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Amazon Competitive Pricing Strategy 101
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This blog was originally published on December 10, 2014, and has been updated to include new and updated information.
On Amazon, the price of a product is intrinsically linked to the Buy Box. Every seller wants to win the Buy Box as the Buy Box is responsible for over 82% of Amazon sales, but the question is how?
Knowing how to price your products to win the Buy Box is very important and there are many repricing solutions and tools that are designed to help customers with pricing competitively.
However, fundamental to any business decision is first understanding the goal of your business. Depending on what your business objectives are, a different competitive pricing strategy will be useful for you.
What is Amazon’s Pricing Model?
Amazon is committed to customer-centricity. As part of that value, Amazon models their pricing around price value, also called the flywheel model. Products are more appealing to prospective customers when the price is competitive, and in most cases that means low. As more third-party sellers and brands joined the marketplace it creates a more diverse product selection to drive costs lower and increase customer engagement and conversion.
Learn how to apply the Flywheel to Your Own Business on Amazon.
3 Competitive Amazon Pricing Strategies
1. Volume Focused
If you have a lot of inventory, or your inventory is easily replenished, your main focus might be on maximizing your sales volume. In this case, you might want to sacrifice your profit margin on each item in order to sell as many items as possible.
Pricing Strategy Goal: Your aim would be to find the best price to win you a large Buy Box share, which would enable you to boost your sales volume.
2. Margin Focused
On the other hand, if you have limited inventory or inventory that is not easily replenished, you might want to sacrifice your sales volume, and instead focus on raising your profit margin per item.
Pricing Strategy Goal: Your aim would be to increase your price as much as possible to secure a large profit margin, while at the same time maintaining a respectable Buy Box share and sales volume.
3. The In-Between Focus
If you’re neither of the above, your best bet would probably be to find a balance between the volume-focused approach and the margin-focused approach, in a way that will guarantee you maximum overall profits.
Pricing Strategy Goal: Your aim would be to find a price that balances Buy Box share and profit margin to gain you the most amount of profit.
To find the Amazon repricer that’s most effective for your business, click here.
Learn what Feedvisor can do for your business
When you partner with Feedvisor, you automatically receive access to our true, AI-driven technology and hands-on team of e-commerce experts. Contact one of our team members today to learn more about our end-to-end solution for brands and large sellers on Amazon, Walmart, and e-marketplaces.
Learn what Feedvisor can do for your business.
When you partner with Feedvisor, you automatically receive access to our true, AI-driven technology and hands-on team of e-commerce experts. Contact one of our team members today to learn more about our end-to-end solution for brands and large sellers on Amazon, Walmart, and e-marketplaces.