May 24, 2013, 3:53 PM

Fighting for the Buy box on Amazon

With a new pricing tool, retailers are finding ways to win more sales.

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Skip McGrath has been selling independently for years through Amazon.com Inc. and eBay Inc.’s marketplaces, but there have been times when some products, like the electric salt dispensers and other kitchen gadgets he offers, just won’t move. “Sometimes products just sit there,” he laments. “I had some products that hadn’t moved in a year.”

Part of the problem, he says, is that with 900 SKUs on Amazon alone—ranging from gourmet packaged foods to jewelry to pistol holsters—he simply doesn’t have the time to re-price them all, and often enough, to maintain a competitive edge on an e-marketplace with thousands of other sellers.

McGrath has tried software applications to automatically re-set prices based on what other marketplace sellers are charging, but says they often simply drive his prices fast to an unaffordable rock-bottom.

However, he recently discovered another way to play the pricing game on Amazon with Feedvisor, a new re-pricing tool from a Tel Aviv, Israel-based company of the same name. Unlike other tools that mainly change prices to stay below the competition, he says, Feedvisor factors in many data sources—including a seller’s ratings from customers, whether it offers free shipping and how well a particular product sells in relation to either of those factors. It also incorporates data about how many units of comparable products are listed by competitors and how well a particular type of product has been selling at various price levels, he says.

Although McGrath has only been using Feedvisor for a few weeks, he says he has already seen a 6% to 8% increase in the number of products he’s sold on Amazon that he has re-priced through Feedvisor.

Other e-marketplace sellers report even larger sales boosts with the tool. G. Brian Kern, a seller of health care and fitness products such as pain relief gels and exercise balls, says he has been using Feedvisor for a year and has realized a 500% increase in sales through Amazon for products it re-priced. Like McGrath, Kern says he had tried other re-pricing tools, but found they simply pushed down prices to what he had set as his floor price. With other sellers doing the same thing, he often wound up having to sell beneath that price, he says.

One way Kern tried to win sales at reasonable prices was by using his re-pricing tools to both lower and raise prices frequently, he says. When competitors’ prices would rise in response, he’d then quickly lower his own prices, he says. “We’d try to catch other sellers off guard.”

But such maneuvering wasn’t worth the time and effort, Kern says. “I was managing 200-300 products, and would spend two hours or more per day re-pricing. That’s a chunk of your time, and then 30 seconds later someone comes in with a new price.”

When Kern deployed Feedvisor, it took about 24 hours to set up, including the time to set his rules for the minimum and maximum prices at which he was willing to sell each item, he says. He also enters information on his costs, including the wholesale prices he pays for merchandise, his fulfillment costs and the commissions he pays to Amazon. Through an application programming interface connection to Amazon, Feedvisor then compiles data from the Amazon marketplace as well as from Kern’s sales and inventory records to constantly re-price his products, aiming for maximum sales and profit margins, he says.

Kern still spends about 15 minutes every day looking at how his products are priced. Feedvisor provides ongoing reports that show how well each product is selling, enabling clients to decide which ones may need adjustments, McGrath adds.

In addition to compiling information from various sources that affect sales, Feedvisor uses built-in analytics to continuously record how well products sell based on price and other attributes like ratings and shipping terms. That enables it to help Kern win the Buy box on Amazon even when he doesn’t offer the lowest price, he says. Feedvisor may determine, for example, that the Gripmaster hand exercisers Kern offers may sell at a higher price than other sellers’ products because of Kern’s customer ratings and the fact that he ships through Fulfillment by Amazon, the warehousing and shipping service offered by Amazon.com for Amazon marketplace sellers. “We’ll win in cases even when we’re selling at a price that 10% to 20% more than a competitor’s price,” he says.

Feedvisor provides its re-pricing software over the Internet as software-as-a-service. Clients pay a fee of 1% on transactions for products re-priced through Feedvisor, says Shmuli Goldberg, director of marketing. He adds that Feedvisor currently works with only the Amazon marketplace, but is planning to offer re-pricing software later this year for eBay Inc.’s eBay.com and Rakuten Inc.’s Rakuten.com Shopping. 

Hiroshi Mikitani, chairman, CEO and co-founder of Rakuten, will address the company’s international e-commerce strategy during his keynote presentation at the Internet Retailer Conference & Exhibition 2013 in Chicago in June. Mikitani’s presentation will take place from 8:45 a.m.-9:15 a.m. on June 5.

 

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