In the competitive world of online retail, everyone knows that pricing can make or break your business. That’s why so many Amazon sellers rely on automated repricing tools that are designed to keep your prices competitive while still ensuring you make a profit on every sale.
If you’re considering using an automated repricer for the first time, it may be tempting to try out Amazon’s free repricing tool known as “Automate Pricing.” Since it’s included for every Amazon seller that is on the Professional Selling Plan, you may be wondering why so many sellers pay for third-party automated repricing tools instead of just using Amazon’s included repricing tool.
There are several reasons why Amazon’s free repricing tool is so unpopular amongst sellers. After listening to feedback from Amazon sellers and conducting our own analysis of Amazon’s free repricing tool, we’ve found several reasons why sellers shouldn’t rely on Amazon’s Automate Pricing tool to manage their prices.
Amazon’s limited, basic repricing rules are a huge drawback for any serious sellers who cares about winning the Buy Box and still making a profit.
While third-party Amazon repricers offer a large array of repricing strategies (including repricing strategies that are powered by AI), Amazon’s Automate Pricing tool only allows sellers to use three basic repricing rules: Stay below the lowest price by a specified amount, Match the lowest price, and Stay above the lowest price by a specified amount. These basic repricing rules aren’t intelligent enough for any serious Amazon seller to rely on because they only take the lowest priced offer into account and completely ignore all of your other competition.
Here’s an example of why you shouldn’t rely on Amazon’s repricing rules:
Let’s say you’re competing with 17 other sellers on a listing where your item is currently priced at $17.50. You have a rule set up to beat your lowest competitor’s price by $0.10. One of your competitors suddenly drops their price to $10, resulting in your price being changed to $9.90. Meanwhile, all of your other competitors remain priced right around your original price of $17.50. Rather than waiting for the competitor who dropped their price to $10 to either sell out or raise their price back up to something reasonable, you will now likely sell a ton of units at an extremely low profit margin because Amazon prioritizes keeping prices low for consumers over keeping profits high for third-party sellers.
This leads us into the next issue with Amazon’s Automate Pricing tool: their pricing rules ultimately lead to a “race to the bottom” every time.
Amazon’s repricing rules are all centered around winning the Buy Box, and each rule is simply aimed at getting you in the Buy Box at the lowest possible price - this is great for consumers, but terrible for third-party Amazon sellers.
Since all of Amazon’s repricing rules only take into account the lowest-priced offer, there’s no opportunity to take the full range of your competition into account and price your item at a price that is still competitive on the listing without completely tanking your profits. This strategy may be effective if you’re simply trying to liquidate inventory, but if you want to sell products at a profitable price and improve your margins, Amazon’s free repricing tool likely isn’t for you.
One of the major benefits of using a third-party repricing tool is the ability to automatically (and strategically) set your Min and Max prices.
When it comes to Min prices, it’s super important to set a minimum price threshold that still allows you to not only make a profit, but make a profit that you’re actually going to be satisfied with. The best third-party repricing tools allow you to automatically set Min prices based on a Target ROI, Profit Margin, or Fixed Profit.
While Min prices are typically viewed as the most important price threshold since they ensure you’re not selling your products at a loss, Max prices can be just as important. Some third-party repricing tools such as Informed Repricer have features that utilize AI to calculate the optimal Max price for every single one of your listings. These algorithms automatically determine a Max price that is high enough to increase your profits, but low enough to keep you in the Buy Box.”
Trying to manually figure out the optimal Min and Max prices for your listings is time-consuming, tedious, and nearly impossible when you have hundreds or thousands of listings. Amazon’s repricer not offering automated Min and Max prices is yet another reason why it pales in comparison to third-party repricing tools.
Third-party Amazon sellers know that oftentimes their biggest competition is Amazon themselves. From directly competing on listings with third-party sellers to building pricing rules that seek to keep prices as low as possible for consumers, Amazon certainly doesn’t value your bottom line.
By using a third-party repricer, you can trust that Amazon doesn’t have access to sensitive data that they could use to undercut your business. You wouldn’t hand over your pricing strategies to any other competitors on your listings, and Amazon shouldn’t be an exception to that rule.
Your profits and sourcing costs are important pillars of your business that you want to keep to yourself. By using a third-party repricing tool instead of Amazon’s repricing tool, you can ensure that your data remains safe and out of the hands of a major competitor.
When you’re deciding what repricing tool to use, you ultimately need to decide what’s important to you and your business. If high profit margins and protecting your pricing data is important to you, we don’t recommend using Amazon’s Automate Pricing tool.
Instead, we recommend checking out some of the best third-party repricing tools on the market. Most third-party repricing tools offer free trials (Informed Repricer offers a 14-day free trial) so you can try out the tools for yourself and see which one offers the best repricing strategies for your business.
Informed Repricer is a competitive repricing platform that helps online businesses drive profits using smart algorithms and actionable insights.
