EcommerceBytes-NewsFlash, Number 3108 - July 15, 2013     3 of 4

Get Your Products Seen by eBay, Amazon Back to School Shoppers

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While July often finds merchants coping with a summer slump in sales, it won't be long before the back-to-school season kicks off in high gear. How can merchants rank high on eBay search results and ensure their inventory has a shot at making it to the Buy Box on Amazon? And how do merchants protect their margins when trying to win on price?

Alasdair McLean-Foreman, CEO of Teikametrics, said the Back-To-School season is a good opportunity for merchants to focus on an aggressive pricing strategy for items they anticipate will be high demand, and recommended merchants using repricing tools to gear aggressive rules towards maximizing Buy Box time.

Arie Shpanya, CEO of WisePricer, said making feedback "impeccable" is the one of the most important things to do in advance, and said good feedback takes time to build. "Both Amazon and eBay position listings with respect to internal metrics such as Detailed Seller Ratings ("DSR" on eBay), customer satisfaction, feedback rate and sales history, in addition to prices and level of inventory."

Shpanya had advice for merchants on boosting their seller ratings. "An easy way to boost the quality of feedback is to sell an item that will generate many 5-star DSR's - try items that have a low cost and slim margins, and are simple and fast to ship. When the transaction is cheap and easy, you'll be able to increase the number of sales made and easily maintain a positive experience, leading to better DSRs." A similar method would work with Amazon seller ratings as well, he said.

FeedVisor Director of Marketing Shmuli Goldberg said the back-to-school season is the same as any other time of the year when it comes to the Buy Box. "Remember that the Buy Box aims to deliver the best possible value to customers in terms of price and performance. If your customer score is high, your shipping times low, your response time quick and your pricing competitive, you will consistently win the Buy Box more than your competitors, and at a higher price."

Jessica Dai, Director of Marketing for BQool, said winning Amazon's Buy Box depends on factors such as featured merchant status, ODR (order defect rate) and pricing. "When all factors are equal, a good pricing strategy will set you apart from your competitors. You certainly don't have to offer the lowest price to win the Buy Box, but you do need to be in the top 4 lowest price positions to be included in Buy Box rotation."

Dai recommended using repricing software to gain access to the top four slots in order to ensure the chance of winning the Buy Box. She also recommended using Amazon's FBA fulfillment service "to gain an unfair advantage over other sellers" - if it makes sense for your business.

Protecting Margins
Since sellers pay different prices for inventory and have different cost structures, how do you protect your margin when trying to win on price?

BQool's Dai said sellers often sacrifice their margins when they're in the lowest price position. "To protect your margins, compete for the 2nd lowest price position instead. Winning the 2nd lowest price position means the chance to win the Buy Box but with better margins."

Teikametrics' McLean-Foreman said the scenario where there are many sellers offering a homogenous good is called "Perfect Competition" in economics. "In a Perfect Competition market scenario, it is impossible for merchants to earn a profit in the long-run. To avoid this situation, and for merchants to maintain profitability, they must continually look for opportunities to sell products that are not saturated by other sellers," he said.

"Working with manufacturers and suppliers that enforce MAP pricing can help merchants maintain healthy profit margins," he added.

WisePricer's Shpanya said merchants should avoid a "bottom dollar" strategy. "The name of the game is to maintain profit. Hence, our recommendation is to choose your own battles and not try to price all the way down to the lowest price. Ideally, you should aim to be in the top 3 featured or top-rated sellers. Don't get too caught up in the downward pricing spiral!"

Feedvisor's Goldberg said he recommends two key strategies to all merchants to protect their margins:

1) Keep your warehouse in mind when setting prices. If you're happy holding an item for an extended period of time, set your prices higher, even though it may reduce sales volume. On the other hand, if you hold perishable goods or items taking vital space in your warehouse, be more aggressive with lower prices in order to shift these items quickly.

2) Set a floor price with a time limit for every item. When bringing in new items, set yourself a clearly defined rule, such as "I will only accept a 25% markup minimum for these items." Next, set a time limit on this rule, such as six weeks or six months. Be strict with yourself that you will not go below this floor price in that time. This will ensure that if the item is more seasonal, you will have the chance to sell it at the best possible price. After the time has run out, you can drop the price to get rid of the stock if it still hasn't sold.

Having good seller metrics, selling the right kind of inventory, keeping margins in mind, and being strategic about exposure without always having to be in the number one Buy Box spot can all help sellers boost sales while maintaining margins, these experts say.

Also see, Merchant Pricing Tips for Coping with the Summer Slump.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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