The global outbreak of the Coronavirus is having an immediate impact on online shopping. One of the negative effects we are seeing with selling on Amazon is price gouging. For those of you who do not know what that means, “price gouging” is a term referring to when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable or fair, and is considered exploitative, potentially to an unethical extent.
Amazon Repricers and Price Gouging
Amazon is cracking down on sellers that are suspected of this unethical behavior, suspending listings, and in some cases, shutting down their Amazon store completely. Amazon recently suspended 6,000 accounts globally for price gouging. One would argue that increasing price due to unusual demand is just bad business. You are likely to make a nice profit in the short term, but if Amazon wishes to deactivate your account, you are essentially out of business.
In this situation, automatic repricers can pose a problem. As most professional sellers are using a software solution to automatically reprice their products, they risk unintentional price gouging.
For example, when your competitors are behaving unethically, your repricing software, which is programmed to help you maximize your profit, will increase to follow your competitor/s.
How can sellers avoid this?
Our advice is to ensure that you set realistic and acceptable max prices on your repriced listings. Seller Snap requires you to set both minimum and maximum prices on a listing before you can start repricing it.
Therefore, minimum price settings are important as they safeguard your listings to avoid losing money on a sale. However, some sellers find it unnecessary to set maximum prices or set the maximum price at an unrealistically high level.
In order to avoid repercussions from Amazon for unintentional price gouging, we recommend you invest time in setting up your max prices in a more logical manner. You could, for example, set your maximum price as a percentage above your average selling price or average historical BuyBox price.
