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WINNING PRICING STRATEGIES FOR PRIVATE LABEL SELLERS Victor Rosenman, Feedvisor CEO | January 2016
WINNING PRICING STRATEGIES FOR PRIVATE LABEL SELLERSVictor Rosenman, Feedvisor CEO | January 2016
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HOW DO YOU GROW A SUCCESSFUL BUSINESS
ON AMAZON?
LET’S TAKE THE SCIENTIFIC APPROACH
Market Equilibrium
A situation in a market when the price is such that the
quantity demanded by buyers is correctly balanced
by the quantity that sellers wish to supply.
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Markets always
navigate toward the
equilibriumThe equilibrium point constantly changes in response to
changes in the market demand or supply
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HOW CAN WE APPLY THIS TO THE
AMAZON MARKETPLACE?
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THE 4 STATES OF THE MARKET
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Slow moving
private label
products
Fast moving
private label
products
Your sales velocity
Competition
Optimizing yourReplenishment Strategy
Winning the Buy Box at the optimal price
Fast Moving Highly Completive Products
Winning Buy Box
at the Optimal PriceThe optimal price is the price point where
your profit is optimized
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Orders
Buy Box
vs Price
Profit
PriceOptimal
Price
Diminishing profits due to
decline in the Buy Box shareMoney on the table
Winning Buy Box
at the Optimal Price
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Orders
Buy Box
vs Price
Profit
PriceOptimal
Price
Diminishing profits due to
decline in the Buy Box shareMoney on the table
ORDERS &
INVENTORY DATA
MARKET
DATA
COMPETITION
DATA
Orders
Inventory Levels
Cost Structure
Sales Rank
History
Buy Box Price
History
Price Bids by Sellers
Seller Metrics
Buy Box Winner
Fast Moving Highly Completive Products
Optimizing yourReplenishment Strategy
Winning the Buy Box at the optimal price
Optimizing your
Replenishment Strategy
Replenish when the demand is high and your stock is low?
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Buy Box Price - very high
Demand - high
Competition - low
Replenish or Liquidate?
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Opportunity Zone
Cost
Replenish or Liquidate?
Replenish when the demand is high and your stock is low?
Optimizing your
Replenishment Strategy
Buy Box Price - very high
Demand - high
Competition - low
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COMPETITIVE MARKETS
ADVANTAGE
Buy Box reflects market dynamics
DISADVANTAGE
Intense competition erodes profit margins
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THE 4 STATES OF THE MARKET
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Slow moving
private label
products
Fast moving
private label
products
Slow moving
highly competitive
products
Slow moving
private label
products
Your sales velocity
Competition
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IN ABSENCE OF DIRECT COMPETITION
PRIVATE LABEL PRODUCTS NEED TO BE
PRICED ACCORDING TO THE DEMAND
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THE 4 STATES OF THE MARKET
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Slow moving
private label
products
Fast moving
private label
products
Slow moving
highly competitive
products
Slow moving
private label
products
Your sales velocity
Competition
Optimizing your Replenishment Strategy
Building a Demand Model to find the optimal price
Fast Moving Private Label Products
Building Demand Model
to find Optimal Price
The optimal price is the price point where
your profit is optimized
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1919
Building Demand Model
to find Optimal Price
The optimal price is the price point where
your profit is optimized
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COSTS &
INVENTORY DATAORDERS
DATA
Inventory Levels
Cost Structure
Orders
Sale Price History
Building Demand Model
to find Optimal Price
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COSTS &
INVENTORY DATAORDERS
DATA
Inventory Levels
Cost Structure
Orders
Sale Price History
Building Demand Model
to find Optimal Price
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THE 4 STATES OF THE MARKET
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Slow moving
private label
products
Fast moving
private label
products
Your sales velocity
Competition
Mitigating Stale Inventory Risks
Reviewing Your Product Catalog
Slow Moving Private Label Products
Attracting TrafficBuilding Demand Model to find the
optimal price
FBA Long Storage Fees
Charges from Amazon or other
warehousing companies for
storing unsold stock
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Tied up cash
Cash is tied to stale inventory
instead of being used for other
opportunities
STALE INVENTORY RISKS
Utilizing Demand Model
to control Sales Velocity
Price impacts demand
Velocity (Pace of Sales) can be controlled by changing the
price
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Utilizing Demand Model
to control Sales Velocity
Price impacts demand
Velocity (Pace of Sales) can be controlled by changing the
price
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“Proprietary algorithms that analyze Big Data and translate it into
actions will be the secret sauce of the successful organizations”
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PETER SONDERGAARD, GLOBAL HEAD OF RESEARCH, GARTNER
ALGO-COMMERCE
Market
Pricing
Demand
Competition
GrowthTrends DecisionsAlgorithmsBig Data
Feedvisor launchesALGORITHMIC REPRICING FOR PRIVATE LABEL
PRODUCTS
Visit us at Booth 15 to learn more
THANK YOU
