Price Wars on Amazon: Why you shouldn’t ALWAYS try to win the Buy Box

 

The Amazon marketplace is becoming increasingly competitive, with professional 3rd party sellers using a variety of repricing solutions to gain the edge over other sellers (including Amazon themselves).

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 Buy Box at the highest possible price.

 

What’s wrong with this claim?

Amazon price wars falling prices
Amazon price wars ensure a downward trend in value

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 price wars everyone is complaining about.

 

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 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 more unconventional, and automated, ways to win the Buy Box? Reach out to us to find out more.