How to win the Amazon Buy Box with automated repricing in 2020
March 24, 2020
An easy way to increase your sales and grow your profit margins is to price your Amazon products competitively. One of the ways to do this is by repricing your inventory. For smaller sellers who have just started off doing FBA, Amazon’s tools can be a good solution for manual repricing. But this is only feasible for sellers with a limited amount of inventory, and let’s face it – who is comfortable with keeping inventory levels low? In theory, larger inventory stocks mean larger profits, and if you are in the FBA business to make money, then manual repricing just isn’t going to cut it.
Repricing can become increasingly complex as you add more SKUs or ASINs to your product catalog. Imagine the amount of work and time it would take to manually reprice 50 SKUs, not to mention big sellers who manage more than 200 items. What’s more, sellers also have to keep an eye on how other FBA businesses are pricing their products. This makes repricing an arduous task of manual labor and close monitoring of competitors’ pricing strategies.
And then there’s the Buy Box…
In the Amazon world, the Buy Box is a gateway to success in the marketplace. As such, many sellers are constantly battling to win it in order to increase their sales. One of the main deciding factors in Amazon’s algorithm regarding who wins the Buy Box is the price of your item. And as a seller, this is one of the few things you do have control over – how competitively you price your items. Therefore, repricing is also a strategy you can use to compete for the Buy Box.
But what is the Buy Box? And why should Amazon sellers care?
The Buy Box is the button on a product listing that allows buyers to make an instant purchase, increasing sellers’ chances of making an easy sale. Once you own the Buy Box, you can create ads to improve the ranking of your listing using keywords for PPC campaigns on Amazon, further distinguishing your product from that of competitors.
How do you become eligible for the Amazon Buy Box?
Two main factors will determine if a seller is eligible for the Buy Box. Firstly, only individuals with professional seller accounts on Amazon can win the box. Secondly, it’s important that your account health is good, as metrics regarding inventory and customer service will affect your chances of getting the box.
The key to winning and maintaining the Buy Box also lies in how competitive your pricing is in comparison with competitors selling the same product in the Amazon marketplace. So, it is important to monitor your competitors’ pricing to know when you need to reprice in order to enter the bid for the widget.
So, what are your repricing options?
Amazon offers a free tool that is readily available in your Seller Central account called “Amazon Automate Pricing,” though it is not without its shortcomings.
It is not suitable for sellers with a high level of SKUs, as it quickly becomes time-consuming to make repricing rules for each product.
The tools’ repricing rules have limitations that make it difficult to gain a competitive advantage in repricing.
It has constraints on how customizable you can make your repricing rules, which can cost sellers the Buy Box.
With small amounts of inventory, these issues are less significant. But for bigger sellers with large inventory quantities, saving time and effort on repricing would allow them to focus on other activities such as inventory sourcing and listing optimization to further drive profits.
It’s also imperative to consider who the competitive players in your listing category are as this will determine how aggressive (or passive) your repricing strategy should be. For context, let’s consider the following:
Amazon’s listing as the competitor
If you find that your product listing is competing for the Buy Box with an Amazon item, it will be difficult to compete on price. Amazon is able to drop its price repeatedly – a phenomenon called “racing to the bottom.” Naturally, this is because they have the power and inventory to price their items at an incredibly low price point in order to win not only the Buy Box but sales, too. The best strategy to avoid a pricing war is to price-match Amazon, although they will probably hold the Buy Box button on their listing.
Another seller’s listing as the competitor
When you match the price of another 3rd party seller, the Buy Box will cycle between both of you as long as your price stays below the price floor set by Amazon. This is when repricing tools come in handy as you can compete with peers who are on a similar level as you, and not a giant like Amazon.
Saving time and effort
In summary, winning the Buy Box comes down to quick and reliable repricing of your products. Although Amazon’s manual repricer is free and will get the job done, after a certain amount of SKUs, the amount of work to manually reprice can get out of hand. Not to mention it lacks the capacity to 1) reprice your items higher and 2) it also doesn’t allow for customized repricing rules.
The ideal time to evaluate the investment value of repricing tools is before Q4. Outsourcing your repricing allows you to focus on production runs and getting your stock sorted before the holiday rush. So, whether you are unloading inventory that will hit long term storage fees or customizing pricing rules to increase your profits, automated repricing is a huge time saver.