Are you an Amazon seller facing fierce competition and aggressive price wars? Many sellers using repricing strategies to encourage more sales find out the hard way that slashing prices to beat your competition is a losing game. In this blog post I will cover:
Amazon is a highly competitive marketplace. Even if you’re selling a great product, over time competitors start to encroach and one of the easiest ways to swipe your sales is to lower their prices.
It’s easy to see why this is one of the easiest Amazon repricing strategies that competitors use. But there are some dire consequences:
If all Amazon sellers compete on price alone then profits become diminished and products become non-viable. It’s a battle to the death and we risk the marketplace becoming monopolized by only a few big players.
Price reductions also change the perception customers have regarding product quality and value. Customers will begin to believe that the product is worth less.
Getting into a price war is an unwanted distraction away from your core business and products. Leaving you less time for innovation, business growth, and customer service.
In the end lower profits will mean you are forced to either drop your product OR source lower quality and cheaper alternatives. Which is never a good idea.
None of these outcomes are good. So, the best strategy is to keep the buy box and avoid a price war!
One of the most frustrating things that can happen in a price war is that you can lose the coveted Amazon Buy Box position. So now, not only is your competition eroding your profit margins, but you can also start losing sales to the lower-priced offer!
Winning the Buy Box on Amazon allows other sellers to hijack your listing. When your Amazon listing gets hijacked you need to act fast to prevent further damage. Read our Amazon Listing Hijacking article to learn how to fix this problem!
If you want to create a sustainable Amazon business, then my advice is to be customer-centric.
In addition, Amazon recognizes sellers with excellent customer service and positive customer reviews and rewards them with improved Amazon Best Seller Rankings (BSR). A better Amazon BSR will elevate your product status and naturally protect you from price wars.
There are lots of ways to improve Amazon BSR including using the Helium 10 Review Insights tool.
It may sound counterintuitive, but your Amazon FBA pricing strategy should be to charge more!
By creatively enhancing your product’s value you can attract buyers who are willing to spend a few dollars more!
In my Amazon FBA business, I use 3 different strategies to create value and stay ahead of my competition:
Create a unique branded product that solves a problem or need. This in turn adds customer value.
Bulk items together. Adding accessories to the main product, to separate my offer from my competition.
Sourcing locally made products because products made in China still have a negative reputation. Plus buying locally can be a good personal choice to protect local jobs.
I choose the strategy to use depending on the product, what else is being sold on Amazon, and the density of my competition.
By choosing one of the 3 strategies (above), then I am automatically separating myself from the pack. BUT more importantly I’m making it much harder for other Amazon sellers to copy my product or offer.
Other tactics I use to make it difficult for other sellers are:
Below are image examples to demonstrate how informative images explaining the product can help you generate more sales compared to your competitors.
So that I can illustrate my points I’ve pulled together some examples of brands selling on Amazon that are beating the competition by staying customer-centric, adding value, and selling high-quality products.
This is a niche beauty brand that focuses on the highest standards of quality. Their products aren’t too much different from other sellers, but their look and feel all suggest quality that’s worth paying for. Their tweezers sell for around $20 compared with other tweezers selling for around $4!
This is a bootstrapped branded coffee supplier with a strong philosophy and community mission. They penetrated the coffee market and are growing from strength to strength with a consumable product and a subscribe and save market!
Because they’ve created a branded product with a great founder’s story, they can set their own pace when it comes to pricing. Instead of paying around $20 for a box of capsules, their customers agree to pay over 50% more!
Nina Woof sells pet accessories. They offer eco-friendly dog poo bags and target customers who are willing to pay more for a product that is environmentally friendly.
Customers who are consciously looking for now-impact products are often willing to pay more. Similar dog poo bags that don’t have eco-friendly claims are several dollars cheaper for a box.
If you’re reading this article and thinking ‘Great information, but I’m already in a price war, how to I get out of it’. Then let me share a story that I heard about through the Serious Seller’s podcast.
Bradley Sutton (host of the Serious Seller’s podcast) launched a coffin shelf product around 4 years ago as part of a training series called Project X.
He launched the product successfully but after 4 years of sales, he is now facing fierce competition and a price war. The coffin shelf used to sell for over $30, making a good profit. But other sellers have systematically caused a price war by lowering prices down to around $20.
He decided to differentiate his product. Using the Helium 10 Reviews Insights tool he was able to find ideas for accessories to bundle and create an interesting offer.
Open your listing on Amazon. Using the Helium 10 Xray open Review Insights.
Go to the filters and select to see only reviews with photos.
Look through the photos to see real lifestyle images from customers. Seeing the product in their home will give you a better idea of how people are using your product.
Using this process, Bradley was able to see that customers buying his coffin shelf would also be interested in accessories like miniature pumpkins, skulls, and other spooky décor.
By sourcing cheap additions, for 25 to 30c extra, he was able to assemble a complete packaged offer that created enough extra value and differentiation from other similar products. This simple strategy is a way to set you apart from the crowd and even give you enough of an edge to sell at a higher price!
In the podcast you can hear more about using creative packaging and how customers perceive packaging as added value.
If you’ve been paying attention to some of my other posts, you’ll know I’m a big advocate for putting in the hard yards and investing time in learning the ropes. It takes time BUT you’re more likely to be a better seller and more likely to make a success of your Amazon business.
Here are some related articles that can help you upskill:
Price wars on Amazon are part of a seller’s journey and it’s normal in the product lifecycle to expect competitors to come along to take a slice of the pie.
But don’t panic. Heavy competition doesn’t mean you have to run away with your tail between your legs. You can also choose to stand your ground, get creative and outwit the competition!
So, if you want a sustainable Amazon business then think about a strategy that creates extra value for the customer and sets you apart from your competition.
I’ve given you some viable strategies in this article to secure a sustainable Amazon business. I’ve also shared examples of branded products and sellers who have secured customer loyalty. In the end, no strategy is right or wrong. And that’s the joy of being an entrepreneur. It’s your business and you get to decide!
A quick note from Hustle Life
At Hustle Life we love bringing you well-researched content to help you online side hustle grow into a thriving business. So that we continue to create great content without opening the site to annoying advertising, we accept affiliate payments. Thank you for using our affiliate links.
If you enjoy our content, please remember to like, and follow us on Facebook.
Jessica Clark has a passion for all things eCommerce. She’s always learning and adapting to find efficiencies and to stay competitive in a fast-paced sector.
We're An Affiliate - We are reluctant to allow advertising on this blog, which we believe will spoil the user experience. Instead (so that we can continue sharing our knowledge and expanding our content), we have decided to include affiliate links for the products that we use and/or rate highly.