Oren wrote a brief post about Amazon’s Automated Repricer last week that is certainly worth a look, however upon further research, and some insight from others. It looks like this is one of those tools that may be best avoided.
What is an Automated Repricer?
It’s pretty much exactly what you would think. It’s an add-on tool, usually third party (with the exception of Amazon’s Automated Repricer), that you can incorporate various logic and tools into that will allow you to automate your pricing based on competing amazon sellers.
Some repricers have built in algorithms that help you get the buy box more frequently, or allow you compete only against other Fulfillment by Amazon (FBA) sellers, vs. Amazon itself or Merchant Fulfilled (MF). Perhaps the biggest benefit that I can see (and full disclosure, I do not use a repricer, nor do I currently have plans of using one), is that they can increase the price based on certain logic, e.g. if you have the buy box.
Of course, all this functionality comes at a cost. Usually it’s a monthly cost, a few data points from Ryan’s article indicate $25-100 per month is not unheard of for a starting cost. If you have a ton of different products, you’d be looking at spending even more per month.
Amazon’s Automated Repricer
While Amazon’s automated repricer comes at no cost, it comes with some very grave concerns, not just if you are going to use it, but also if you are competing against other sellers using it. From a brief Reddit thread – I think folks realize that Amazon’s repricer will hasten the race to the bottom.
There are a couple of reasons for that. Based on Amazon’s FAQ and description of what happens to your price based on a variety of scenarios:
Rather than the relentless penny cutting back and forth among sellers, Amazon will take the minimums from any of the other sellers also using the Amazon Automated Repricer into account, so rather than penny cuts, its more like beam (you know, like “Beam me down, Scotty”) to the bottom.
Amazon’s Automated Repricer can be helpful for some, however, I suspect that the greatest help will be to customers–not always a bad thing, by the way. I have been wary of repricers, and there are others that perhaps feel more strongly. I see the value of repricers if you want the buy box at a cost, I also see the value if you want to maximize your margin by increasing prices based on various rules. Perhaps my biggest challenge personally, is that I don’t always have the ability to respond quickly when sales spike. But I do fear for folks that use Amazon’s repricer, thinking that this will help them, without understanding the ramifications. For folks that choose not to use Amazon’s repricer, we will likely also experience some growing pains. So please, be ware.