Wholesaling on Amazon is an entirely viable business model, but not being on top of your business and your pricing can mean you miss out on potential margins. Repricing is a necessity for most in the wholesale world. It’s a large factor in determining which sellers dominate the marketplace amongst fierce competition.
WHAT IS THE BUY BOX ON AMAZON, AND WHY IS IT IMPORTANT?
Sellers are continually adapting fluctuating pricing to meet market needs. If pricing is set too low or too high, the buy box is lost, and that seller forgoes the opportunity to make the sale. This is why repricing is such a critical component of a wholesaler’s business model.
If you’re selling on Amazon, you know that the buy box is vital to you achieving conversations on the platform.
If you’re newer to the scene, the buy box can be a little confusing, and to put the whole concept of repricing together, we thought we would shed some light on why the buy box is so valued.
The buy box is the column on the right of an Amazon listing that houses all of the essential purchase details.
If the item is in stock
Sold by these sellers
Add to wish list or wedding registry
The buy box’s ultimate purpose is to provide a smooth and efficient way for customers to make their purchases.
Not all sellers on Amazon automatically qualify for the buy box, however. Amazon wants to ensure a professional selling account is in good standing, has enough inventory, reflects a good metric of positive feedback, and that the seller is prime eligible with competitive pricing.
Winning the buy box means you get the sale!
Keep in mind that the buy box is fluid, with many sellers coming on and off a listing at times in the wholesale model. And yes, in case you're wondering, Amazon-specific brands generally win the buy box for their listings. Wholesalers want to avoid competing with Amazon products for this reason. They know they have less opportunity to “win the buy box” with an Amazon-branded product.
WHAT IS AMAZON REPRICING & WHY DOES IT MATTER?
Repricing is precisely as it sounds, changing the prices of products on Amazon. These price changes are a normal part of business on Amazon. The general public has no idea that repricing is standard practice or occurs, as these changes are typically very incremental.
Pricing is imperative to your sales and your profitability in wholesaling on Amazon. Pricing too low can mean you struggle with margins that don’t make sense. While pricing too high can mean you limit your sales velocity.
It’s about finding the sweet spot for your product and brand and developing a strategy using sound formulas to hand off to your repricer.
FIND YOUR BREAK-EVEN PRICE
In pricing terms, we call this finding your floor. Your floor is the lowest price that a product can be sold. Be sure to factor in all your costs when calculating your floor price. Knowing this price will make your margins clear. Fees can include but are not limited to:
To provide perspective, here is the formula we use to calculate our floor pricing at BuyBoxer:
Unfortunately, during a global pandemic, price gouging became more prevalent on Amazon. It's essential to note this because, as wholesalers, you have to do due diligence in ensuring you aren’t accidentally floating into price gouging territory with the use of automated repricers. There may be times, where you may have to suspend your repricer temporarily. Be sure to monitor the situation as needed.
TIPS FOR SUCCESS WITH REPRICING
Float your floor more often. Increase the numbers that you are sending your repricer, and you may in return see an increase in margins.
Reprice up throughout the day. Set specific time intervals to price up at certain times of the day.
Instead of manually adjusting pricing, sellers opt for software to reprice and automate this experience. Repricing software makes the process more efficient while helping sellers achieve:
Increased Sales & Maximize Profits
Instant & Efficient Repricing
Win Buy Boxes
*Be aware that pricing too low can create a minimum threshold that can see sellers lose profitability. Not an ideal situation for anyone!
Here at SmartScout, we believe in upwards pricing combined with necessary downward pricing, and we encourage more brands to do the same. Pricing upwards for specific time frames helps sellers achieve higher margins.
The problem with too many brands pricing too low is that it can become a downward spiral for all players. Understanding repricing and working with robust repricing software is paramount.
With that in mind, beware that repricers can have a hefty price tag. Repricing is a business expense and one we feel you can’t afford to miss out on, so factor it into your total cost to do business!
Below you’ll find a list of our top 3 repricers along with their main benefits. Each repricer on the market offers different capabilities, and you will have to determine which best suits your needs.
ChannelMAX offers real-time or continuous Amazon repricing and is widely known for its algorithmic repricing capabilities.
The obvious benefit is that of its real-time capabilities meaning your pricing is instant, and sellers, therefore, do not have to be concerned with delays or ongoing question marks that can arise from other repricers timing.
While many repricers on the market will effectively perform similar tasks, many do not offer pricing based on revenue. Eva.guru offers revenue-based pricing, and for that reason (especially in scaling phase,) they’ve made our top 3 list.
Available for Private Label
Competitor Algorithms Detector
Set & Forget Configuration
While set-it-and-forget-it repricing configurations offer efficiency, be mindful that proper repricing structure requires strategy and continuous effort. Understand your market, continually evaluate your competition, and be sure you have chosen products and brands that have also paid attention to differentiation.
The goal is to increase margins on all playing fields. Repricing is an effective means, and in our opinion, essential means of maximizing sales and driving margins, but other considerations to your wholesale business must be continuously evaluated and adapted.