In this episode of the Marketplace Blueprint podcast, Robyn interviews Dylan Carter from GoAura, as he shares his insight on pricing strategies and using re-pricers.
When is it the right time to start using a repricing tool?
Have you ever had a product listed on Amazon and as soon as you lower the price, your competitor drops their price. No matter how late at night or early in the morning, their price almost magically comes to match yours. If you have experienced this, you probably compete against someone using a repricer.
Repricers tend to be the most helpful when you have a lot of other sellers on the same listing. For this reason, most people who source their inventory via retail arbitrage or online arbitrage tend to use repricers the most.
Dylan shares why he loves the power repricers give sellers. Repricers can work wonders but emphasizes that they are not miracle workers by any means. In his opinion, if you have less than 20 skews or less than $10,000 per month in revenue, you should not be using a repricing tool based on the cost factor.
Robyn added that you need to be especially careful using a repricer when you are working with a MAP (minimum advertising pricing) agreement. You need to carefully set up the repricer to not price your items below the MAP price for an item. All good repricers should allow you to set that floor price.
It would be best if you analyzed every tool that you use in your business from an ROI standpoint. However, you must keep in mind as your business evolves, so do your strategies, so nothing is permanent. Just because the ROI isn’t good for your business at this scale, that doesn’t mean that it won’t work down the road.
When you are starting out it makes more sense to do repricing manually, but at a certain point, you will need to manage your time more efficiently and so having a software that automatically takes care of this will allow you to better allocate your time to more high-end revenue-producing tasks; therefore you are making more money because of that cost.
“You’ve got to think about it from an ROI perspective. And a lot of newer sellers have trouble with that for some reason. But it’s part of growing as a business owner and understanding what’s happening. And if you can look at the math on it, you’ll see that it’s a clear decision.” Dillon Carter.
Robyn says that she doesn’t use a repricer for many items except during Q4. In this strategy, she sets her repricer to only reprice the item up as supply and demand can drive up prices during Q4.
What are some of the top mistakes people make when they move from manual repricing to software auto repricing?
1) Not testing:
“Don’t look at repricing tools as a go button. I just set it up, I don’t know if it’s going to work the way that I anticipate it to work, but I’m just going to toggle everything on and see what happens. Please don’t do that!”
Dylan recommends taking 5 to 10 listings and performing, letting it run for a week or two. Then ask yourself, did it perform the way that you anticipated? If it didn’t, we need to dive back into the settings and see if there was an error and why the program didn’t work as planned.
After we’ve corrected our settings, run other tests, and obtained the desired results, it’s still not an all or nothing game. Just because it worked perfectly on 10 SKUs doesn’t mean that it can’t fail on the 11th. Keep in mind that you started with a small sample size, and every listing is its own little ecosystem, so expand slowly and review results.
2) Not enough clarity on the minimum prices.
This is something that needs to be assessed. Your min price needs to be set at a level on which you would happily make a sale. Too many times, the Buy Box can shift down, and it goes to your min price, and you make a sale at the lower side of the spectrum, so you need to be comfortable at that price point.
Keep in mind, regardless of the repricing tool; your price can shift between your min and max boundary. It’s going to follow the rule sets you established. So having your min pricing analyzed and derived from your cost structure is key to the proper functioning of the repricing strategy.
3)Not having costs established.
You need to have clarity on your costs to determine if you’re making money or not? It sounds simple and straightforward, but Daniel goes on to say: “We actually see it more often than I would like in our space, but it does happen, and we can’t really control it or properly advise you if you’re not aware of your accurate costs.”
It would be best if you had your costs stored somewhere. And have them structured in a way that’s easy to access and simple to read.
Having control in managing your data and processes.
When it comes to all software on Amazon, it’s essential to remember “garbage in, garbage out.” Whether you’re looking at a re-pricer or any other software system, you have to structure your data in a way that the software is going to be able to identify what’s going on. And then you need to have safety nets to check and make sure that what you input is getting you the desired results. That means checking in and having ways to make sure that all the tools and all the team members are producing the results that you need in order to be as profitable as possible.