For online sellers using Amazon, the right pricing strategy can mean the difference between success and failure.
Virtually every type of product imaginable can be found on Amazon, and there’s certainly no shortage of vendors bringing them to market. Alongside the quality of your products and the reliability of your deliveries, your customers will rate you on the value for money your business represents. Offering them a great price that gains you a healthy return is crucial, especially at certain points in the year, such as the run up to the festive season.
Here, we’ve gathered some key pointers on finding an approach to Amazon repricing that works for your online business.
You won’t be able to set an effective pricing strategy without taking your business’s historical information and inventory performance into account. Make sure you can access and drill down into your sales data, paying attention to any seasonal trends. This will help you predict how upcoming periods are likely to pan out, and where you can make refinements to push profit.
Consider fluctuating shipping costs and currency markets
External commercial factors will affect your Amazon business, particularly if you sell your products overseas. Passing on shipping rates directly from major carriers can work well, but be aware that if their charges change, yours will need to follow suit.
And while there’s nothing you can do about the shifting nature of the currency market, you can take steps to protect yourself from its effects. After all, there are few things more demoralising to an online seller than watching a considerable chunk of your hard-earned international takings disappear when you convert it back to GBP.
Enlisting the help of a foreign currency specialist, such as World First, gains you better exchange rates than that of standard marketplace payment systems, allows you to convert at a time to suit you or when the market is most favourable, and helps you maintain your profit margin with clever foreign exchange
Let product popularity reflect in your prices
Good press and great, genuine reviews will hopefully serve to increase the demand for your products. If you’ve received either, don’t be afraid to up the price for the products in question – your customers will pay it. It’s just good business sense to respond to supply and demand.
Take seasonal trends into account
The way seasonality affects your business will depend hugely on the type of products you are selling. Digging into your sales data will help you identify patterns in what sells and when, so look out for spikes that may relate to specific times of the year.
Once you’ve found any seasonal trends, think about when you can amend your pricing strategy to capitalise on the timeframe when particular products are most sought after. For example, it wouldn’t make sense to sell Christmas crackers in April for the same price as you would in December. However, while there will be lots of people looking to buy Christmas crackers from you in December, there will also be plenty looking to buy them from rival Amazon sellers too, so you also need to be aware of competition levels. You need to tread the fine line between maximising profits without pricing yourself out of the market.
Keep an eye on your competitors
This awareness of what your competitors are doing needs to extend beyond periods of seasonality, however. If you are selling the same types of items as other Amazon sellers (and it’s almost certain you will be), you will need to pitch your products at a competitive price in order to ensure you get at least your fair share of sales.
Conversely, if you sell any products that only your business stocks, you can feel comfortable asking for a higher price for them, even if they cost the same and the margins are the same.
Segment and track your inventory
Split your inventory up into logical categories so that you can see which items in which product groups are most prone to variations in demand, and subsequently, can be priced to reflect this.
It’s also useful to monitor what you’re paying for stock so that you can make sure you never sell anything at a loss. Doing this manually can be a challenge, especially if you have a large inventory, but thankfully there is automation out there that can help. Repricing software enables you to compare your prices directly with those of your rivals on Amazon, and position yours automatically to be more competitive for higher ranking in the search results.
Think about your FBA storage fees
Fulfilment by Amazon (FBA) allows you trade online throughout Europe by using Amazon’s own extensive resources to pick, pack and ship your stock as it sells. Of course, there’s a fee involved for this service; to cover the cost of sending your products and for storing them in Amazon’s warehouses until they’re sold.
FBA storage prices vary depending on the time of year, and how long Amazon stores your items, so make sure you know when the costs are due to rise. You should also consider lowering the prices of any stock you’re storing to help them shift.
Don’t be afraid to experiment with your pricing strategy
Above all, it’s important to remember that honing any pricing strategy is likely to take plenty of trial and error. Finding the right balance of all of the above elements, as well as others unique to your Amazon business, will take time and effort but creating a solid repricing strategy you can rely on moving forward will be more than worth it.