Pricing Best Practices on E-Commerce Marketplaces
When competing in e-commerce, it’s easy to get buried in mountains of data every day — and still feel behind. It’s understandable. There are millions of sellers and billions of products to compete with — and that’s just on Amazon. This feeling is especially acute when it thinking about pricing on marketplaces, where more sellers than ever are competing across product categories.
With more than half of online shoppers regularly comparing sellers to find the best price, it’s no longer your product descriptions and images alone that capture attention. Often, pricing is what matters most.
If you want to consistently rise to the top of results, having a structured pricing strategy is a must.
Complications of Marketplace Pricing
The simple act of pricing a product can be confounding for both retailers and brands. Set your pricing thresholds too high, and you’ll be quickly outpriced. Dip too low, and you risk losing out on a mountain of revenue potential.
When it comes to pricing on marketplaces, there’s no such thing as a simple calculation. Virtually every product you price will involve a complex equation with numerous variables, including how much stock you have, the brand image you want to uphold and the prices your competitors are using.
And then, once you have all of that figured out, there are three more issues to consider:
- Price Parity — Marketplaces require consistency. You can’t, for example, list an item for one price on Amazon and another on eBay or Walmart. These sites need to guarantee that sellers are presenting their best offers to shoppers, and the risk of product suppressions, listing removals and even account suspensions is high for any seller that fails to abide by strict policies — even if it happens accidentally or unknowingly.
- Minimum Advertised Price (MAP) Policies — If you fail to comply with a brand’s minimum threshold for advertising a product — even if it’s to stay on par with other, lower-priced listings — you risk harming or even losing a profitable relationship.
- Product Performance — If a particular product isn’t performing well during a slow season, it’s highly likely that the price needs to be adjusted down. But when demand is sky-high and the orders are flying in fast, that’s a sure sign that it’s time for a price increase. Over time, these tiny tweaks can add up to make a big difference in overall revenue.
4 Best Practices for Marketplace Pricing
Yes, pricing can get complicated. But getting the price “just right” can unlock a mountain of revenue potential. Below are six best practices and proactive strategies that will help elevate your pricing game plan and keep you ahead of other sellers in your space.
Best Practice #1: Monitor Competition Constantly
Today’s marketplaces are designed to empower online shoppers. Searching for a single product can yield a dozen or more results, and if your listing doesn’t rise to the top it’s unlikely to be seen — let alone clicked.
Successful brands and retailers understand that staying ahead of pricing trends requires competitive data analytics that are easy to grasp at a glance. For this reason, visualization dashboards and benchmarking tools are key. Select analytics tools that provide deep insight into how your pricing stacks up to the competition in straightforward, uncomplicated reports — day after day and hour after crucial hour.
Best Practice #2: Regularly Audit Agreements
The best way to avoid price disparity on marketplaces like Amazon and eBay? Pay attention to the details. Take some time to pull out the agreements you’ve signed with each marketplace and locate the sections related to pricing and price parity.
It can be easy to overlook some requirements, so it’s important to audit your pricing strategy for anything that might get you in trouble with your terms of agreement.
Best Practice #3: Centralize Marketplace Management
Whether you log into multiple accounts or rely solely on individual marketplace interfaces, managing marketplaces in silos makes it incredibly challenging to streamline your pricing strategy. The lack of a centralized view can lead to gaps in data, inconsistencies in pricing and delays in diagnosis.
How will you know when your Amazon price becomes higher than what you have listed at eBay or Google Express? What will happen when your MAP policy is being violated on not just one but five marketplaces? Consolidating multichannel efforts into a single, streamlined platform can prevent small issues from becoming big problems.
Best Practice #4: Watch For Opportunities to Bundle
Bundling products into single-SKU offerings isn’t just a best practice for competitive pricing. It’s also a great way to differentiate from the competition. For example, there will be plenty of times when a consumer will be considering just one of your items. But if they see your promotion for an even better deal — a discounted three-pack, for example — there’s a good chance you’ll land an even bigger sale. By grouping popular products into competitively-priced packages, you can inspire consumers to stretch their wallets.
For four more pricing best practices and more information on what to consider in a dynamic pricing strategy, download our eBook: Pricing for Marketplaces: The Definitive Guide.
Wrapping It Up
With more sellers and consumers flocking to marketplaces every day, competition has never been tougher. Between optimizing listings, managing errors and fulfilling orders, there’s little time left to scrutinize pricing on hundreds or thousands of SKUs. But with a little preparation and a lot of automation, building a competitive pricing strategy for each marketplace can be a hassle-free process that ultimately gets you more clicks and purchases than ever.
ChannelAdvisor’s intelligent pricing tools allow you to easily compete on price across all of your sales channels.
Our Algorithmic Repricers can adjust any product price to capture more buy box, best offer and above-the-fold positions at the highest prices possible while staying compliant across Amazon, eBay, Walmart and other channels. And our Performance-Based Pricing feature makes automatic adjustments based on real-time product demand.
With ChannelAdvisor Velocity Repricing, product prices are adjusted automatically based on your goals — whether you want to extract more margin on fast-selling products or lower prices when sales are slow.
Want to leverage the power of ChannelAdvisor’s repricing and analytics technology with a free trial? Check out ChannelAdvisor Elevate, our standalone Amazon solution built to help you win the Buy Box and maximize profits. Start with a free, no-risk trial and cancel anytime.
To see ChannelAdvisor’s tools in action or to speak to an e-commerce consultant about your pricing strategies on marketplaces, request a demo today.