With countless other retailers using one of the world’s biggest online sales platforms, much of your success as a seller on Amazon will depend on a tried and tested pricing strategy.
While the quality of your products and the consistency of your delivery processes are both important, offering your customers value for money while securing yourself a good return is vital to business sustainability. This is especially important at times of key commercial opportunity, such as the pre-Christmas countdown.
The following tips can help you create a repricing strategy that your Amazon business can rely on time and time again.
Examine past sales data
Truly effective pricing plans rest on previous business performance; after all, you can’t predict how the goods in your inventory will fare in the future without considering how they’ve done in the past. Sellers have the benefit of a series of retail-led seasonal events that come around every year, so much can be gleaned from analysing historical pricing strategies and sales data, including where fine-tuning can lead to increased profit next time around.
Take shifting shipping costs and currency markets into account
Using the same, or similar, shipping rates as your chosen courier is a straightforward approach to covering your delivery costs, but remember that as and when their rates change, yours will need to too.
If your Amazon business sells overseas, you’ll also need to think about the inevitable fluctuations of the currency market. Though taking a financial hit when converting foreign earnings back into your native currency is sadly unavoidable, there are ways to minimise the effects.
While Amazon has its own currency conversion and payment systems, international currency brokers like World First have access to the most competitive exchange rates available, which they can then pass on to their clients. What’s more, they can help you convert your takings when you stand to make the best return or at a time chosen by you. Their handy foreign exchange tools can help you protect your profit margin despite the movements of the market.
Don’t be afraid to raise the price of your most popular products
There are several great ways of drawing attention to your most popular and best-selling products, including working for and sharing any positive press and making use of Amazon’s review system. With any luck, these techniques will result in increased demand for the goods in question, and if so, you’re well within your rights to ask for more for them.
Think about how seasonality affects your sales
From summer to Christmas, Easter to Valentine’s Day, most online sellers have at least one period of concentrated sales in their commercial calendar. You may already know when in the year to expect your highest takings, but if you’re unsure, looking in detail at past sales reports will help you spot patterns unique to your business.
With your seasonal trends identified, you can then concentrate on refining your pricing strategy to maximise on these periods of higher demand. A case in point—you wouldn’t sell Easter eggs in November for the same price as you would in March. Of course, your rival Amazon sellers will also be aware of these seasonal peaks, so you also need to make sure your prices are competitive. Offering the lowest price will often get you the sale, but it should never be at the expense of your profit margin.
Be aware of your competition
To expand on the above, any thorough repricing strategy should account for what your competitors are doing at all times, not just when the stakes are highest. It’s virtually certain that your business sells the same type of products as at least a few other Amazon sellers, so to ensure you get a good bite of the cherry you need to price your goods against theirs with care.
Having said that, if there are any items in your inventory that are unique to your business, feel free to up their retail prices. As the sole supplier, you can afford to ask your customers for more.
Split your inventory into product categories
Amazon’s success lies in part with its ease of user experience, so make it as easy as possible for your customers to find what they’re looking for by segmenting your products into logical categories. Don’t worry if many items may make sense in more than one category; featuring products in multiple categories can be used to reveal where they generate the most sales, and subsequently, where you can make profit-boosting pricing adjustments.
Use repricing software to monitor costs and maintain a competitive advantage
Having a large inventory can make manually keeping track of your stock outlay a challenge, but clever repricing software systems can automate this for you. Not only can it help you guard against ever selling anything at a loss, this kind of software can automatically compare your prices with those of your competitors and update yours to be better value, which will give you better ranking in the product search results.
Factor in your FBA storage fees
Many online sellers use Fulfilment by Amazon (FBA) to get their goods to their customers throughout Europe. You pay a fee for Amazon to store your products until they are sold, and then to pick, pack and send them as and when the sales come in.
Storage fees are separate from fulfilment fees, and they also fluctuate depending on the time of year and how long your goods take up space in Amazon’s warehouses. Make a note of when storage fees are set to rise, and think about discounting the retail prices of any items that have been sitting in storage for a while.
Remember that an effective repricing plan takes time
When creating your own repricing strategy, it’s likely to take a fair amount of trial and error to hit upon the right mix of all of the above. There may well be other factors you’ll need to consider, including some particular to your Amazon business, but these will become clear as you experiment with different approaches.
It may take time and effort, but having a bespoke repricing strategy in place for your business that can help it continue to grow and develop will be more than worth it.
Vertical Leap is a search marketing agency based in the United Kingdom.