Repricing 101: 3 Common Repricing Errors To Avoid
We are in a business that is largely motivated by high turnover and quick profit; it’s what drives every Amazon seller. Therefore, it is key to mobilize an effective repricing strategy to ensure maximum profit. Proper repricing action has proven to increase profit quicker than increasing sales volume. Alternatively, repricing your products haphazardly can reduce it just as fast. Even the most seasoned FBA sellers commit repricing errors that hurt their bottom line.
Some of the top 3 repricing errors to avoid:
Slashing prices just to win the buy box
We cannot emphasize this enough; lowest price should not be the entirety of your repricing and buy box strategy. The popular misconception that the lowest price gets the buy box has a lot of sellers scrambling to slash their prices while overlooking some important repricing and buy box concepts and strategies
Price is just one component of the Amazon algorithm to determine the buy box winner. As we have discussed in previous articles, seller performance is just as important as an item’s price. This requires close attention to your seller metrics, as well as the competitiveness of price, to dominate the buy box.
If you are an FBA seller, you enjoy a tremendous advantage over competitors who are FBM (Fulfilled By Merchant) as only FBA sellers can tap into the market of the more than 20 million active shoppers who subscribe to Amazon Prime. Furthermore, because the landed price of FBA items already cover shipping fees, FBA sellers can still get the buy box even if prices are set as much as 10% higher than the prices of their FBM competitors. With this in mind, your minimum sell price should always take costs into account. It is very easy to get caught up in a buy box war with another seller and disregard the direct and indirect costs incurred in selling an item. Winning the buy box while disregarding costs and losing potential profit is a pyrrhic victory at best. Keep your eyes on the prize – In this case, the goal is to make a profit, not to win the buy box!
Sticking with a Repricer That Just Doesn’t Cut the Mustard
For an extended period of time last year, we used a repricer that turned out to be huge bust. Admittedly, we failed to do our due diligence and settled on a repricer due to its lower subscription fee. Although much cheaper than the repricing app we eventually switched to , it didn’t account for several months of dwindling sales and profits. We decided to dive in and look a litte bit closer at the repricer we were using after experience a lower than average buy box percentage. We found out that this particular repricer only updated prices on a hourly basis, rather than in real time, causing our items to stay out of the buy box for a much longer period of time
After some apparently crucial research and comparison, we decided to switch to AppEagle repricer which acts in real time. It responds immediately to exploitable situations, such as competitor stock-outs, enabling maximized profit. This repricer utilizes strategy and critical insight, and takes FBA-specific situations into consideration when adjusting the prices of my SKUs.
When implementing a repricer, make sure you look for one that allows full customization so you can easily tailor your repricing strategy according to our business goals.
Within months of switching repricers, my sales and profit figures not only recovered, but also hit record-highs.
Moral of this story: Don’t scrimp on a crucial investment for your business, and know when to pull the plug on a non-performing asset.
Not Classifying Your Inventory into Various Repricing Categories
Categorizing items in your inventory according to different characteristics can help to create your own unique repricing strategy. Using factors such as age, seasonal sale trends, and past performance to categorize can help forecast future pricing performance. Doing this ensures competitive pricing and allows you to set a bigger profit margin.
Are you aware of other mistakes FBA sellers make when repricing?
Let us know!
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