Pricing plays a crucial role in eCommerce, especially on Amazon. Since product pricing is essential, Amazon sellers do their best to offer shoppers the most reasonable price possible. 

Sellers rely on an Amazon seller tool known as an Amazon repricer in order to achieve their goal of offering a competitive price. To better understand repricing and repricing software for Amazon, here are some important details Amazon sellers should know. 

What is Repricing in General

Repricing is a term that has been incorporated into the digital landscape in consonance with the evolution of eCommerce. It pertains to the process of updating listing prices with a certain degree of automation. 

In its simplest form, repricing refers to updating product prices on eCommerce sites by means of an automated technology. Such a process is facilitated in real-time with the help of repricing software. 

What is Amazon Marketplace Repricing?

Simply put, repricing refers to adjusting the listing price on the Amazon marketplace. In order to offer a competitive price to Amazon shoppers, Amazon sellers change their listing prices based on various market conditions, including the competitors’ behavior. 

To efficiently and effectively facilitate repricing, third-party merchants use a repricing software for their Amazon business.

What Is a Repricer and How Does It Work? 

A repricer is a software tool that automatically changes the price of an item you sell on Amazon (a listing) based on one or more rules, such as always matching the lowest offer on Amazon, or by applying more complicated internal logic.

A repricer makes price changes by pushing price feeds using Amazon’s MWS API  and requires that you grant the repricing software access to your Amazon Seller account. 

From the minute Amazon opened the marketplace to 3P sellers, frequent product price changes have become critical to running a successful Amazon storefront.                 

WHY? Because if you want to sell, you have to be in the buy box, and to get the buy box if you don’t have it, the only thing you can do in the short term is lower your price (of course in the long term you should worry about your seller rating and a bunch of other things that make you a better seller).

How Does Repricing Help Amazon Sellers?

Updates in the eCommerce industry introduced not just marketplace improvements but also software advancements. For example, Amazon has allowed third-party developers to introduce Amazon seller tools that can assist sellers and shoppers alike. 

A repricing tool is one of these softwares that drastically help Amazon sellers save time and maximize their profit. Some of the reasons why Amazon sellers should use repricing software include the following: 

• Increased Amazon Buy Box Win Rate

The Amazon Buy Box is a significant real estate on Amazon’s product detail page. It is where the “Add to Cart” and “Buy Now” buttons are situated. Amazon sellers compete to win the Amazon Buy Box to increase their sales conversion. 

Amazon chooses compelling offers from a pool of eligible offers to win the Buy Box. One of the factors that Amazon evaluates in awarding the Buy Box is the product price. 

With the help of a repricing software, Amazon sellers can offer a competitive listing price to increase their chances of winning the coveted Amazon Buy Box. 

• Improved Pricing Process

Repricing software, AI repricers in particular, provides efficiency in terms of price adjustments. The automated repricing process can help third-party merchants quickly change listing prices even in bulk. 

With automated repricing, there is no need for Amazon sellers to spend too much time and effort adjusting individual product prices for each listing manually. High-volume Amazon sellers can definitely benefit from repricing software. 

• Better Search Result Ranking 

Frequent Amazon shoppers will use filters when shopping online. Among these filters is the product price. Since using a repricer lets you offer a competitive price, the likelihood of becoming more visible on Amazon searches is high. 

Additionally, the Amazon algorithm also considers product price when ranking listings on the Amazon search result pages. When you have a competitive price, your product will likely rank higher on the search results page. 

• Access to Sophisticated Data

Apart from helping sellers adjust their listing price to a competitive level, using reliable and advanced repricing software like Seller Snap also gives sellers access to critical information through data analytics. Sophisticated repricers have built-in analytics that can give third-party merchants an overview of their listings’ performance. 

Why Do Repricing Solutions Work So Well With Amazon? 

We see far more repricers than for any other marketplace and it’s not just because Amazon is the biggest. There are 3 main reasons for this:

• The catalog based system (ASINs), makes it easy to compare “apples to apples”. A buyer knows he is getting the exact same product from different sellers and the competition is on price and the overall buying experience any individual seller can provide.

• The extensive API that provides a lot of data and makes integration with 3P repricers and other SW solutions relatively easy and effective.

• The buy box is very effective (relatively speaking) in predicting successful sales. The success of a price change getting the buy box can immediately be seen, while seeing the effect of price changes on sales and profit takes far longer.

Facilitate Success Through Repricing Software

Repricing is a delicate task, for a simple mistake can drastically affect your overall Amazon business performance. In order to facilitate competitive pricing for your listings, it is highly recommended to use repricers. 

Using repricing software for your business can help you beat your competitors in the Amazon marketplace while increasing sales conversion in the process. Integrating repricing software into your Amazon business is perhaps one of the best decisions you can make to improve your Amazon venture. 

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.

Let’s assume you are an Amazon seller and you don’t quite understand the term “Game Theory”. Or you do, but you can’t imagine how your Amazon store could benefit from it. Here’s a brief overview of Amazon repricer solution. 

Game Theory and John Nash

Let’s start with a fun example. The superstar who actually came up with the concept of Game Theory is mathematical genius and slightly crazy, John Nash. In the movie “A Beautiful Mind,” his Hollywood Biography, Nash (played by Russell Crowe) explains Game Theory with the example of seducing one or more women.

What it comes down to is, if four men are in a bar with four women, they will likely all want to dance with the “hot blonde” one (Nash’s words not Seller Snap’s). If they all decide to pursue her, there is a significant chance that none of the guys will end up dancing at all. Because the other women don’t want to be second choice. Best case scenario, three of them will sit lonely at the bar, and only one of the guys will get to dance with the sought after blonde girl.

Better to Dance Together than Not to Dance at All

Game Theory tells the men to each pick a different girl to dance with. This way chances are high that all four women and all four men get to spend their evening with a partner. No one feels like the second choice and no one gets rejected. Three men might not be dancing with their desired partner, but at least they are dancing.

How to Dance in Amazon Price Wars

If you aim to always win the Buy Box (or always go for the hot blonde girl), then this will usually result in a price war (only one guy gets to dance, and chances are that it’s not you). Other sellers will quickly react to your drop in price, and the Buy Box price will quickly decrease. A race to the bottom is on without the help of an FBA repricer. 

To automate this repricing process, the majority of professional Amazon sellers are using some form of a repricing software. They apply complex rules or alternatively, use artificial intelligence machine learning; Game Theory repricing on Amazon in other words.

Today, you stand little chance of competing against other FBA sellers if you are not using some form of an Amazon repricer solution. Amazon repricers change the price of your product continuously, thus, unfortunately, it becomes an impossible task when doing it manually. With that, come two more disadvantages:

• Your repricing decisions quickly affect the repricing decisions of other sellers.
• If you aim to always win or dominate the Buy Box, then this will most likely result in a price war.

How does AI Repricing on Amazon Work?

By collecting data from Amazon – on pricing, for example, it’s possible to predict the behavioral changes in your competition. With a superior repricing tool that always seeks the optimal strategy for each Amazon listing, AI automatically applies the best approach for each specific situation, making it an ideal repricer software. 

Here’s Where Game Theory Comes In

The behavior of Amazon sellers using a rule-based repricer can be described as the seller trying to do what is best for them short term. However, they ignore the fact that selling on Amazon doesn’t just involve one cycle of price changes.

Seller Snap’s AI repricer software will automatically apply the best strategy for each specific situation. When you sell on Amazon, your goal should be to get the Buy Box-share you are “entitled” to, while keeping the price high, instead of racing to the bottom.

Examples of AI Repricing on Amazon

A competitor is matching your price: 

Competitor strategy is to share the Buy Box with you, and they are probably using a rule-based FBA repricer, set to match the lowest FBA price. AI repricing on Amazon will find the highest rate that the competitor is willing to go and increases your price. You remain at that price, which results in sharing the Buy Box at the highest possible rate. Other solutions often lead to losing the Buy Box or sharing it at a lower price.

A competitor behaves aggressively with repricing: 

Let’s assume that the competitor strategy is to beat the lowest FBA price by $0.05 and they are probably using a rule-based repricer set to match the lowest FBA price. The competitor will always undercut your price by the exact amount that will lead to them winning the Buy Box.  

AI will mirror the behavior of the competitor by reducing the price until the reset point. This is usually the point at which you win the Buy Box 50% of the time. When this happens, the repricer will increase the price to your maximum. You will temporarily lose the Buy Box while waiting for your competitor to raise price. Then the process will start again, ultimately resulting in the highest possible Buy Box price.

How to apply AI on your Amazon storefront?

The Seller Snap platform offers an advanced AI solution for repricing on Amazon as described in this article. In our opinion, AI-powered Game Theory repricing is the best solution to ensure optimal sales on Amazon. However, as with any AI product, there will be scenarios where the AI is not the most suitable strategy. In this case, you might achieve better results by applying a simple rule-based repricer. This is why Seller Snap built a system that allows sellers to switch between AI and rule-based methods very quickly at all times.

Want to try out Game Theory Repricing? We offer all sellers a FREE 15-day trial! Request yours here.

Seller Snap and Game Theory Repricing are a genuine step forward in Amazon repricing technology, providing a fresh and effective approach to a long-standing problem: how to compete effectively on the Amazon marketplaces without driving prices into the ground. 

When looking at some of the more common metrics such as Amazon Buy Box share, average price, and revenue, it is important to understand what these numbers tell you about the effectiveness of your repricing software.

Why your average listed price is not that important?

Let’s say you are offering an item where there is one other seller on Amazon, and that seller is offering the item at $11.

You used to sell the item for $11, not using a repricing software and sharing the Buy Box with your Amazon competitor.

Now you started using a repricing software that is lowering the price to $10 and winning the Buy Box. It then increases the price to $15, losing the Buy Box to the other seller.

Your average price is $12.50 and you may be getting 50% Buy Box share, however, the average price of $12.50 is meaningless because you are never winning the Buy Box at that price. You are now getting 50% Buy Box share at $10 instead of $11.

The more important metric to look out for is your average buy box winning price. This is a weighted average of your listed price while you were in the Buy Box.

If you are getting the same Buy Box share as before, but at a higher average winning price, you stand a higher chance of increasing your profit (assuming the price change is not large enough to affect the demand for the item).

This concept is also widely promoted by many Amazon repricing solutions, both rule-based and algorithmic. For example, you will often come across repricers allowing the rule to never to compete with sellers that have a lower feedback score than you.

Buy Box and Positive Feedback

The reality is, Amazon’s algorithm considers a vast amount of parameters and data, most of which is unknown or unavailable to the 3rd party sellers. Very often there seems to be little importance to who has the higher rating.

With Amazon FBM Prime becoming more common, even being an FBA seller no longer guarantees an edge when going for the Buy Box.

This doesn’t mean you should completely forget about your positive feedback score. Your seller feedback applies to all the products you sell and depending on the competition, this might give you the edge on some listings. We should also remember that the Buy Box isn’t everything and buyers will look at your feedback score when comparing you to the other buying choices they have.

So, how do you determine the best price to get you Buy Box shares?

There is no alternative to looking at each listing individually and learning which price compared to your serious competitors will get you in the Buy Box. This price will be different from listing to listing, even when you are competing against the same seller on multiple ASINs.

If you’ve looked at any repricing software lately, you probably noticed they offer some form of automatic “smart” repricing that will guarantee you always win the Amazon Buy Box at the highest possible price.

What’s wrong with this claim?

True, Amazon provides each professional seller with the data necessary to know whether they are currently in the Buy Box. It’s also easy enough to calculate how much you need to decrease your price to win the Buy Box (if you’re not currently in it).

Problem is, for any competitive product sold on Amazon there are at least a few other strong sellers who are using some sort of repricing software and also want their chunk of the Buy Box.

This scenario can very quickly trigger a “race to the bottom”, killing profit margin for all, and leaving you with the same Buy Box share you had when you got started but at the lowest price you are willing to sell for.

Using such a rule to reprice all your products is the reason behind all the buy box price wars everyone is complaining about. Hence, checking buy box price is crucial.

So what can you do?

Unless you are certain you can beat your competition on price and are going for maximum sales velocity, you should instead accept the fact that you need to share the Buy Box with other competitors and focus on getting that Buy Box share at a higher average price.

In most cases, to avoid buy box price wars you must accept that you must sometimes lose the Buy Box.

You can achieve this by winning the Buy Box when your competitors are priced relatively high and willing to lose the Buy Box when market prices are low (remember your competitors are using repricers and constantly updating their price as well).
Would you like to find out about more unconventional, and automated, ways to win the Buy Box? Reach out to us to find out more.