Amazon Bots, bad for business!

[waynewes]

I have noticed a number of people who are using price bots on Amazon (It took me a while, I thought they must just be noticing my price changes quickly) but I can't understand why. From my experience on Amazon the best practice seems to be to match the price of the other sellers, when you undercut all it does is drive the price down and lower your profit margin. When you both (or all) list on the same price, Amazon naturally rotates through the different sellers. If however you use bots then you end up in price wars, you will of course generate more sales but at a much lower profit margin. I don't know about you but I would rather have 10 sales that make me £100 profit than 50 that make me £70.
I have seen many products that have sat at £10 for ages then some idiot with a price bot drives the price down to £5, which increases overall sales as well, bringing more products into the uk and encouraging Chinese sellers, driving the price down even lower until the only people that can sell the item is the chinese.

If you have been a victim of one of these numpties then please join with me, find a time in the day when your sales are the lowest (maybe late at night or early in the morning) lower your price to your break even point and their price will drop also, if they have their settings correct then they will drop to their 'lowest' price, once you have found their lowest price, put your price just a couple of pence above then and leave it, do this for all items that you have with them. Send them a quick message saying you are declaring war on all bot users. Hopefully this will then encourage them to stop using the bot and price fairly. I am not saying that you should fix the price, DO NOT message anyone to agree a price or to fix a price, this is against the law. But let them know the reason that you are ruining their profit margin is because they are not playing fair.

On another note, I have a seller who is always priced the same as me but for some reason the item isn't naturally rotating to me and other sellers like other products do, any idea's why?

 

[AndyP]

Hmmm...I think you need to do a little homework....these are not numpties as you so eloquently call them... pricing strategy is an entire science in its own right....its not a case of simply racing to the bottom, there are many strategies to use...some will be the lowest, others will match Amazon but beat other named players, another will be to price slightly above to drive prices up... it really isn't as simple and stupid as you seem to be assuming that it is. Also, you appear to have missed that buy box eligibility isn't always about the price. It plays a big part of course but that isn't all there is to it.

Price matching software is not "bots" per se. There are numerous pieces of software out there that do the job, some more sophisticated than others. For Amazon they work in conjunction with Amazon Merchant Services and are completely legitmate.

 

[waynewes]

I get that there are different ways and strategies to use these but the people I am talking about are the ones that set it to just under cut. Using the system in some of the other ways you mentioned to me makes sense, to match prices or even to raise them. But setting all your prices just to beat other people is such an aggressive way to do businesses that it is detrimental to the whole system.

Personally If someone is using a system in a way that cuts their profit margin and overall profit potential then I would class them as a numptie.
And of course the buy box isn't just about the price, fulfilment by Amazon has a huge pull as do your sales of that item but price is one of the biggest pull factors.

I get your point about my choice of wording, I will be honest and say I wouldn't know what the difference is/where the line between bot and software are. I just class something that works on its own as a bot. I do get that there is Amazon software to do this and I did not mean to imply that it was unauthorised use. I guess I just have a vary 'British fair play' attitude and someone who uses software in this way is, to my mind, cheating.

So are you saying that creating a price war on all your products is a good business practice and is an effective pricing strategy? To my mind you would only have a price war on some high demand products to draw customers to your business to then make more money from them on linked purchases. Not all of your products.

 

[AndyP]

...So are you saying that creating a price war on all your products is a good business practice and is an effective pricing strategy?

No.I am not saying that as I don't know the individual company's various pricing strategies or policies. I was simply pointing out that pricing strategy is a serious business and there are various tools to assist (and sometimes hinder).

Whilst your British sense of fair play is admirable I'm afraid that you will need to put that to one side if you want to survive in today's retail environment. However that in itself could be considered to be a strategy I guess so if that is what works for you then I wish you well.

 

[ClaireSummers]

Hey,
I totally hear what you're saying about the price bots - certainly not a good idea and I've had the same experiences as you...
Recently read a really good review of how the Amazon Buy Box works which i found really useful... might be good for you to have a read too - fdv.sr/bible

 

[JJWinst]

The Amazon buy box works ultimately on price. Whatever you read about feedback/sales history is rubbish. If you use FBA and are the lowest price, you will win; simple.

The "Bots" you are referring to are the same "bots" Amazon use themselves. The only difference is with Amazon, they win the buy box WHATEVER price their at.

Unfortunately if you have what I call a "Spoiler" on the listing (someone who undercuts by pennies every time) then it's up to you whether you want to keep driving the price down or keep matching them.

 

[AndyP]

pls ignore

 

[kulture]

The Amazon buy box works ultimately on price. Whatever you read about feedback/sales history is rubbish. If you use FBA and are the lowest price, you will win; simple.

The "Bots" you are referring to are the same "bots" Amazon use themselves. The only difference is with Amazon, they win the buy box WHATEVER price their at.

Unfortunately if you have what I call a "Spoiler" on the listing (someone who undercuts by pennies every time) then it's up to you whether you want to keep driving the price down or keep matching them.

I rarely see a post with so many errors/misconceptions. The buy box does not work simply on price. I have often got the buy box and have neither the lowest price nor am I an FBA seller. You are right FBA sellers get a huge advantage and do not need to be lowest to get the box. The bots are NOT the ones used by Amazon. They are third party services.

 

[AndyP]

Well said Kulture. I posted just before you pretty much saying the same thing and then I thought better of it so removed what I said as I didn't want to start a battle

I think, guys, that you have the sound of hobbyists rather than business people. It's dog eat dog and to survive in today's very tough trading environment you can't realistically play the old boys game and work on the basis of a handshake. I am not suggesting being underhand, I am simply saying that you appear to have a somewhat naive view of the realities of online trading.

Price matching software is perfectly legitimate as long as you use it as part of a cohesive strategy and regardless of what you think, the buy box simply is not based solely on the lowest price.

 

[kulture]

I am not a fan of price matching software. It hands the control of your prices to your competitors.

 

[AndyP]

I am not a fan of price matching software. It hands the control of your prices to your competitors.

No it doesn't. That's why I keep banging on about pricing strategy. Without one then of course you are correct but with one it's an incredibly useful tool.

 

[kulture]

I feel silly about getting into a "oh yes it does" / "oh no it doesn't" argument, but it does in the vast majority of cases I have seen. Most of my competitors who use a price tracking bot simply aim to be 1p cheaper than the rest. This means that all I have to do is reduce my prices and they will follow. Then when the hit bottom, I let them burn through their stock at low margins before I let my price rise to better margins and make a reasonable profit.

So within limits, I set their prices.

Now I admit it is a lot more complex than that, but I am not going to give everything away.

 

[JJWinst]

I rarely see a post with so many errors/misconceptions. The buy box does not work simply on price. I have often got the buy box and have neither the lowest price nor am I an FBA seller. You are right FBA sellers get a huge advantage and do not need to be lowest to get the box. The bots are NOT the ones used by Amazon. They are third party services.

With every product I sell my competitors are all using FBA or it's a "Sold by Amazon" product. I can guarantee you that anyone other than Amazon is challenging for the buy box on price and price alone. If you have good feedback and you are the lowest price you will win.

I have not once in 2 years come across a listing (which I am competing on) win the buy box when it has been not been the lowest price where their competitor has good feedback and are using FBA.

 

[JJWinst]

And just to confirm; by me saying "Amazon use the same bots" - Whatever technology it is they are using they are using an automated service to set their prices.

If you are FBA and you are competing against Amazon; you cannot win. Unless you can afford to go considerably cheaper and they do not want to match that price, you can't win. I have perfect feedback, great sales history, yet just recently Amazon started to sell the example product themselves and immediately won the buy box. I haven't been their since even if I have matched or lowered the price.

 

[SillyJokes]

welcome to 2009, this is hardly new.

The main problem as I see it is that it isn't just one competitor competing for the buy box but in my case often up to 18 people or more, most of whom clearly have lower fixed costs than I do and can always afford to go cheaper or simply want to clear stock at any price because it can't be sold profitably and is taking up precious space.

FBA usually gets buy box even when not the cheapest at all.

 

[kulture]

With every product I sell my competitors are all using FBA or it's a "Sold by Amazon" product. I can guarantee you that anyone other than Amazon is challenging for the buy box on price and price alone. If you have good feedback and you are the lowest price you will win.

I have not once in 2 years come across a listing (which I am competing on) win the buy box when it has been not been the lowest price where their competitor has good feedback and are using FBA.

So you are just talking about competing with FBA. Well for JUST FBA the only criteria is price, because Amazon naturally assume that all other aspects are equal. In general however the buy now box is not just determined by price UNLESS all the sellers are FBA.

 

[JJWinst]

That maybe true but in this day and age if you are a business seller on Amazon and aren't using FBA then your missing a trick. Most of the popular products on Amazon will have at least 1 business seller who will more than likely be using FBA in which case means the lowest price wins.

As I've said before theirs no hope for Amazon sellers as Amazon will jump on any high selling item's an cripple everyone's margins.

Building a brand/your own website is the way to go for me.

 

[kulture]

FBA is fine for general, generic products. It is not fine for collectable products especially where variants have the same bar code and need to be spotted and hand picked. It is also not fine for products that are easily damaged/need to be mint.