amazon top sellers follow the price dive
Be a leader
The way to be a leader on Amazon is to avoid getting too caught up in price wars. Drive more sales based on your strengths, and how well you know your competitors. Is your competitor eligible to win the Buy Box? If your rival has low-performance metrics, you can still win a share of the Buy Box – at a higher price.
Don’t jump onto the sinking ship when other sellers are descending rapidly below your minimum price. The wise seller will wait until their competitor runs out of stock, and will be confident that their high operational standards will pay off to make them more profit. You can set competitor rules to ignore out-of-bounds sellers with low seller ratings who go below your minimum price. There is no sense in participating in a pricing war that decreases your profit margin when you can own a portion of the Buy Box share based on your high seller metrics.
Be on the lookout for competitors who may be discontinuing the product – don’t get involved in plummeting your prices by thinking short-term. When that seller has sold their inventory, you have one less competitor which is a bonus – wait it out and let them sell out at their discounted rate. You can jump back in when the opportunity is there to sell at a rate you are comfortable with.
Know your competitors
Track your competitors’ pricing trends, so that you know how low they are willing to price. You don’t want to lower your prices to the minimum selling price constantly, and if you optimize your Buy Box share with high-performance ratings, you won’t need to. You might also learn that one particular product has too much competition at a price below your margin – in this case use insights to make better business decisions on your current inventory.
You can’t win the Buy Box on price alone. Look for a repricer with a complete set of competitor rules that allows your repricer to ignore out-of-bound sellers. This means that you won’t have to compete with sellers at a price that would damage your profit margin. Consider some of the performance metrics that best apply to your business strengths and use these competitor rules to combat your rivals.
Fulfillment – FBA (Fulfillment by Amazon) sellers can beat FBM (Fulfillment by Merchant) to the Buy Box at a higher price.
Feedback – negative feedback must be below 5%.
Seller rating – score as close to 100 as possible, a rating above 95 is recommended.
Domestic v international shipping – customers prefer to order from domestic sellers. Domestic sellers can win the Buy Box at a higher price than international sellers.
Stock levels – price higher than your competitors when they are low on stock.
And there are many more ways to target your competitors.
Using data to win the Buy Box
Sellers who understand the dynamics of pricing on Amazon can make better decisions. The ability to see your competitors’ pricing trends helps you to outpace them in a highly competitive environment. The right data will remove the complexity from knowing what your next step should be, and will help you to make the right decisions when setting up pricing strategies and rules.
Don’t reprice blindly. Make informed decisions, by discovering what products are selling well and which ones are taking up valuable stock room space. Storage doesn’t come cheap, so with the right answers, you can make the smart decision to re-stock profitable products.
The right data will give you the answers you need to drive your business in the right direction. In order to get the necessary insights from the data, you need to ask the right questions.
1. Who is currently winning the Buy Box and how many times have they won?
2. What is my pricing history on each product and at what price have I won the Buy Box?
3. Why am I losing the Buy Box to another competitor?
4. How many sellers are competing on my product?
Win the Buy Box with an intelligent repricing strategy
When you create a targeted repricing strategy based on your own business insights, you have the power to yield so much more profit from the many sales you make through the Amazon Buy Box