Prices change regularly on marketplaces, forcing merchants to adjust their price list in response to the competition and changes in the environment. As you can see in the graph above (the classic demand curve we all learned in Econ 101), the price of a product has a huge impact on profits, as price increases, forcing demand and sales volume declines. If your price is too high, your volume declines so that you have lower profits. If your price is too low, the increased volume might not cover the profits lost. That’s why repricer tools help maximize profits.
What are repricer tools?
Let’s say you’re using a 3rd party marketplace like Amazon. After you figured out what products to sell on the third-party marketplace, you face competition from others offering similar products. You list your product to compete with their pricing, but, in e-commerce settings, pricing is dynamic, changing frequently to optimize profits.
That’s where repricer tools help. These tools modify your pricing with a sustainable and feasible pricing strategy based on current conditions. Repricer tools help you upscale your business and stay competitive in the world of e-commerce.
Repricing is a core concept in the e-commerce world. Sellers must reprice their product prices to stay competitive and make a profit. Price and competition are a driving factor in gaining more loyal customers. According to Market Place Pulse, Amazon has about 3 million online sellers as of November 2019
Even with their selling policies and seller code of conduct, repricing is allowed. Their policies force competitors to act fairly and honestly in selling products on their marketplace, giving sellers access to huge numbers of consumers. Since you and your competitors congregate on the same 3rd party seller, consumers don’t make choices based solely on the brand. They care more about prices and their loyalty to the marketplace. Thus, product list optimization and repricing give you an extra edge to upscale your business.
Are you skeptical about using a repricer tool for Amazon? Let us discuss further what the repricer tools do for Amazon resellers like you.
However, repricing is complicated. Consumers usually want to buy the product at the lowest price possible. As a merchant, consumers pit your brand against other sellers, forcing a race to the bottom as companies strive to offer lower prices and more significant discounts than their competitors. This dynamic makes repricing complicated. The product values in e-commerce are not fixed, and the prices change regularly as competitors strive to outdo each other.
A repricer tool helps sellers by lowering or raising product prices instantly in real-time. The tools use a predetermined pricing strategy allowing sellers to maximize their profit margin and capture the Buy Box (getting customers to add your product to their shopping cart) resulting in outperforming their competitors.
As every business has different goals, so various repricer tools are available to match your business goals, instantly and automatically following the terms and configuration of your preferred price strategy. More so, repricer tools help sellers gain visibility over their competition. With several aspects of e-commerce, it is best to approach pricing with a repricer tool and dynamic pricing strategy.
Dynamic pricing strategy
Repricer tools and dynamic repricing strategy help online resellers change prices in real-time. But, some sellers worry about changing their prices regularly. A 2005 study in The Journal Monetary Economics, supports this fear, stating the annoyance of consumers with price fluctuation and frequent price changes. Thus, the dynamic pricing strategy takes place in online marketplaces to integrate consumer behavior and e-commerce.
When consumers buy online, they are not buying from a specific retailer with an established relationship. They’re looking for affordable options for a particular product regardless of the online store. Consumers are brand-centric. Thus, brands need to use other strategies for branded e-commerce. Online sellers have to take into account the environment and target audience to build consumer’s trust.
Types of repricing strategies
There are various types of repricing strategies that help online sellers gain insight and produce their desired outcomes.
Online sellers who use algorithmic repricing strategy claim to capture the Buy Box more than 80% of the time. The algorithmic repricing strategy uses self-learning analysis to work. It approaches pricing on several dimensions based on sales and consumer data to ensure the product list price stays optimized. More so, you can set the risk tolerance and precision configuration of the repricer tool to ensure the prices remain in an acceptable range.
Price mirroring repricing
This strategy synchronizes or mirrors the price between the marketplace and a percentage modifier. There are marketplaces like Amazon that require price parity, and they do not allow third-party sellers to sell the same products in their inventory at a lower price in other markets.
Rule-based repricing strategy gives you full control over the product list and prices. You can set the factors in the marketplace that trigger the price change.
Meanwhile, velocity-based repricing is for online sellers who aim to sell a certain volume in a period. The strategy allows the sellers to set the minimum and maximum sales threshold, and the tool bases price on the number of products set.
How to efficiently use repricer tools
The perfect repricer tool for every situation doesn’t exist. You have to set and balance the configurations for the tool to prioritize the customers before making a profit. Consumer relationships affect the sales and profit of the business. Thus, you need to use repricer tools to compete in the marketplace efficiently.
Create a long-term plan
One of the common mistakes online sellers make is planning short-term. Repricing products following their behavior might not fit their long term plan. Sellers must broaden the scope of their products. They should base pricing on sales over the past month, quarter, or year. There are two primary considerations for using this method:
- History of Sales Price: The price history of every product guides the sellers in setting the price at a certain period.
- History of Sales Rank: The performance history of a product can help online sellers decide when and what products to reprice. There are instances that the product performs better, even when it is not its season. It will give you an insight into the product behavior to prepare the repricing configuration and inventory.
Accurately plan the inventory
You need sufficient product inventory to meet demand at a specific price. With accurately planned and well-balanced product inventory, you can satisfy demand without wasting money on unsold stock.
You must link inventory to the repricer tool and set specific configurations that adjust price according to product stock. The repricer tool helps monitor the product quantity and set the price according to the average market value.
Be selective of competitors
With the number of competing online merchants, it is almost impossible to compete efficiently with all of them. Thus, you must narrow down the focus of your competition to exclude some competitors. Consider online sellers related to your niche as comparisons to capitalize on repricing strategies. You may consider them as competitors through their:
- Rating: You can compete with a minimum number of sellers leaving those other sellers with an average rating.
- Feedback: It is unnecessary to compete with sellers that are only aggressive in marketing their brand. Compete with those online sellers that are well-established and positive reviews.
- Shipment: Online sellers who ship from different countries have to be excluded from your list of competitors. They have different selling strategies. More so, you might compromise your selling strategy by repricing aggressively due to the shipping costs.
Avoid lower repricing
Avoid the temptation to undercut competitors when they lowered their prices. This starts a pricing war leading to the bottom, and only buyers benefit from such strategies. More so, do not be lenient with lower repricing against sellers. They may outlast you in repricing strategies. It is best to research product sales rank and sales history before finalizing your strategy.
Benefits of using repricer tools
When repricer tools are used correctly, they help maximize business profits. You can manipulate the price quickly, leading to better results.
Repricer tools monitor the activity changes of your competitors. When a competitor changes the product price or runs out of stocks, the tool adjusts and reprices your products in real-time. But, some repricers reprice hourly or delay more than an hour, which reduces their usefulness. Thus, make sure to invest in a repricer tool that reacts on time.
When the seller’s products win the Buy Box frequently, the chances of future sales increases. Repricing tools have a sophisticated algorithm that takes this into consideration with the Amazon Buy Box. Other factors come into play with the repricing tool. Repricer tools are competitive in every aspect.
More sales, best profit
Repricer tools do most of the tasks within the range you defined in the configuration. Will the repricer tool do its best to sell every chance it gets? While it changes the pricing at every opportunity, it won’t always win. It will help you achieve the highest price, win the Buy Box, and have better feedback and customer satisfaction.
Checking prices, evaluating products, and monitoring competitors all the time is a complicated task. A simple mistake in any of these tasks may reduce profits and devalue the product. The market is always changing; the goal to be on top of the competition needs constant monitoring for changes. Thus, instead of managing pricing on your own, repricer tools help monitor prices and strategize.
Product repricing involves complexity. With the information gathered, we encourage sellers who use Amazon or who compete with multiple third-party sellers to use a repricer tool like Seller Snap to develop a clear and feasible strategy.
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