If you’re selling products on Amazon, you may have heard about repricing tools. Repricing is nothing new in the world of retail, but it’s even more frenetic in an eCommerce marketplace like Amazon. Therefore, learning about the pros and cons of using a repricing tool is extremely important.
Around 60% of Amazon “high earners”, with annual revenue of $3-10 million, are using repricing tools. – Seller App
They do play a significant role in staying profitable as it lets sellers adapt to an ever-changing market that’s constantly moving at a breakneck pace.
Perhaps you’ve already made up your mind as an Amazon seller to use an Amazon repricing tool. Here are a few things you need to know about it.
What is an Amazon Repricing Tool?
Having dynamic pricing is a proven strategy for expanding one’s market. It helps you sell more and get good customer reviews, which can then lead to winning the Amazon Buy Box, which then lets your business grow even further. Amazon repricing is more than just a trend, but a part of doing business on the platform.
A repricing tool adjusts the prices of your products to keep them from being superseded by the prices of your competitors’ products. While this process can be done manually, a repricing tool lets you have your products be repriced automatically.
Repricing tools alleviate the stress of the process from sellers who are looking to stay competitive in the online market. They’re allowed on Amazon, wherein the competition can get especially tough. Having a good Amazon repricing tool lets you stay ahead of the curve.
Different Types of Amazon Repricing
Repricing is nothing new in the retail business. It has always been a common practice even with brick-and-mortar stores. The difference with eCommerce is that it’s done way more often, to the point that it can be done every single day, or even multiple times a day. There are different types of Amazon repricing, each with their own strengths and weaknesses.
The one most people would know is manual repricing, which is basically doing it by yourself. It’s slow, tedious and prone to errors and misjudgments. It can be done directly in Amazon Sellers Central or through a repricing tool.
Done with a repricing tool, rule-based repricing adheres to rules and conditions set by the seller. For example, you can set it up that if a competitor reprices their products, you can have your tool automatically reprice your products to match theirs.
While rule-based repricing does help alleviate much of the busywork, it still takes a good bit of time and know-how to set those rules in the first place. This form of repricing is alright if you’re selling low-profit items like books and films.
Then, there’s algorithmic repricing, which is the most advanced. It follows computer algorithms that take various factors into account to set the best prices possible. It’s the most efficient form of repricing as the repricing tool takes care of the whole process for you.
It’s more complex than rule-based repricing, which means it’s also more expensive. This is only practical if you’re selling items with high-profit margins.
Pros of Amazon Repricing
1. Saves Time and Money
The more products you’re selling, the more time you need to reprice each one. Even if you don’t have that big of an inventory, having to reprice them by yourself can get tedious. An Amazon repricing tool can do it automatically, leaving your hands free to do other important things.
You don’t have to do it yourself, nor do your employees. The repricing tool does it for you, which means more money saved in the long run, especially if you happen to have a large inventory.
2. Compete Objectively
Emotion is a common theme when it comes to money. For example, when a stock dips, anxiety arises; when it rises, excitement abounds. But emotional highs and lows can muddy up the decision-making process, so being objective is important in order to be able to compete well.
Using a good Amazon repricing tool helps with maintaining that objectivity. Instead of repricing something high just because you need more money at the moment, you can have the repricing tool decide what to do.
With a good repricing tool, you neither scare customers away nor not profit at all due to a dubious repricing decision. By having it take the decision-making away from you, it can help you earn more revenue in the long run.
3. Real-Time Reactive Repricing
Not only is manual repricing rare, but it’s also too slow. When a repricing opportunity comes up, you’ll have to drop whatever you’re doing at the moment, get on your computer, and do it. That kind of hassle is not necessary when you’re using an Amazon repricing tool.
A good Amazon repricing tool can react to conditions in real-time and get it done in a flash. It can react to price fluctuations, know exactly how to reprice your item accordingly, and do it as often as needed.
4. Minimize Margin of Error
The Amazon repricing tool, as a piece of software, does exactly what you tell it to do. That means it won’t make a mistake as a human would. It will reprice your products accordingly without fail. That means you’ll get the desired results every single time, as long as you tell it what it’s supposed to do.
5. Automatically Take Multiple Factors into Account
There are numerous factors involved in the pricing of products in a competitive market. It’s not just about what the competitors do, but also how customers are behaving, what the current conditions are in the market, and so on.
This is where the best Amazon repricing tools out there truly shine, as they’re able to use algorithmic repricing to make what are most likely the right calls for that moment.
6. Adapting to Your Competition
This isn’t just the matter of “Everybody is doing it, so you should too.” Using a repricing tool allows you to stay on top of things. By watching how your products are being repriced, you can get a sense of how the market is flowing and what your competitors are doing. And of course, the repricing tool lets you keep up at a remarkable speed, which is what it’s designed to do.
Cons of Amazon Repricing
It does cost money to use an Amazon repricing tool, and it’s worth the expense if you’re a big seller with lots of items in your Amazon store. But if you only have a few products in your store, then it may not be worth it to use one since it won’t be cost-effective in the long run.
2. Price War
Maybe it’s true that constant fluctuations in prices lead to price wars among sellers, but it may also not be true. The truth may be somewhere in the middle since it does depend on the actual conditions of the market, as well as supply and demand. But in most cases, prices won’t go below the minimum value.
3. Lower Profit Margins
While it’s true that higher profit margins may be possible thanks to using Amazon repricing tools, the opposite can also be true in some cases. If you and your rivals hit the minimum value, then you’ll earn less money. After all, it’s a buyer’s market, first and foremost.
If you get a good repricing tool that fits your needs like a glove right off the bat, then that’s a good thing. However, in a lot of cases, different repricing tools have different quirks and features that make it not as viable for your business.
But if that’s the only one you have access to, then you’ll have to make due somehow. Don’t worry about it too much since that’s normal.
How to Pick the Best Amazon Repricing Tool
Knowing your business is the most important thing when it comes to choosing the best Amazon repricing tool. They’re all designed to satisfy certain needs, and knowing your own business lets you know what your exact needs are.
Here’s how you can pick the best Amazon Repricing Tool:
You can take a look at the sales rank and price history of a product to know how hot it is.
Analyze how its pricing has affected its sales performance, then determine a repricing strategy from that.
Check your stocks, then reprice your item accordingly.
Consider stocks as a factor in establishing pricing rules to avoid running out of stock of an item that has been selling well.
Do not drop the price of an item without good reason.
Make sure you have enough saved up to survive a period with a big price drop.
Analyze your competition carefully and define them. You can’t fight them all, so compete with rival sellers who are closest to your level.
Look into the seller rating, seller feedback, and shipping destinations. From that research, list down the competition that is most similar to how you operate your business.
These may seem like tips for repricing itself and not about picking the best Amazon repricing tool, but knowing what goes into repricing is what will help you with this decision.
List of Amazon Repricing Tools
- Repricer (Formerly xSellco)
- Informed.co (formerly Appeagle)
- Seller Snap
- Seller Dynamics
- Profit Protector Pro
- NuPrice Repricer
Additional read: 5 Valuable Lessons We Can Learn from Amazon’s Pricing Strategy
A serious entrepreneur who’s looking to maximize returns on Amazon should look at a solid repricing tool for a boost.
It can help you increase sales, and save precious time while staying competitive.