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AuctionBytes Blog
Covering auctions, collectibles and marketplace selling.

AuctionBytes Blog The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.
Thu June 28 2012 11:41:53

Does Amazon Compete with Your Products on Amazon.com?

By: Julia Wilkinson
Sponsored Link
In an interesting article in the Wall Street Journal yesterday, while sellers report an average 50% increase in sales when they join the Amazon Marketplace, some small Amazon marketplace sellers feel Amazon is competing with them on specific products, even to the point of using the site "as a vast laboratory to spot new products to sell, test sales of potential new goods, and exert more control over pricing."

In one example, seller Jeff Peterson of sports merchandise company Collectible Supplies, Inc., was selling up to 100 "Pillow Pets" (modeled after NFL mascots) a day at $29.99, until Amazon itself began offering the pillow pets for the same price but with the featured placement known as the "buy box." Peterson said he kept lowering his price, but Amazon "would always match my price or go lower until I eventually gave up" and set it at the manufacturer's suggested price. Currently Amazon was selling a Baltimore Ravens Pet for $12 with free shipping, according to the Journal, but Peterson has bumped his price up again to $29.99.

But selling on Amazon holds great appeal for many sellers, with its approximately 85 million unique monthly visitors, which is 45% greater than eBay Inc., and "nearly 7-fold more than Sears Holding Corp., both of which host their own third-party marketplaces," the Journal reports, according to ComScore data. (The Sears Third Party Marketplace is at https://seller.marketplace.sears.com/).

As an Amazon seller myself, I see one of the biggest problems as the constant bottom-feeding on prices, which can be difficult to keep up with, even if you have an automated repricer tool, because the condition details of what is ostensibly the exact same product, such as a collectible book, can vary so much. However, I now make a good deal more money regularly on Amazon than I do on eBay in terms of the media categories I sell in. Personally, I haven't seen Amazon compete with me on the types of  products I sell, which are usually vintage books and other types of media.

Have you felt this double-edged sword of competition from Amazon itself on your products? What percentage of your sales come from Amazon, if you sell on multiple marketplaces? Or is all this competition just an expected part of doing business anywhere? Post a comment here!



Comments (10) | Permalink
Readers Comments

Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
This user has validated their user name. by: Anonymous Annie
       
Thu Jun 28 13:01:47 2012
Just now getting my toes wet with Amazon ads. I've set a modest daily budget and I bid modestly on what each click will cost me. And to my GREAT DELIGHT, I'm getting more Amazon-generated click-through sales than I get ''on-eBay'' sales.

I'm discovering that (for me) the Amazon shoppers/browsers that are interested in my ads are ALSO shoppers who are ready-to-buy. They're not bottom-feeders, they're sophisticated, they don't bury me with questions, they know how to read listing details.

My experience may not be typical, but these are EXACTLY the type of customers that I am delighted to have.

It's difficult to compare costs between eBay and Amazon-Ads... but my monthly Amazon budget is LESS THAN the typical monthly fees I pay to eBay.

Obviously, not every Amazon click ends up in a sale, but it's proving to be well worthwhile as the sales continue to come in at a pace that beats eBay.

At this rate, I should experiment a little and increase my bids per click... or increase my overall budget to see if there's a correlation that produces even MORE sales.

It might work, or it might not work, but at least I have the OPTION to try, and I can always ease-back on my investment if it doesn't have the desired effect.

In contrast, there's not a whole lot that I can do to influence my eBay views and purchases. For the most part, I'm at eBay's mercy.

The ''rush-to-the-bottom'' game is something that I'm not going to fall prey to. I'll just continue to offer quality products and excellent service on a well-organized and easy-to-use website. (After all, there's more to ''value'' than price alone.)

Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: pace306 This user has validated their user name.
       
Thu Jun 28 13:03:11 2012
I was offered a position as a buyer for Amazon - so I can tell you how it works.

Amazon isnt ''people'' its a computer program. All day, every day each ASIN is analyzed and reports are created. If you introduce an item into Amazons catalog it gets added to the section on new ASINs. That section is monitored for 30 days. If in that time it reaches a certain threshold (as set by the buying team in that specific category) OR it is deemed to be an important part of the catalog - then Amazon auto generates a PO to the manufactorer and the program gives iteself the box!

If you lower your price by %2 (the threshold) lower then the Amazon price, the programs built in repricer corrects the price. Its set by a certain factors (margin, quantity on hand and how popular the item is. If the item isnt popular Amazon waits till their stock is depleated  then rotates the next best price/best performance seller into the box.

Amazon makes at least %8 on every sales - so its a win/win for them. The only question is, if they choose to ''own that sku themselves'' or not.

Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: Susan Averello This user has validated their user name.
       
Thu Jun 28 13:43:38 2012
I wouldn't want to sell on amazon but I sure like the prices when it comes to being a customer there.  
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: Digmen1 This user has validated their user name.
       Web Site
Thu Jun 28 17:57:16 2012
It seems to me that small sellers are better off with their own websites rather than be controlled by sites such as ebay and amazon.

But of course setting up your own site and getting views/sale is not that easy.
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: tb This user has validated their user name.
       
Fri Jun 29 00:12:51 2012
This has absolutely happened to us many times! It makes perfect sense from their standpoint. Do you think they're not watching what Marketplace sellers are doing? It's a great opportunity to get valuable marketing data AND get paid for it!

Just like eBay, Amazon is not your friend.
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: tb This user has validated their user name.
       
Fri Jun 29 00:14:16 2012
BTW, Sears? Are you kidding? Is anyone selling there? I see they charge $40 a month to sell. I'm shocked and amused.
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
This user has validated their user name. by: Ina
       
Fri Jun 29 09:24:58 2012
@pace306 "then Amazon auto generates a PO to the manufactorer"

Wouldn't Amazon need to know the cost of the item before issuing a PO?
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: KEEPING A CLOSE EYE ON THEM ALL! This user has validated their user name.
       
Fri Jun 29 09:46:14 2012
Quote from Anonymous Annie:

 “I'm discovering that (for me) the Amazon shoppers/browsers that are interested in my ads are ALSO shoppers who are ready-to-buy. They're not bottom-feeders, they're sophisticated, they don't bury me with questions, they know how to read listing details."
(Anonymous Annie)

You hit it right on the head. Which is precisely why we do a large amount of our business on Amazon and our own sites as opposed to dealing with all the foolishness that goes on on ebafia.  

The buyers on Amazon are (for the most part) educated, thoughtful and informed folks who are willing to pay what something is actually worth as opposed to ebay where everyone expects you to GIVE THEM EVERYTHING FOR FREE and then want to BITCH about it in the process.


We decided long ago ebay was a losing proposition and went to Amazon and we couldn't be happier there - And there ARE ways to counter Amazon 'competing' with your items...

Think shipping cost for starters - Most buyers there are savvy enough to check the TOTAL cost of receiving an item and we've found more often than not we provide the 'like items' at a lower total to their door cost than Amazon it's self does so we get the sale.
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: Moonwishes This user has validated their user name.
       Web Site
Fri Jun 29 11:54:31 2012
I've been slowing starting to list on Amazon again after a several year Hiatus. Just this month alone I sold almost $100 worth of inventory. After fees, etc. I make within pennies of what I make on ecrater for the same product. I'm willing to sell on amazon has it has never made me feel like I'm getting a stress ulcer. I also don't play the race to the bottom with prices either. I list at a certain price and leave it at that.
Does Amazon Compete with Your Products on Amazon.com?   Does Amazon Compete with Your Products on Amazon.com?
by: pace306 This user has validated their user name.
       
Sat Jun 30 23:46:34 2012
@ina :)

Amazon is like Walmart - EVERY major manufactorer wants the 800 pound gorilla to buy thier items.

If you are the printer buyer for example - you either go to CES and establish a relationship or they come visit Seattle.

Amazon chooses which companies to deal with - but all price sheets from almost all companies are in thier system. The program auto generates POs as need. No human being gets involved unless a category gets too saturated to make any money or they own too much product.

Items that sell well that are NOT in their ordering system are kicked ''upstairs'' to the actual manager or head buyer for that section - and the contact(s) needed are made.

It happened to me with iHIP. I introduced most of their items into Amazons catalog, and after 6 weeks - I had Amazon as my competition on EVERY SKU. IFOr something that I was selling for 29.99, Amazon cut it to 17.99. They did it because they can - the program looks at margin not profit.

I gave up on most SKUs after that and now only sell one or two there - as the rest are ''killed'' or not popular enough to carry.



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