The 2017 Amazon Virtual Summit: Day 2
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What causes Price Wars on Amazon? How to manage price wars on Amazon Identifying the best pricing strategy for your business Live open Q&A
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The 2017 Amazon Virtual Summit: Day 2
- 1. 1 Click to edit Master subtitle style THE 2017 Amazon VIRTUAL SUMMIT Presented BY:
- 2. 2 AMAZON SUMMIT LOGISTICS 11am PST / 2pm EST EACH DAY 3-DAY EVENT | 2/28, 3/1 & 3/2 ALL 3 DAYS ARE BEING RECORDED & SENT OUT HAVE A QUESTION? SUBMIT IN CHAT BOX MORE RESOURCES IN ‘HANDOUTS’ SECTION
- 3. 3 AMAZON SUMMIT LOGISTICS Maximizing Your Amazon Product Discoverability via Content Optimization Price Wars: Overtaking Your Competitors On Amazon Finding More Traffic, Finding More Sales DAY 3 DAY 2 DAY 1
- 4. 4
- 5. 5 AGENDA • Key Buy Box variables • Busting Buy Box myths • Defining price wars • Why price wars occur on Amazon • Avoiding price wars • How to handle price wars the smart way
- 6. HOW DOES THE BUY BOX ALGORITHM WORK?
- 7. THE BUY BOX Key Questions to Consider • Is your Product Prime Eligible? • What is your Landed Price? • Are you exceeding Amazon’s target for Seller performance? • How fast are your hipping times relative to your customer base? • Are your products consistently in stock and in quantities that ensure demand will be met?
- 8. WHY SELLERS SHOULD CARE ABOUT THE BUY BOX 82% of Amazon website sales today go through the Buy Box, and this number greatly increases with Amazon mobile sales
- 9. LOWEST PRICE ALWAYS WINS THE BUY BOX: NOT TRUE
- 10. 10
- 11. DOES AMAZON ALWAYS WIN THE BUY BOX?
- 14. 14 DEFINITION OF PRICE WARS A commercial competition characterized by the repeated cutting of prices below those of competitors
- 17. 17 WHY PRICE WARS OCCUR Price wars are becoming more common because managers tend to view a price change as an easy, quick, and reversible action
- 19. 19 PRICE WARS: EXAMPLE 1 Short price war, low impact
- 20. 20 PRICE WARS: EXAMPLE 2 Short price war, high impact
- 21. 21 PRICE WARS: EXAMPLE 3 Multiple competitors, Multiple methods
- 24. 24 NUMBER OF COMPETITORS IN PRICE WARS
- 25. 25 PERCENTAGE OF FBA AND FBM PRODUCTS
- 26. 26 WHY DO PRICE WARS HAPPEN ON AMAZON? Rule-based repricing • Competing for the same product • Lack of understanding
- 27. MANAGING PRICE WARS ON AMAZON
- 28. 28 THE PRISONER’S DILEMMA • You and another person were both arrested for something you did • Each one is in solitary confinement with no means of communicating with the other • The prosecutors offer each one of you a bargain. Each prisoner is given the opportunity either to: betray and testify that the other committed the crime, or to cooperate with the other by remaining silent.
- 29. 29 THE PRISONER’S DILEMMA • If both you and the other person remain silent, you each get 1 year in prison YOU OTHER PERSON Silent Silent 1 year, 1 year Betray Betray 5 years, Free Free , 5 years • If the other person betray you and you don’t, he goes free and you spend five years in prison • If you betray and the other person doesn’t, you go free and he spends five years in prison 3 year , 3 year• If both of you betray, each one will get 3 years in prison
- 30. 30 THE AMAZON SELLER’S DILEMMA • You and another Amazon seller are selling a profitable product • You have no way to communicate with the other sellers
- 31. 31 THE AMAZON SELLER’S DILEMMA • If you both cooperate and keep prices high, you each make $10 million in profit YOU COMPETITOR Keep price high Keep price high $10M , $10M Cut price Cut price $2M , $13M $13M , $2M • If you lower prices and your competitor doesn’t, you make $13 million in profit and your competitor only makes $2 million • If your competitor lowers prices and you don’t, your competitor makes $13 million and you make $2 million $5M , $5M• If you both compete and lower prices, you each make $5 million in profit
- 32. 32 HOW TO AVOID PRICE WARS? 1. Be patient 2. Know your competitors 3. Be a market leader
- 33. 33 What is their repricing method? KNOW YOUR COMPETITORS
- 34. 34 How low can they go? KNOW YOUR COMPETITORS
- 35. 35 What goes down must come up KNOW YOUR COMPETITORS
- 36. 36 Click to edit Master subtitle style Day 3 | March 2nd | 11am PST/2pm EST Finding More Traffic, Finding More Sales Topics Discussed: • Amazon Marketing Services – The New Frontier • Optimizing Your Sponsored Product Ads • Leveraging Other People’s Traffic • Creating Promotions that Convert • Live Walk-Through and Open Q&A
- 37. 37
- 38. 38 THANK YOU
Notas do Editor
- 1. Talk about the growth of mobile and that on mobile this % is actually higher “Amazon said that mobile orders on Thanksgiving topped Cyber Monday last year” 2. Talk about Private Label – each brand owns 100% of the buy box
- 1. Talk about the growth of mobile and that on mobile this % is actually higher “Amazon said that mobile orders on Thanksgiving topped Cyber Monday last year” 2. Talk about Private Label – each brand owns 100% of the buy box
- Let’s get rid of some myths. First myth above No magic number Depends on different sellers metrics (yours and your competitors). Depends on your competitor objectives
- Let’s get rid of some myths. First myth above No magic number Depends on different sellers metrics (yours and your competitors). Depends on your competitor objectives
- Amazon wins 70% of the time they are competing on the buy box
- Talk about the difference
- Talk about the difference
- Talk about the difference
- Let’s start with a tiny price war – it didn’t last long (17 min), and had minimal impact on the pricing (0.02%). Nevertheless, we can see a short race to the lower price, and strong correlation between the moves of these two competitors.
- In this example, we’re talking about a much longer price war almost 24 hours), with substantial impact on the market price (24%). The interesting part here, is that the pace of the race to the bottom changes at some point, deepening the decrease in prices.
- Another interesting example. Here we can see three competitors involved in the war. Once again, we can see that each war can be somewhat different than the other. On that note, it’s interesting to see that the seller reflected in red, is involved in the war – but in a different pace compared to the other two.
- Talk about the difference
- Talk about the difference
- By tracking your competitors’ moves over time, you can try to vaguely predict their responsiveness to the price changes occurring in the market, specifically yours. In this case we can see that while two competitors are repricing their listing on a frequent basis, the third seller (gray), isn’t moving. Should that have been the only seller in the arena except us, we could have made much use of such information. On one hand – we know we can cut their price without initiating a price war; on the other we know that there’s no option to initiate a “reverse price war” – a concept we’ll shortly discuss, driving market prices upwards.
- By tracking your competitors’ moves over time, you can try to vaguely predict their responsiveness to the price changes occurring in the market, specifically yours. In this case we can see that while two competitors are repricing their listing on a frequent basis, the third seller (gray), isn’t moving. Should that have been the only seller in the arena except us, we could have made much use of such information. On one hand – we know we can cut their price without initiating a price war; on the other we know that there’s no option to initiate a “reverse price war” – a concept we’ll shortly discuss, driving market prices upwards.
- We’ve mentioned the concept of “reverse price wars” several slides ago, where prices go dynamically upwards rather then downwards. In this example, we can see two declining price wars followed by two inclining ones. This is one of the most important repricing aspects, due to today's market dynamics. Without having a reverse price war initiator in place, most chances that we’ll meet our floor prices in no time. In this case, the reverse price war was carried out gradually, along time. Another approach we employ, is to generate a sharp price during off-hours, in the hope of driving the market upwards. Of course, it may sometimes work and at other times not.