Selling on an ecommerce platform can sometimes feel like a game of chess where being out-maneuvered can knock you out of the game. The most common way brands are out-maneuvered is via price.
On Amazon, third-party sellers are rewarded for offering low prices, and that often means they’ll undercut your pricing to get ahead. This behavior (called price erosion) makes it very difficult for other merchants to sell your product without eating into their own margins, and without proper checks on the sellers contributing to erosion, you may see your profits plummet. That’s what makes maintaining price stability on Amazon so important: it protects a brand’s margins and ultimately, the brand itself.
There are several things you can do to maintain price stability and regain control of your brand on Amazon. What works for one brand may not work as well for another, but these are five proven tactics that can help.
A MAP (Minimum Advertised Price) policy is a policy set by a manufacturer that tells resellers the lowest price they can advertise for that manufacturer’s products. MAP policies apply to _advertised _price and don’t limit the actual price a seller can set for a product. Brands set them to protect themselves from price erosion.
A good MAP policy outlines advertised price suggestions on specific products and the consequences for vendors who violate the policy (i.e. being banned from selling the product, having their account frozen). When effectively enforced, MAP policies incentivize third-party sellers to not undercut other sellers on cost, keeping pricing stable and giving other retailers a fair chance to sell a brand’s product in the market.
Note: before setting up a MAP policy, you’ll want to consult with a lawyer or legal team to ensure your brand doesn’t run afoul of antitrust laws.
Cutting the number of distributors selling your product can also help you maintain stability and take back control of your brand. Limiting your distribution allows you to more easily monitor where your product is being sold and at what price. It also helps you to retain authorized distributors who are following the rules while removing those who are not.
It may feel uncomfortable to cut off distributors, especially those you have developed a strong relationship with, but if a seller continues to violate your pricing policies, the harm done to your brand in the long-term by keeping them will be far greater than the harm done by cutting them out.
One reason why sellers may be undercutting your pricing on Amazon and creating instability is because your pricing is not as competitive as it should be in the first place. If your competitors are selling similar products at a noticeably lower price, it will be much harder for third-party sellers to move your product and more enticing for them to lower the price so that customers will have the incentive to purchase from them.
To find competitive pricing that works for your brand, conduct analysis on similar products across the market that can help you determine what prices make sense.
Often Amazon pricing is unstable because your products are being sold by unauthorized sellers who have no incentives to stop and no control. One way you can prevent this from happening is by enacting quality control policies or procedures.
An example of a quality control procedure is serialization. Stamping or printing each one of your products with a unique serial number allows your warehouse to track them more easily so you can identify leaks and ensure your customers are getting legitimate products. Serialization takes time and money, but it’s one way to protect your margins.
In order to get your pricing stable, you need to be aware of price drops, and the good news is there is plenty of technology available to help you monitor price shifts around the web. Chrome extensions like Honey and WikiBuy can help you compare a product across the web to other marketplaces. Extensions like Keepa can show you price fluctuations.
Another tech tool you can use is Predict. Predict is comprehensive, in-depth software that allows you to see data on MAP violations, how competitive your products are, and how much it’s costing you.
With the right tools and the right policies, you can stay on top of the game when it comes to price stability on Amazon. Read more about how to maintain prices on Amazon with our eBooks below, or contact a Pattern representative to learn how we enable our brands to gain pricing control on marketplaces.
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If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.
Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.
At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead.
An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.
A great Amazon SEO Agency partner will:
Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance.
Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS.
To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.
A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.
It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.
Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins.
Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.
As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.
Contact us to learn more about our SEO optimization services.