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How to Increase Profit and Revenue on Amazon

The world’s most competitive marketplace isn’t in a city mall or an old bazaar. In fact, it isn’t even in any physical setting (yet). It’s online, and its name is Amazon. It’s home to millions of active users and has become known to house incredibly low prices on popular items. The marketplace is a powerhouse that provides sellers with a big problem: if it’s so competitive, how can I make money?

Price cuts run rampant on Amazon, largely because of the retailer’s pricing strategies. Amazon stretches its margins thin to make a sale, leaving many retailers on the marketplace scrounging for revenge against the retail behemoth. Sure, they win sales, but unfortunately, those sales don’t always translate into generous earnings.

There’s good news, though. You can have your Amazonian cake and eat it too. Price optimization is the key to winning sales and earning some decent profits as well. If you’ve been selling on the Amazon marketplace but have been disappointed in your revenue and profit levels, these tips can change that.

Price Smarter, Not Harder

Many retailers have a hard time changing their prices because of the frequency required. We all know Amazon is known to change the prices of their products numerous times a day. Most companies barely have the resources to change their prices a couple of times a day.

When it comes to price optimization, you have to slow your roll on price changes. Sure, Amazon is hopping around like a mad rabbit, but didn’t you know that slow and steady wins the race? Calculated price changes can make your price more appealing in the eyes of the shopper, and oftentimes that price can be higher than theirs.

There are so many factors that go into the price perception of your brand. If you look at a can of tomato soup at a grocery store like Whole Foods and a can of tomato soup at Safeway, you know to expect some disparity. The same goes for retailers on Amazon. Test different price points and observe the results of each change, you’ll be surprised to see how much higher you can price over competitors and still win sales.

Take Advantage of Being the Only Seller

You may not have to worry about much competitive pressure if you’re selling a niche product. In this situation, you can command a higher price. Test different prices to measure the demand changes of the product. Obviously pricing a t-shirt at $100 isn’t going to win over customers, and pricing it at $20 might even be too much.

By testing different prices with these items, you can find the sweet spot in your pricing that will not only win you sales but help you expand your margins to a better level. Aimlessly increasing your price is the same as undisciplined price cutting in that both can curb sales.

Don’t Go Head to Head with the Big Guy

If you’re hiking in a jungle and an 800-pound gorilla is blocking your path, are you going to go ahead and just fight him head on? That’s what it’s like to go toe-to-toe with Amazon as a seller. You’re not going to be successful getting entangled in a price war, but there are still ways you can beat Amazon on its own marketplace.

Competing directly against Amazon is a great way to kiss your revenue and profit goodbye. The company barely turns a profit, and they don’t have to. They reinvest all of their revenue back into their business to build a lean mean price cutting machine. Instead of pricing against them, take advantage of the benefits they offer sellers, like Fulfillment by Amazon (FBA).

FBA is a great way to win the Buy Box, and in return have an increased chance of winning the sale. FBA basically means that Amazon will accomplish all of your fulfillment tasks for you. Amazon is a well-oiled machine, and by having them handling things like shipping and packaging, you can be certain there will be little to no problems with your customer service experience. Combine this with a well-calculated price, and you can win yourself the Buy Box.

Finding the right price on Amazon is no easy task. Manually it’s tough to keep up with the numerous changing factors that go into winning the Buy Box, but Wiser’s Amazon dynamic pricing solution can help you win the buy Box more often with consistently competitive prices.

Contributing Writer: Brian Smyth

Angelica Valentine

Angelica Valentine is a Marketing Consultant with several years of expertise in the retail sector. Her work has appeared on VentureBeat, Business Insider, SAP, and more. She holds a BA from Barnard College of Columbia University.

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