An Amazon Pricing Strategy For
Small Booksellers
If you sell books online you need an Amazon pricing strategy to keep your inventory competitive and safe from predatory sellers.
Competition causes book prices to rise and fall on a daily, if not hourly, basis on the major online marketplaces like Amazon.com, AbeBooks.com, and Alibris.com.
To remain competitive and profitable you need to adjust the prices of your inventory accordingly. In addition, you need to adjust your prices without falling victim to unscrupulous sellers who purposely cause inexperienced sellers using automatic repricers to artificially lower their prices to below market levels.
Those unscrupulous sellers will then scoop up the underpriced books resell them at higher prices.
In this article I'm going to show you how to sell used books by using one of my favorite repricing techniques that instantly increased my overall profit margins by 20% while protecting me against most online predators.
I say "most" because there are some highly sophisticated sellers out there who make it their business to prey on smaller sellers who are selling products online. They have advanced technology to fool your repricing tools so you have to be ever vigilant to guard Amazon pricing cheats.
That’s why I’m often asked, “Can I still make money selling used books?” The answer, of course, is a resounding “Yes!” But you have to learn how.
Don't Destroy Your Online Profit
There's a phrase called "race to the bottom" that you must understand if you want to protect your profits and not left holding a bag full of inexpensive books. Anyone can make money online if you learn to avoid this dangerous practice.
This problem happens primarily on Amazon.com so that's important to know when you decide where to sell used books in your business.
A race to the bottom is a situation where you have two dueling automated repricers trying to undercut each other in a vain attempt capture the next sale.
| Don't get into bidding wars with other sellers because in the end, you both lose! |
It goes like this. Seller A prices a book at $25.00. Seller B prices the same book at $24.99. Now Seller A's automatic repricing tool doesn't like being undercut so it reprices the book at $24.98.
This triggers Seller B's repricer to respond in kind by repricing the book to $24.97 -- and the race is on! And you'll race all the way down to a profit destroying penny when a used book seller operates this way.
Don't Follow The Crowd
Your Amazon pricing strategy must be smarter. The way to avoid the dreaded race to the bottom and keep your cash in hand is to avoid pricing wars altogether. Inexperienced booksellers think they always have to have the very next sale -- even if it means lowering prices to unprofitable levels.
Typically, they train their repricer to meet or beat the lowest price in the same or better condition. For example, if a competitor is selling a book in "Good" condition for $10.00, novice booksellers either sell it for $10.00 (to meet the price), or for $9.99 (to beat the price).
No one does book research any more. They just follow the crowd like mindless lemmings incorrectly thinking they're going to make money being online.
That's dangerous thinking, because an equally inexperienced seller will do the same thing. Again -- the race is on! Online bookselling was never meant to be a money loser.
If you're going to sell books for a penny you might as well donate used books to charity and take a tax deduction. You'll be ahead of the game if you did.
Avoid the race to the bottom by pricing your book two cents above the lowest price in the same or better condition! How does this help? Consider this…
If your competition is bound and determined to meet or beat your lowest price by a penny using an automatic repricer, when you price your book at $10.02 vs. your competitor's $10.00 price, a new dynamic occurs with your Amazon pricing.
Stop The Repricing Insanity
Your competitors will now raise their price to either $10.02 (to match you) or $10.01 (to undercut you by a penny.)
Now your repricer doesn't like being matched or beaten by a penny, so it raises your price again to either $10.04 or $10.03 to stay two cents higher. Get it? This is a great way to increase bookstore sales with your repricer.
Of course, as an online bookstore owner you can to too far in the other direction as well and price yourself right out of the market.
That's why truly sophisticated Internet booksellers have an upper limit over which their repricers will not exceed, for example $200. In addition, they have a lower limit under which their repricers will not go, like $5.
Truly professional Amazon pricing algorithms won't allow the lower limit fall below a certain percentage of the original listing price, like 75%.
So if an expensive book gets attacked by an unscrupulous seller the maximum loss won't exceed 25%. In other words, a $100 book won't fall below $75 before hitting the floor.
There are many repricing strategies for home-based businesses and this is just one. For maximum protection against market forces and fraud you should used a combination of Amazon pricing strategies to protect your business. That's how you make money from the Internet.
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Great advice - thank you! Not rated yet
October 18, 2012
Very illuminating - thank you. I'm a complete novice to selling on Amazon, and (as a buyer), had always wondered how come there were …
