Pricing Strategies for Amazon FBA Sellers – Does Low Price Win?

As I coach new clients, one of the issues that comes up repeatedly is pricing. How should I price my product? Should I be .05 lower than the lowest price? How high can I price and still get a share of the buy box? You get the idea.

There’s no easy answer to any of these, and I’d like to address the first question in this post.

One of the biggest misconceptions of newer sellers is that you have to be the lowest price, always. It seems to make perfect sense, but in most cases it is simply not the case. Amazon has a buy box, the featured area on the main page of a listing where the price and the seller’s store name are listed.

Since there are thousands of third-party sellers, the seller featured will often be one of them instead of Amazon. The likelihood of a seller selling his or her product increases greatly when that seller is “in the buy box.”

You can see an example of the buy box below. You can see the price listed and the featured seller in the center of the page. Other sellers are listed to the right. If someone clicks the large “Add to Cart” button on the top right, the buy box seller, JD 01 will get the sale. This is how many buyers make their purchases, so you can imagine why sellers want to make sure they get in the buy box.

The thing is, many sellers rotate in and out of the buy box on most products every day. There is no exact science to how close you have to be to the lowest price to be eligible for the buy box rotation, but you rarely need to even match the lowest price to at least share the buy box.

Being the lowest price may get you the sale faster, but you are typically leaving money on the table, and often you will start a price war downward by trying to be the lowest. It happens time and time again. You are free to run your business however you choose, and you shouldn’t let anyone tell you how to price, but be aware that being the lowest priced seller isn’t necessarily the best or only way to share the buy box.

One situation where I recommend that people try to match the lowest price is when Amazon is suppressing the buy box. In other words, nobody gets featured on the main listing page, and the buyer must click through to the list of all sellers to see the various offers.

On these listings, if you are not the lowest price, or at least matching the lowest price, it’s less likely you will earn a sale unless the sellers priced lower than you have a bad rating or are selling as merchant fulfilled when you are selling as FBA.

Below is an example of an item with a suppressed buy box. You can see that there is no price listed where the price was on the listing above. There is also no seller listed. The buyer has to either click the “34 New” at the bottom of the screen or “See All Buying Options” at the top right of the screen in order to see all of the available offers. This puts the sellers with the lowest prices in an advantageous position that doesn’t exist as much as when there is a buy box.

Once the seller clicks through, they have to decide which seller to buy from. Below is a shot of what the buyer will see when they click through.

You can see that there are two sellers at $38.00, one with 100% feedback and one with 99% feedback. As a buyer, I would have no reason to pay even the .01 more than the next 2 sellers are asking. Since “Willis & Co.” are backordered, I’d choose “A Great Deal on Everything” since they are the cheapest in stock option.

In these situations, it does make sense to match the lowest price. Most people won’t look at this page unless the buy box is suppressed, but Amazon has been suppressing more and more buy boxes, so it pays to check each listing and price accordingly.

Hopefully this is helpful and helps you make better pricing decisions. More posts will follow on pricing in the near future. Subscribe below to receive updates and helpful information to help grow your Amazon business.

2018-01-24T01:53:16+00:00