Prices are constantly changing on Amazon, and if you are a seller, you need to keep up. Even before eCommerce, customers chose products based on pricing. It’s recommended to consult an eCommerce agency if you are not sure.
If you don’t set the right prices, you can get trumped by the competition.
Sellers not only want to win the best leads, but they are also looking to secure a share of the coveted Buy Box. The Amazon Buy Box requires a strategy and a plan if you intend to have a place in it.
The Buy Box Race
Amazon has two kinds of sellers, Amazon itself and third-party resellers. Multiple merchants selling the same item are not unusual for Amazon. Therefore, the Buy Box concept was introduced. It is a white box that shows up on your product page, and everyone does not have it.
Sellers selling the same product compete for the Buy Box, and the lowest priced one wins it. Eighty-two percent of the sales on Amazon happen through the Buy Box. This number is even higher for purchases on mobile.
Other sellers are grouped at the bottom, while the Buy Box merchants are highlighted. The algorithms for this buy box are a mystery, so you can work hard to win the box by fixing your pricing.
Here are some strategies to stay ahead of the competitors and maintain reasonable prices for your Amazon store.
Do not go for cheap pricing
It is the most common thing that baffles sellers. They think that low pricing will make the customers flock to their shops. Part of this is correct; you will get a flurry of customers based on low prices. However, many customers start relating cheap with low quality. Your store may look like a cheap items store, which is not the right image.
The best way to go about this is to price your products by 1.5% more than the lowest seller. This way, you are not cheap, and your prices are competitive. Use this as your default strategy for most of the inventory. You might win a share of the Buy Box with this little tip.
People also keep the prices 30% above the cost price and then add a fee to it. It is better to take the long-term approach and reset the prices every three months.
This tip is for private label sellers, not resellers. The customer sitting at the other side of the screen does not care about how you manufactured the product. They also do not care about the money involved or inventory costs. It is your job to make the product look appealing (price-wise) to them while keeping other expenses at bay.
A cost and profit pricing model are not suitable for private label sellers on Amazon. Private sellers have the most significant advantage in the books; they are not competing with resellers! In this case, your product price is what the ideal customer would like to pay.
Conduct thorough research on what customer trends dominate your niche and Amazon trends. Make a persona that urges customers to care about your label as a whole. Use ecommerce techniques like writing compelling copy, creating a story, and promoting a wholesome brand.
Provide value to your customers through competitive prices and customization. Send handwritten thank-you notes, followed by a happy email. Pay close attention to feedback on prices so that you can reset once needed.
The $10 law
When using fulfillment by Amazon (FBA) services, use the $10 law. Rules change when your products go above or below the magic number of 10. It is tricky to keep a profit for products below $10 because of the FBA fee. So, these lower-priced products will have a lesser margin.
If you have a low price item, do not despair. The best way to go forward is to introduce bundle offers. Bundle offers to look lucrative and get you some profit around the $10 price. You are good to go if you already have healthy profit margins.
Keep learning and improving
Even when things look shaky, never make decisions in a panic. Plan well, and stay on track with the help of a price tracker. An Amazon Revenue Calculator can help in keeping a check on trends and predict upcoming peak times. If you do not have access to a tool, you can maintain a spreadsheet of your Amazon pricing history.
Look at what your competitors are doing. Are they suddenly sporting a low price? Use past learning and sales data to predict future trends, and data is an excellent guide of what works. Some products are on the inventory for too long, and then some best sellers fly off the shelf. You decide to set the right prices for all of these products.
Once you go through this cycle, you will come out with so much learning and insights. You should also take part in industry conversations and talk to other sellers. Long-term success on Amazon starts with data, so you must learn some analytical skills to skim through this data.
Stay away from the manufacturer’s product description. Write your own product description, from the eye of a first-time buyer. Before you even think about selling, fix your store and make it look like the best one out there.
Most sales on Amazon happen through the search bar. Around 70% of customers find the product on the first search result page. So, you must optimize while keeping keywords in mind. What’s the point of reasonable prices if customers can’t see your store in the first place? Amazon SEO can help you get more traffic to your store and turn it into a profit.
According to Amazon:
While these strategies are there to guide you, you must keep your eyes open for new trends. No plan is a good plan unless you customize it according to your business. Use your intelligence and competence to set the right prices.
Pricing your products is an essential step in your seller journey. Never make assumptions, because nowadays you have enough data and insights at hand to make an informed decision. Happy selling!
Article submitted by guest contributor Alma Causey