Friday, June 10, 2016

Amazon Adds Autopricer Feature

Sometime last week or the week before Amazon quietly rolled out a new function in Seller Central, an autopricer.

The autopricer will adjust your prices up or down based on the rules that you decide.

Here is a little video that Amazon put out to describe it:

The autopricer from Amazon is rather robust.  It allows you to decide which SKUs are autopriced so that your entire inventory isn't on the same autopricer method.  In addition, you have different rules set for different SKUs.

For example, if you are trying to have a firesale on one SKU, you can set the autopricer to continue cutting on that SKU, however, if you want to just be competitive on another SKU, you can set the autopricer to match the buy box until the price hits $25, for example

Finding the Autopricer

To find the autopricer, click on Pricing>Automate pricing.

Set Based on Buy Box

You can set the price to either match, stay below or above the buy box by a dollar amount or percentage.  You can decide to match all offers, all FBA offers (don't match all offers, that's just dumb), or only offers from other 3rd party sellers so you can exclude Amazon if you choose only 3rd parties and those with the same fulfillment method.

Lowest Price

When you choose to go based on the lowest price, you can set it to match, stay below or above the lowest price by a dollar amount or percentage.

When you are matching the lowest price you have more options.  You can match those who have the same or better sub-condition.  For example, if you are selling as new, it won't match those who are selling as like new even though they are much cheaper.  Again, you can exclude those who are not FBA sellers.  You can also exclude any people who have a seller rating within 5% of your rating (they may not get the buy box with too long a rank).  Again, you can choose to only match 3rd party sellers.

Benefits of Autopricers

The benefits of autopricers are obvious.
1) You don't have to continually monitor your prices if you are planning to lower prices anyways.
2) Quicker sales.  If you aren't competitive in your pricing, it just won't sell.

Downside of Autopricers

The downside of autopricers is a little less obvious but they are real and significant
1) Your sales may go up but your profit may go down.  Instead of waiting for the price to come back to you, you go down to the lower price.

2)  If it is known that you have an autopricer, other sellers may play with their pricing to lower your price and "punish" you for having an autopricer.  It may not be fair or right but it happens.

3) What happens when 2 or even 3 autopricers enter a SKU?  The price usually plummets.  This is especially true if one (or multiple) has the autopricer to cut the price below the buy box and the other has an autopricer to match or cut below the buy box.  Imagine that cycle.  Thankfully you can set the price to which you are comfortable cutting until but a lot of your profit can be eroded quickly.

4) You miss the upside.  When you sell too fast, you miss the upside.  This can be significant, sometimes you can end up selling for even more when the item starts coming back compared to when you originally bought.

5) Makes it difficult to reload.  If you are selling at relatively low prices, you will have little incentive to buy more since it isn't as profitable as you would like and you are already sold out by the time it comes back (often with less competition).

6) Difficult to share deals.  If you share a deal with someone who has an autopricer and it was going for $300 and they pushed the price down to $250, are you going to share the next deal with that person?

I have personally never used an autopricer and I don't plan on it now but there can be benefit for some as long as it is used properly.

Anyone have experience with autopricers?  How do you set it?