One company is advising online merchants, “Don’t get Amazoned” in what some might say is a risky strategy. “I’ve actually gotten a message about this campaign that they would love to join but are actually scared to join / fear retaliation from Amazon – another sign they may have too much power,” Wiser marketing director Min-Jee Hwang told EcommerceBytes of her company’s current promotion.
To Wiser, raising awareness of “the Amazon effect” and offering a way to mitigate it will be key. “It’s not necessarily about market share, but about the power Amazon has. In terms of sales, they are making more than their next 10 biggest competitors combined,” she said.
Hwang believes retailers see Amazon as a necessary evil. She acknowledged the benefits of selling on Amazon, and suggested ways to do so without giving the online retail giant so much power over one’s potential selling success.
“We recommend limiting the percent of your inventory sold on Amazon (limit the data they can capture), utilizing their product listing ads instead (get the visibility on Amazon, but redirect traffic to your webstore where Amazon can’t get your actual sales data), and focus on growing your independent channel/webstore.”
Another way to keep pace would be with repricing, or dynamic pricing, that Hwang noted would keep up with a variety of factors beyond just the competition’s prices – the practice accounts for other influences like time of day, price elasticity, historic sales volume, and seasonality.
Wiser recently changed its name from WisePricer. “As our product suite continued to expand and evolve based off our flagship product WisePricer, it made sense to have an umbrella brand, Wiser, to be inclusive of all the solutions we offer and will offer,” she said.
The company isn’t just about price matching or cutting – Hwang said Wiser can optimize for profit or for revenue, and can even recognize opportunities to increase prices. Amazon certainly seems to practice this, with Hwang noting that studies have shown some 2.5 million daily price changes taking place there.
Such changes happen rapidly, every ten to fifteen minutes, and are backed with the best technology Amazon possesses. “Amazon’s algorithm is taking into consideration a tremendous number of data points and manipulates prices to position their products better,” Hwang said.
And Amazon can bring that capability to bear on any product line – and on marketplace sellers by extension. “They can identify hot products and opportunities to reprice to beat whoever they want, in theory,” Hwang said.
Wiser takes this into account for its clients by tracking and matching prices based on SKU attributes on a site, in this example it’s Amazon, and repricing the client’s products according to how they want to be optimized.
One hotly sought-after place on Amazon is in its Buy Box. Hwang noted how getting there is partly dependent on having the lowest price. “Essentially they are perpetuating this price-cutting mentality and in the long-term, it’s a lose-lose situation,” Hwang said.
“Given their size, resources, and willingness to sell below costs, Amazon has the ability to undercut any marketplace seller if they desire, or even remove their listings, even if they don’t put new “rules” in place per se,” she continued and cited a couple of examples, like one seller of NFL-themed Pillow Pets who saw Amazon slash prices to match or undercut his line until he gave up.
That seller, Jeff Peterson, was featured in a Wall Street Journal piece in 2012. Another seller, Thomas Frenchu, said in the same article that Amazon was “a double-edged sword,” as sellers had to be on Amazon and competing with them all the while too.
Wiser set up a site dedicated to its “Don’t get Amazoned” marketing campaign at DontGetAmazoned.com.
“By participating in the Don’t Get Amazoned community, sellers can see that they are not alone, and share tips and strategies for success, both on and off the Amazon marketplace,” Hwang said.