A good plan violently executed now is better than a perfect plan executed next week.
– General George S. Patton
No one really wants to take part in a pricing war on Amazon.
No one wants their prices to be driven so low that they cannot make a profit or even worse, lose money. However, if you are already selling on Amazon, you know that pricing has a lot to do with winning the Buy Box. The issue is that most merchants place too much focus on the price of the product, and spend most of their time during the day adjusting prices. It’s addictive to fight a price war on Amazon.
What happens during a price war? During a price war, you, the competitors and your buyers are all affected. It is obvious how you and your competitors are affected, your profit margin becomes lower and lower each time the price is reduced. But what about the buyers?
You might think that the buyer would be the one person that was not suffering from the pricing war, however, if we dig a little bit, we can see that the buyer is indeed affected.
The first way that a buyer is affected is that they will start to expect those rock bottom prices all of the time. This means that if you are not able to provide them with these rock bottom prices, they know that all they have to do is continue looking on Amazon, and they will find someone who will. A lot of consumers see Amazon as the best place for this type of product pricing – they think Amazon is always the lowest price.
This gets the buyer not only used to cheap prices, but cheap products as well. The buyer might end up walking away from a merchant who would actually provide them with quality products and a better buying experience than those offering these cheap products.
We also have to remember that when a person sees a price that is very cheap, they are going to associate this with a cheap product. There have been many times that I have been looking for a specific product on Amazon and found it for very low prices, but have instead gone to another seller and paid more for a product because I wanted quality. I wanted a product that would last, not one that would break the first time I used it.
So what do you do?
Most merchant use re-pricing software. This can be a great, logical great strategy if you are 1) just starting out and wanting to get as many sales/reviews as possible, or 2) Trying to move a product quickly.
You see, using pricing software is like eating ice cream. We all love to have a bit of ice cream on occasion because it is a treat or a reward for something that we have accomplished. However, if have ice cream every day, it will no longer provide us with the satisfaction that it once did. Or at least that’s what they tell me.
A price war almost never works out for the merchant.
It is understandable that you want to grow your business, but you do not want to do so by selling your products for as cheaply as possible. You have to remember that not only to you have to earn a living; you have to make a profit. No amount of sales at a loss is worth the energy when selling on Amazon. At best, its a short-lived victory.
Excepted from my soon to be released eBook, Selling on Amazon – Strategy and Tactics that Help You Succeed.
Need help making more profits on Amazon? As always, if you have any questions you can contact me at firstname.lastname@example.org or visit my Blog at timothyscottburns.wordpress.com