If you’re an Amazon seller, you’ve likely encountered an increase in competition in recent years. With increased competition comes an increase in predatory pricing and price undercutting. In an effort to beat out competitors selling similar (or, in some cases, identical) products, sellers can get in a pricing war, seeing who can list at the lowest price.
Not only does this negatively affect your margins, but it can also devalue your brand integrity. Healthy competition is part of selling on Amazon, but it can quickly get out of hand.
The Amazon experts at Blue Wheel are weighing in on how your brand can defend against predatory pricing on Amazon so your brand can see continued, sustained success on the marketplace.
Determine Your Pricing Thresholds
First, and perhaps most obviously, you need to determine your pricing thresholds for each product. You’ve likely already identified your MAP pricing, but because this number is generally used for retail partners, you need to have your own pricing thresholds in place.
Keep these costs in mind as you determine the lowest price you can offer for a product:
- Cost of goods
- Amazon seller fees
- Amazon warehouse fees
With these data points, you should be able to determine a healthy margin for your product. This can be a range of prices you feel comfortable with, which would allow you to undercut the price of your competitors, or just set the lowest price you feel comfortable with and not change the pricing outside of sales.
Invest in Advertising
If you’ve been selling on Amazon for any amount of time, you’ve probably heard this a million times — but Amazon Advertising is the best way to increase your visibility, drive traffic to your listings, conquest your competitors, and grow your brand.
At first consideration, you might wonder how investing in advertising could combat predatory pricing. However, if you can appear above your competitors on the search results page, with a price that is competitive (but not lower), you’re still likely to convert just because of your placement. Appearing at the top of the search page has a trust factor for consumers.
Optimize Your Listings and Store
In conjunction with your advertising efforts, you need to optimize your product detail pages and brand store. If your advertising efforts have been successful and are driving traffic, you need to ensure your PDPs (product detail pages) are fully optimized for conversion.
Set your brand apart with a unique value proposition. Can you justify a slightly higher price because your product is better quality? Does your product have an additional feature that makes it unique? Do you offer a money back guarantee or free returns? Do market research to set yourself apart from your competitors.
Additionally, your product listing — especially your images, description, and A+ content — all contribute to your SEO on Amazon. So while having your ad appear first on the search results page is important, it’s also important for your organic ranking to be high. (You’ll appear twice on the same page!)
Lastly, gaining quality 5-star reviews can be a big differentiator between you and a competitor who is attempting to undercut your pricing. There are many strategies for gaining positive reviews out there, but make sure you’re not violating any of Amazon’s terms. The best course of action for getting positive reviews is to:
- Sell a high-quality product at the right price
- Accurately depict the product in images and descriptions
- Ship product out on time (if FBM)
- Provide stellar customer service
Remember — if a review is false, you can dispute it with Amazon to have it removed from your product listing. However, only truly incorrect reviews will be removed by Amazon. Do not report any negative review; only report reviews that are factually incorrect and you can back up with proof.
Blue Wheel is a full-service marketplace agency that has over 10 years of Amazon experience. Reach out to the team today to learn how we can help your brand.