Isn’t Amazon Repricing a race to the bottom?
This is a common question and, unfortunately, a common sentiment in the e-commerce community. Whether it’s on the Amazon Seller Forums, on Reddit, or in the comments on e-commerce blogs, you’ll hear concerns about Amazon pricing:
“The repricer will just keep lowering my prices until I’m a penny below the competition, which puts my profits in jeopardy.”
This claim is a myth. But you would expect a company that provides Amazon repricing software to say this. You might want us to go further and argue the various benefits of repricing and offer you a free trial to prove its merits.
But sometimes, that’s not enough to prove to your sellers that repricing is good for your business.
We are aware of this. Therefore, we will provide proof.
The Proof is in the Pricing
In our report on the impact of automated pricing on Amazon sales, we demonstrated that a sample of 368 Amazon sellers saw a 145% sales increase in the first 30 weeks of using xSellco Price Manager.
But what about profits? If repricing is a “race to the bottom,” you’d expect prices to fall as sales increase, right?
So, we decided to look at average order value to see if it remained consistent as sales surged, or if it dropped due to Amazon repricing?
So let's look at the results.
While a repricer can increase your sales by an average of 145%, it won’t reduce your profits. In fact, it maintains the same average order value as you’ve always had.
Here is the proof.
The data on this graph comes from the same pool of sellers as the Automated Pricing report, but here we’ve added average order value.
We can see that even though Amazon sales grew rapidly over the 30 weeks, average order value remained unaffected by using the Amazon repricer.
Uncovering the racial underbelly
In the first six weeks of automatic pricing, average order value dropped a small amount — about one percent. However, these six weeks were followed by an almost immediate return to pre-adjusted levels. In the late 30 weeks, average order value even increased by 2%.
The initial drop was likely due to online sellers adopting overly aggressive pricing strategies in the first few weeks of automated prices.
At this stage, the seller has tried and tested their own pricing rules. After six weeks, they learned that by automating their prices, they would win the Buy Box more often and win more sales — without having to lower their price floor.
Average order value remained stable over the 30 weeks, proving that automated pricing strategies allow sellers to increase sales by 145% without engaging in a “race to the bottom” with competitors.
Amazon Sellers: It’s Time to Automate Your Prices
Have you tried using an Amazon Repricer? xSellco Price Manager reprices your products in real-time, allowing you to repricer faster than your competitors.
You can also reprice based on your net profit margin with our Ultimate Plan to ensure you make a profit on every sale.
Before you start buying into the theory that pricing is a race to the bottom line, try it yourself. You’ll discover potential for sales growth that you might be missing out on if you were still in a static pricing world.
