Amazon Competition

Repricing. No other term both strikes fear and anger in the minds of old-school book-sellers and, at the same time, excites the modern, tech-savvy book selling entrepreneur.  It is a term that has received more bad publicity than any other term in book selling (“penny book” vies for the top spot with “repricing”).  Once introduced, however, repricing has revolutionized the online book selling world and has allowed sellers to partake in a “set it and forget it” price mentality.  Amidst the dozens, hundreds or thousands of competing offers on Amazon, repricing allows a seller to maintain a fixed position throughout the item’s time for sale.  In this post I will be referencing repricing as used on Amazon’s marketplace, but repricing can and is used on other sites as well.

What is repricing?

Repricing is a popular term used by online sellers to set the price they’d like to sell their copy of a book at.  It’s most notably used on Amazon to describe the practice of using a set of rules in order to keep the copy of their book at a fixed position among all of the other offers for that same book.  A fixed position meaning a pricing position such as a penny lower than the lowest offer, an average of the lowest 3 offers or it can even get as granular as the average price of the lowest 10 offers in like new condition over $5.  The options are limited only to the software or service that you use to perform the repricing.

Repricers: How do these programs gather the prices?

Everyone that has ever bought or sold a book on Amazon’s marketplace knows that if you search for a book and click on the used section you will find anywhere from 0 to thousands of different sellers trying to peddle their wares and sell you their copy of that book.  Prices for these offers typically have huge ranges with the lowest going from one cent to the highest at hundreds of dollars or more.  The reason these prices vary so much is the topic of another discussion but for now just think about this huge number of sellers offering a book at such a huge number of different prices.

Amazon has what’s referred to as their marketplace application programming interface (API).  A simple TV analogy can be used to describe this API.  When you want to flip on the boob tube and watch Lost you pick up the remote (Amazon.com) and push the power button to turn on the TV (click in the search box on Amazon.com).  This action then sends a signal to the TV’s sensor which then tells the electronic circuitry to initiate power-on and “Whoila!” you’re TV is on.  Think of the API as the sensor in the TV.  It’s the guts of the TV that no ordinary Joe understands but if you get a TV mechanic around he could whip out a Phillips screwdriver and turn your TV on by just jiggling the sensor.  He knows how to manipulate the guts of the TV instead of using an external device to do the same thing.

The API is just like this.  A buyer may browse to amazon.com in their web browser of choice and look at the prices of a book but a web developer can go in behind the scenes of the website and gather all the prices just from a simple command.  They’re both seeing the same information but when the prices are received via the API, this gives the developer a way to manipulate those prices and present them in a different way to the user of their program.  You just want to see the lowest 3 used offers with condition of Acceptable?  Sure!  How about just seeing prices over $5?  No problem!  All repricing programs use this API to download prices for each book and set rules depending on how the user wants to set them.

Repricers: Why do sellers depend on them?

Now that we know how repricing programs gather the prices, let’s talk about why any seller in their right mind would want this sort of capability.

A used book’s prices on Amazon are sorted in order of lowest price + shipping to highest price + shipping.  Each book will typically have multiple pages of offers.  When a potential buyer checks out the used offers, they will immediately see the first page of prices which are, by default, the lowest prices that a book is being sold at. However, if they scroll down to the bottom of the page they will also always have the option of clicking on other pages of offers.

If you were a buyer, excluding everything else which seller are you most likely to buy this book from?  A seller on the very front page as soon as you click on the used offers which is accessible by one click or by scrolling down to the bottom of the page, clicking on page 56, scrolling to the middle and buying that copy.  It’s a pretty easy answer.

If you list a book that is still in demand on Amazon today and notice that the lowest used offers are $5, $6.50 and $7 and you decide you want to sell your copy at $6 which would get you in the second position on the very 1st page; a very lucrative and high visible position!  However, this book doesn’t have a very good sales rank and is a slow seller.  Other sellers notice that this book has been sitting in their inventory for months now and reduce the price to meet buyer demand.  Other sellers follow suit and before you know it the lowest 3 offers aren’t $5, $6.50 and $7 anymore.  They are now 25 cents, 56 cents and a dollar.  Since yours is still listed at $6, you’re no longer competitive!  You’re on the 54th page of listings and a buyer would need to conquer Mount Everest to buy your book.  What makes you so special that they would want to do that?  Take at look at this book; Don’t Make Me Think by Steve Krug.  It’s a perfect example of this phenomenon.

Instead of listing your book for $6 and ending up on page 56 after 2 weeks, a repricing program connected to your book could see that you’ve just listed that book at $6 and ALSO notice the prices of your competitors.  It will take a look at all of this on a periodic basis and as your competitors lower their price your book just follows along making your book still appear on the 1st page right in front of the buyer’s eyes.  Don’t want your book to follow ALL the way down to a penny?  No problem!  Just set your minimum to $4 and you’re repricer will gladly accept your command and keep looking at your competition chomping at the bit to follow them but since you’ve told it “NO!” at $4, it will behave.

Repricers are crucial to any seller that has more than a few hundred books that wants to remain competitive in the highly competitive world of low sales rank books on Amazon.  If you’re a new seller with a few dozen books, take time out of every week to periodically check your competitors prices and adjust manually.  However, get to the point where you’ve got 10,000 books online and you’d die of old age before you could look at them all.  Repricing automates this process.

Repricing: How do I configure this?

This all depends on the service that you’re using to reprice your books.  Programs that provide this service include RepriceIT, Aman Pro, FillZ, Art of Books, Monsoon, Alibris et al.  However, they all have access to the same information through the Amazon marketplace API so technically they all have the same capability.  Refer to your program’s individual instructions on how to get your repricing program configured.  If you need a particular rule setup and they don’t offer it, let them know as it *can* be done but it all depends on the individual company offering the program if they *will* do it.

Repricing: What are some examples of popular rules?

Repricing rules or conditions can be set a number of different ways depending on the seller’s goals but there are a few rules that are common among sellers.

1. Put my price at a penny below the lowest competing offer ALWAYS.

No other rule pisses other sellers off more than this rule including myself and, believe it or not, I was once one of them.  New sellers new to Amazon or sellers that simply don’t care about the market as a whole can sometimes set their repricer to undercut the competition by a penny or more with no regard.  This gets them the best placement on the page in front of the buyer but what if you have two or more of these jokers trying to sell the same copy using the same rule?  Price war!  Seller 1′s response at being undercut by a penny: “Oh, you undercut ME?  I’ll show you!  I’ll undercut YOU!  Take that!”  Seller 2′s response: “How dare you undercut me!  I want that top position!  I’ll do you one better and mark my price down ANOTHER penny!”.  Rinse, wash and repeat and before you know it the lowest price hits rock bottom, future buyers rejoice and all the sensible sellers that chose not to undercut other sellers go down with them because they still need to follow to remain competive on the 1st page albeit NOT the lowest offer.

2. MATCH the lowest offer.

To remain in a competitive position some sellers choose the have their repricers simply match the lowest offer to be ONE of the few not the ONLY one with the lowest offer for a book.  This not only keeps them competitive because they’re still very visible and at the same time does not begin a price war with a “run to the bottom”.

3. Set my price at the average of the lowest X offers.

Sellers not looking to turn around their inventory as quick as possible will sometimes make a compromise and choose to set their price at the average of the lowest X offers with the lower number of offers being a lower price and vice versa.  This allows them to still remain relatively competive and depending on the total offers can allow them to still remain on the first page of results but also command a higher price for their copy.

Notice a trend?  Lowest.  In my experience and according to a study performed by Monsoon, 70% of buyers are interested in price first, condition second and feedback third.  They’re always looking for the cheap copy and if you want your copy of your book to be there for the buyer, you have to ablige and offer a low price to meet that demand (note: not the only LOWEST, but just LOW).

Repricing: The Final Verdict

Any successful seller needs to do 3 things to make money in this business.

1. Meet buyer demand
2. Get in front of the buyer
3. Offer what the buyer is wanting

Out of those 3 points, repricing takes care of 2/3 of them.  Repricing programs are able to allow the seller to meet buyer demand by keeping pace with the competition and remain right in front of the buyer AT ALL TIMES with no intervention by the seller.  My business would not survive without repricing technology.  It is a tool that can be used for good or for bad but in the hands of the right seller, it can be a very powerful, profit-generating tool.

If you’d like to learn more about repricing or many other methods for being successful at selling books online, take a look at my updated eBook titled Used Books: Big Business – The Secrets to Selling Books Online for Big Profits.  I discuss, in depth, repricing along with dozens of other techniques for operating a successful home-based online book selling business.

Please feel free to comment on this post or if you have questions about repricing in general head on over to the forum and post a question for us all to talk about!

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