Amazon pricing strategy to stay competitive on Amazon

The main goal of Amazon Pricing Strategy is to generate as many sales as possible, get authentic product reviews and provide the best customer service to your Amazon customers. A long term brand can be build on Amazon by using proper Amazon pricing strategy which will result in Amazon promoting your products and automatically recommended in the 'Customers who bought this item also bought' section.  All your product will be automatically promoted by building a long term brand with Amazon by focusing on generating sales, getting authentic product reviews and providing outstanding customer service.

You will be able to achieve success in selling on Amazon platform by following the below steps.

You need to do the basic before you even start thinking about generating traffic, putting any marketing budget to work, or refining your Amazon pricing strategy which means you need to optimize your Amazon product detail page for Amazon's organic search results. The majority of sales on Amazon is done through search and more than 70 percent of it happens on first page of Amazon search results. Therefore you need to spend time optimizing your products for Amazon's search.  

Setting the right price on Amazon is often easy for private label products where you don't have any competition on your Amazon product page. Generally, you need to consider two variables for every single product you sell on Amazon. First to find your lowest price as you want to be profitable and second is to find your highest price possible to maximize profit. You need to first consider all of your costs, and with those costs included you need to decide the prices that would be profitable for you on Amazon. Your floor price need to be calculated first for this and second thing that you must take into consideration is your price must be competitive related to your most important search terms to get your product on page one of Amazon search results. No one will find and order your overpriced product after first page as more than 70 percent of sales on Amazon happen on first page of organic search.

You need to know all your costs first. Determine your floor price by taking all of them into account to operate successfully. Shipping, Customs, Payment wiring, Amazon Commission, Amazon FBA Fees and Customer Return Fees are the costs which you have to take into your equation. Amazon keeps 20 percent of the original commission as a return fee on all returns. Your own returns related fees including return shipping, disposal and product write-offs fees as well as variable overhead allocation costs should also be taken into consideration while calculating your floor price. There are also category specific costs which also need to be considered. For example, Amazon will charge you FBA fees related to customer return shipping costs if you sell clothing.

Your ultimate goal is to have your products ranked on first page of Amazon search results to maximize your profit. You can get your products to page one with deep marketing pockets such as deep launch discounts, giveaways or a big Amazon Sponsored Products budget. However, you want your product to stay on the first page of search result and generate sustainable, profitable organic sales. You must consider the competition around you to get your products to stick on page one. You can search your top three keywords for your product and review the pricing of the search results on first page of search result to evaluate the competition around you. So, you will be able to know if your prices are within a reasonable range of the prices you find there or not. You can be 20 percent more expensive than the highest price on the first page of search results which is the upper price floor. You will most likely never make it to the top of Amazon search results if your price is higher.

Keep your prices stable to build customer trust and a sustainable long-term brand on Amazon. However, there are some exceptions to keep your price stable. These include:

You can increase your sales rank to results in more organic sales later.

Cross-selling your products, will also results in better sales rank for all products included in the cross-selling promotion in the end.

Price cuts refer to cutting your prices close to break-even or below profitability which is most often done during new product launches.

A company deviates from the standard prices mainly when it launces new product.

Usually, launch discount for all customers and up to 50 percent price cuts for repeat customers on the email list can be offered.

Up to 40 percent discount for bundles sales can be offered in cross selling.

A company can deviate from the standard prices on Black Friday, Cyber Monday or Other Holidays.

Stock Clearance can help get rid of your overstock in case you have overstock and can also revive a dead product.

You will only be successful selling on Amazon once you can generate organic sales with a decent profit margin before you even think about cutting prices below profitability.

There are no sales without traffic. Just listing your product on Amazon is not enough to get traffic and sales  You need not only get the organic traffic on Amazon, but you need to drive traffic from external sources to your Amazon product page to be successful.

Building an email list is a great way to boost your sales at product launch as it can be used by Amazon to send their customers directly to our new product pages on Amazon.

A discount code is also given for the purchase of the products and often a good jump-start on sales can be seen from that.

You can add a sign-up field on your website, like a newsletter sign-up, an ebook download, or the like to start building your own list.

You can also communicate your newsletter sign-up option on your social media channels and on your packaging.

You can send one email to your customer after your sale at Amazon. You can point them to your newsletter sign-up page in this email.

ConvertKit is used by Amazon, which has a very easy-to-use interface and the customers can easily tagged as well as individual newsletter campaigns can be  build.

You have multiple advertising options on Facebook, and the great thing is that you don't need an existing fan base for that.

You can also define your target audience and create a post which will show up directly in a user’s Facebook feed

You can finally know whether your Facebook advertising is worthwhile, if you are really addressing the target groups that buy your products on Amazon and if your advertising is actually generating revenue with analytics.

The fastest way to get your product on the first page of Amazon search results is Amazon Sponsored Product placements which work similar to Google AdWords, where you bid on search terms.

You can buy an ad relative to the search terms if a person is searching on Amazon for your product, and your offer will appear next to the best results.

Amazon Sponsored Products is that it is very easy to set up and you can do it in a matter of minutes.

You have to manage your account carefully and regularly even in a simple interface to avoid an exploding marketing budget as Amazon is continually improving the algorithm and the competition on your ads becomes tougher when more sellers enter the marketplace.

The sponsored products program is opened to Amazon Retail clients.

You can either have someone in-house to watch your campaigns very closely or work with MarketPlaceClicks, who is managing the account for Amazon.

You can make big money when you are on the first page of the search results and, if possible, in the top three listing which is not possible by a single sale on your site.

Every link on Facebook, Twitter, YouTube, Instagram, our blog posts and our email newsletter is pointed to one specific Amazon product page apart from our website.

High search engine ranking can be build for your own online store through content marketing and influencer outreach work to gain backlinks from relevant, high quality sites.

You can choose the Youtubers and bloggers who fit best with your product and brand, and offer them free review samples.

Give them your top-selling product if you give your products away for review.

Ensure that all the traffic is going to that one product as you want to have this product in the top three of the first page of search results.

A small booklet and two business-card-sized inserts with 10 percent discount codes for customers can be in every shipping to give their friends or use on their next Amazon order

Best customer testimonials can be used to build trust.

A customer case study can be included inside a small booklet.

You should focus on brand name and the most specific keywords in the long tail to get most of the traffic from Google from people searching for your brand.

You should focus on long-tail keywords as very specific campaigns are created in the long tail for the products. It must include the product name, the material, and the color.

You won’t sell anything on Amazon without product reviews.

Your conversion rate depends on the amount and the quality of reviews.

Consider the following points to increase your number of authentic product reviews:

You can email your customers after purchase and ask for reviews. Tools like Feedback Genius can be used to automate this process.

You must review your seller feedback regularly for people who actually provide positive product feedback and ask them to also write a product review through email as feedback is not very visible for other customers.

Make sure to comment on any negative product reviews or on reviews where a customer has a question to build trust and increase your conversion.

Ask your customer politely if they are willing to share their experience with other customers on Amazon whenever you receive an email, a customer service call or positive feedback on your social media channels.

Outstanding customer service will be your best marketing tool on Amazon today.

You need to create a 'wow' experience or your customer which will help spread word of mouth.

You can start your customer service on your Amazon product page as this is the place where all your customers start their customer journey, ask questions, read reviews, check out your seller feedback and finally click the 'Add to Cart' button.

You need to manage your seller feedback actively, answer questions in the Q&A section, comment on negative product reviews and offer instant help in your product pages.

All emails should be answered within 24 hours or faster and strive to resolve every customer service issue in a single communication.

Facebook and Twitter can be used as your first customer service channels.

The expectations off your customer can be exceeded here and you can 'wow' your customers by replying to all questions within an hour.

An FAQ section can be created on your website that answers common questions.

An easy-to-use contact form can also be offered on your website.