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Repricing Inventory on Amazon

A look at what's new in the world of competitive-pricing software

One of the first things you learn when you begin to sell on Amazon is that others sellers cheat—or, at least, it seems they do. We’ll explain.

Like many sellers, when we first started selling on Amazon, we listed a dozen or so books to test Amazon’s waters. The site makes it simple when you’re creating a listing to see how your competition has priced the same item, and then price yours lower if you’d like. We did just that.

A day later, when we checked our inventory, we saw that for many items we were no longer the seller with the lowest prices. In some cases, others sellers had lowered their prices in response to ours by a few cents. We repriced and, within hours, our competition did as well.

It all reminded us of when we first started buying on eBay. Some buyers seemed to have an unfair advantage, swooping in during the final seconds of an auction to outbid us by just enough to win the auction. That’s when we learned about sniping programs.

It turns out that, on Amazon, sellers use similar software that can automatically reprice their inventory when competition appears to ensure their prices remain the lowest. Repricing solutions for Amazon sellers have been around for years.

A check of The Auction Software Review website found dozens of such programs. Many, such as Monsoon and FillZ, are geared to media sellers and seem to be quite popular. Monsoon has reported that its solutions have helped Amazon merchants sell more than 50 million items.

We talked to a few experts on repricing software and two respected merchants to get their thoughts on the subject. Read on to see what they said.

“The approach to repricing has changed with the need to do more than simply always go lower than a competitor’s price”

Repricing insiders weigh in

“Repricing software is pretty much a must-have for Amazon sellers who sell catalog products (that is, most of them),” says Andy Geldman, editor of The Auction Software Review. “There is typically nothing to differentiate between sellers on Amazon other than price, so ‘winning the Buy Box’ is crucially important.”

Geldman takes it a step farther: “Every tool specifically for selling on Amazon that I know of includes repricing, and there are several specialist tools, too. The range is large enough that I created a new category specifically for [pricing tools],” he says.

All this brings us to a new kid in town, who is making somewhat of a splash: Teikametrics. (Its name comes from “teika,” the Japanese word for lowest price). The publicity surrounding this company may have something to do with its founder’s pedigree. CEO Alasdair McLean-Foreman is not only a Harvard grad with a major in economics, he was captain of Harvard’s track and field team. Clearly, this is a guy who knows how to compete.

More importantly, the company also seems to have a very good handle on the technology that can help larger-scale Amazon sellers succeed, offering software to help these sellers “improve your Amazon and other marketplace revenue and profitability.” Teikametrics offers a free consultation to Amazon Pro Merchants to explain how they can benefit from its product.

To learn more about what’s new in the world of repricing software, as well as some details on Teikametrics’ free consultation offer, we turned to the company’s founder. The interview follows.

Schepp: Tell us a bit about your company and your “message” for Amazon Pro Merchants.

McLean-Foreman: Teikametrics’ core mission is to provide retailers with the best tools to optimize their inventory to meet demand in online marketplaces. Our solution provides Amazon Pro Merchants with the tools they need to dynamically change prices, analyze competition, improve listing coverage and intelligently control Amazon FBA inventory levels.

Schepp: Repricing software has been around for years. How has the technology evolved?

McLean-Foreman: Yes, repricing software has been available for a while, but from experience as a seller, I believe many of the solutions available still do not provide the tools many merchants need to execute a winning strategy. We founded Teikametrics to provide a solution after selling our own e-commerce company in 2008. We started selling products online in 2001 and used many repricing tools as we diversified our sales channels through Amazon’s marketplace program.

Using other solutions helped us understand the challenges merchants face in a competitive environment, such as selling on Amazon. Many of the repricing solutions we used as a merchant were flawed in their ability to obtain accurate pricing data, and we know that issue still exists, as the technology required is complex. Various technologies and software techniques have improved to make repricing a lot more accurate.

“There are many repricing tools, but I am not convinced that ‘race to the gutter’ is a good pricing strategy”

In addition to technology improvements, I think the approach to repricing has certainly changed with the need to provide tools to adjust to competition, and do more than simply always go lower than a competitor’s price. For example, the introduction of Amazon’s [Fulfillment By Amazon] program is a great opportunity for merchants who have invested in inventory that is exclusive or harder to come by to maximize profits.

Providing tools to help merchants optimize their pricing based on their supply is really exciting to us and is a big part of our offering, outside of simple repricing based on rules.

Schepp: What technology options would you recommend for smaller merchants who sell on Amazon, who are not yet in the Pro Merchant league?

McLean-Foreman: I would recommend getting started with a simple self-service repricing solution. I know there are a handful of options that do not provide expert support that can help Amazon merchants get started with repricing, easily. We speak to many merchants who have grown their volume with simple repricing software and then come to us wanting a more customized solution with expert support. Before going live with any repricing application, especially anything that is self-service, I would recommend fully testing a small set of SKUs, or using dummy data.

Schepp: We hear that your company offers a free consult to Amazon sellers. True?

McLean-Foreman: We offer our clients an opportunity to test their repricing parameters before they go live with repricing. As part of this process, we provide a free consultation where we can analyze and review the repricing opportunities for a test batch of SKUs.

Is repricing necessary?

We don’t want to give the impression that we feel repricing software is a must. Some sellers just don’t believe in it. They feel it takes them down a path they would rather not go down. John Lawson, one of the most respected e-merchants we know, doesn’t use it. He explains his decision this way:

“I do not use it because that is a game I don’t want to play, at least not automatically,” he says. “There are many repricing tools, but I am not convinced that ‘race to the gutter’ is a good pricing strategy. I see the benefit of this for the Amazon site, as it keeps prices artificially low, but it also keeps service and quality low. The less a business makes on mark up, the worse the customer service gets. So yes, we want fair and competitive pricing, but racing to the bottom ultimately hurts the market, not helps it.”

Long-time e-merchant Andy Mowery raised some other interesting points. Mowery worked with a college student to create his own proprietary software back in 2008. He’s also reviewed many “auto-pricing services,” and has real concerns.

“It’s now obvious that auto-pricers exist, and many are using them. The real story is how far back this goes, and how those just getting into it now means you are probably chasing the dragon,” he says. “If it were so easy to provide auto-pricing services to others, without having their entire business, we’d have sold our technology years ago. It’s very customized. It completely depends on the marketplace versus website strategy and, even if you own the technology, use of it is not for those who don’t master understanding all the other dynamics.”

If this article is leaving you wondering how to proceed, and feeling lost, we understand. Like so many things, use of repricing software when selling on Amazon isn’t clear cut. Fortunately, there are many experienced merchants like Mowery and Lawson who can help us see our way out of the woods.

About the author

Brad & Debra Schepp
Brad and Debra Schepp are the authors of 20 books, including eBay PowerSeller Secrets and The Official Success Guide: Insider Tips and Strategies for Sourcing Products from the World's Largest B2B Marketplace. Their most recent book is How to Find a Job on LinkedIn, Facebook, Twitter and Google+. Brad is also a literary agent for Waterside Productions. For further information, visit the couple's website, Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • George W

    New pricing strategy: Pay the buyer to take the merchandise!

  • Simon C

    It always becomes a race to the gutter!

  • Rocketray55

    Yup George, all this software has done is see to it that there is a proliferation of 1 cent books on Amazon. Why bother? If you can’t get 4 or 5 dollars for an item, give up.

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