Price Points by Omnia Retail

In Omnia's Pricing Blog, our pricing experts cover all the latest trends, Omnia pricing events, customer insights and pricing strategies.

Amazon and Meta's 2023 partnership share a common end-goal

Jeff Bezos and Mark Zuckerberg are smiling a little more as the fourth quarter of 2023 plays out, thanks to a striking new deal between Amazon and Meta: Instagram and Facebook users can now shop products directly from...

Jeff Bezos and Mark Zuckerberg are smiling a little more as the fourth quarter of 2023 plays out, thanks to a striking new deal between Amazon and Meta: Instagram and Facebook users can now shop products directly from Amazon ads in their feed without having to exit the app. Shoppers will have the ability to link their two Amazon and Meta accounts “for a more seamless shopping experience,” says Meta in a statement in November. “For the first time, customers will be able to shop Amazon’s Facebook and Instagram ads and check out with Amazon,” said the company too in a statement. Source: Maurice Rahmey, Co-Founder and Co-CEO at Disruptive Digital As retail and e-commerce experience decreasing sales, small businesses and enterprises will be looking at this new partnership intently to see how it may affect their sales strategy. Despite the possibility of some good news for brands and retailers, who may be eager about the news of this collaboration, Omnia sees other factors that may be at play: Is it more about increasing ad sales and consolidating advertising market power, or is it about the end seller? Setting the stage for the Amazon-Meta partnership Over the years, social commerce has matured to rival e-commerce in its sales and reach. The line between a successful e-commerce marketplace or retailer and an in-app storefront on social media is blurring, and no other example than TikTok Shop’s launch in the US in September displays this phenomenon so well. However, despite social commerce’s rise to success with a valuation of $1.2 trillion by 2025, the industry’s largest player, Meta, has still struggled to rebound after Apple’s iOS privacy updates in 2021 largely cut off its ability to mass target customers and collect data from them. Forbes wrote in 2022 that Facebook took a $12 billion knock to ad revenue after the change. As a response, Facebook and Instagram simultaneously increased advertising costs for brands and retailers and squeezed their reach and engagement levels to initiate more ad spending, which created an unprecedented scenario for themselves where advertisers chose other platforms to advertise on. When it comes to Amazon, as it has grown bigger and more brands have chosen to sell their products on the behemoth marketplace, the more saturated each category has become. And as brands - big and small - obviously want to be seen by shoppers on Amazon’s apps, the competition for attention thickens, making for a ripe scene for Amazon to take advantage of this competition. Getting vendors to advertise their products has been the e-commerce giant’s strategy for some time now, with the push to lure in ad expenditure from sellers accruing $12.06 billion at the end of the third quarter. That’s a 26% increase compared to the same time in 2022. Looking ahead, Amazon has ramped up their agenda to boost ad sales, offering enterprise ad agencies the chance to advertise via Amazon Prime Video in 2024, asking for between $50 - 100 million. It may seem out of left field for a retail company to focus so much on building an advertising department, however, this is how Amazon plans to consolidate growth and power in the industry. Talk to one of our consultants about dynamic pricing. Contact us How will this affect brands, enterprises and other marketplaces? There are pros and cons to this deal that will have ripple effects. For brands who already sell on Amazon wanting to increase sales volume, being able to advertise and convert directly within Facebook and Instagram will be largely beneficial to them. The ease of the process will also be improve the customer’s shopping experience and, in turn, will build a network of return customers. For enterprises, the pros are quite similar, however, a glaring con is that larger enterprises also want to direct traffic to and sales from their own websites using their own pricing strategies that aren’t dictated by Amazon. The Amazon-Meta partnership may send enterprises down a path where they see less sales from their own platforms and find themselves relying more on in-app sales from their Amazon stock. If this takes place, Amazon will be able to indirectly control the price of an enterprise’s product. For marketplaces, especially those in niche categories, this partnership may leave them out in the cold. As the Amazon-Meta coalition grows, more and more vendors will turn toward it to make sales and grow their brand. In turn, more shoppers will go where there is variety with a competitive price and an easier shopping experience. As a result, other marketplaces may feel the effects of consolidation by losing vendors, shoppers and overall sales. A new era within e-commerce This is a surprising partnership for the e-commerce industry and is being described as “the most significant ad product of the year” by Founder and CEO of Disruptive Digital marketing agency Maurice Rahmey. When speaking to CNBC, Rahmey said the partnership shows “these two-walled gardens are kind of coming together.” According to a Duetche Bank report quoted by Fast Company, 75% of Facebook’s billions in revenue comes from small businesses, making Facebook (and Google) the chosen place for small-to-medium businesses to advertise and sell. If Meta has done such a good job in cornering the SMB market, it’s no surprise that Amazon would want in. And if Amazon has done well to expand profits through ad sales, it’s no wonder Meta would want a chance to recover from their $12 billion knock from Apple’s iOS privacy changes. However, these may be short-term goals for the two companies, and it’s all about the long game for both of them: For Meta, this unlikely partnership is a giant leap towards increased ad sales and market penetration through social commerce. For Meta, this collaboration means forging towards a commerce-first platform, beyond the early years of selfies and poking. Combining their resources on tracking, data and user experience, a new era of shopping and marketplace expansion is upon us.

Amazon and Meta's 2023 partnership share a common end-goal

Optimise Your Listings to Win the Amazon Buy Box

Marketplaces are one of the best channels for brands and vendors to create a successful e-commerce business. However, considering how many vendors are listed on the many marketplaces, not everyone can be highly...

Marketplaces are one of the best channels for brands and vendors to create a successful e-commerce business. However, considering how many vendors are listed on the many marketplaces, not everyone can be highly successful at making sales. How do some find success and others don’t? A lot of it comes down to the quality of a vendor’s product listings, and whether or not they win the ultra-important Buy Box. In this article, Omnia breaks down the unique aspects of product listings on marketplaces and offers some best practices to win the Buy Box. Why product listings on marketplaces are a special case E-commerce businesses should be treating their marketplace product listings differently than listings on D2C or retail channels. Because there are so many sellers competing for sales on marketplaces – for example, Amazon has 9.7 million sellers globally, with about 2 million active sellers – the listings on these sites must be optimised if the vendor wants to stand a chance against other sellers. The fiercest competition is around who wins the Buy Box, where one listing will be shown with the “Add to Basket” or “Buy Now” button, while offers from other sellers are shown in a secondary position. The example below shows the Buy Box for a Cerave skincare product on Amazon. In a majority of cases, the vendor who wins the Buy Box will win the sale. On Amazon, 82% of sales go through the Buy Box, and the figure is even higher for purchases made on mobile. Some vendors, such as Zalando, claim not to have a Buy Box, likely to avoid consumers seeing their platform as one where prices can change within minutes due to high competition. “We do not want to enable a price war. Therefore, only one vendor offers a product. If more vendors offer the same product, convenience decides who is listed on the platform. This is calculated by an algorithm on the basis of factors such as shipment speed, trustworthiness and return speed. There is no pressure on price to win any kind of Buy Box.” Zalando’s VP of Direct to Consumer Carsten Keller Regardless of how a specific marketplace chooses to word their offerings, for the sake of simplicity, we will refer to the existence of a Buy Box if there is competition among third-party sellers and the marketplace must make decisions about which offer is shown to the end consumer. Best practices to optimise product listings and win the Buy Box In order to even be in the running to win the Buy Box, sellers must have optimised product listings that check all the key boxes. Let’s first run through some best practices for improving product listings for marketplaces in general, then go over some tips for specific marketplaces. General product listing best practices Optimise product titles: Marketplaces may have slightly varied requirements for certain aspects of product titles like character count, but a few things are consistent across sites. Product titles should include relevant keywords and provide the necessary product information without sounding like spam. Keep them concise and descriptive, covering attributes like brand, make, model, size, material or colour (where relevant). Also consider including nouns that customers often search for: “Adidas Stan Smith sneakers” versus “Adidas Stan Smith”. Use high-quality, eye-catching visuals: Each product listing should include high-resolution images from multiple angles to showcase your product. Clear, well-lit photos help build trust and provide customers with a better understanding of what they're purchasing. Videos showcasing the product are an added bonus here. Write detailed product descriptions: Write informative and engaging product descriptions. Highlight key features, benefits and any unique selling points to help potential buyers make informed decisions. Make consistent updates: Product listings shouldn’t be stagnant; continue to update the information and visuals to keep them fresh and ensure they are optimised for current trends. Analyse what’s working and what’s not so you can make changes to improve performance. You’ll also need to keep an eye on marketplace rules; if they change which types of media are allowed, for example, you’ll want to optimise for that. Localise content: If the marketplace services multiple countries or regions with different languages, make sure content is localised. That means listings are translated into the necessary languages, but also that the correct currencies are displayed and the audience you’re speaking to is reflected in the copy. Automate where possible: Especially when selling a high volume of products, it’s important to auto-populate listings when possible, whether for language translation, promotion, or something else. Manual updates will be much trickier as the volume grows, and if a product listing ends up being outdated, it can hurt your chances at the Buy Box. Use dynamic pricing: Price is one of the major factors that decides if you win the buy box. In some marketplaces, like Amazon, you will have to be priced within the top sellers to stand a chance of winning. For other marketplaces, price is a little less dominant, but you still need to be within a certain range of your competitors. As competitor prices are continuously changing, having the ability to dynamically reprice will ensure you are always still within the range. Dynamic pricing software like Omnia can help with this. There are other factors that have less to do with product listings, but are still known to impact who is shown in the Buy Box. These include: Shipping speed: Offering fast shipping will help in two ways: 1) it’s rewarded by the marketplace itself, and 2) it increases likelihood of positive customer reviews, which also boosts Buy Box prospects. Stock availability: If a seller runs out of inventory, the Buy Box will go to someone else. These levels also need to be consistent. Customer service: Both the marketplace and the customers will take note of sellers that respond quickly to customer questions and issues. Marketplace-specific best practices for product listings Whether they call it a Buy Box or not, marketplaces with third-party vendors selling the same products will have an algorithm to decide which offer is shown. Some marketplaces are clear about what it takes to win their Buy Box, but for most marketplaces, the “secret sauce” of the algorithm is unconfirmed. Many in the industry have studied the Buy Box on different sites to understand what makes a winning product listing. Amazon There is unfortunately no easy shortcut to win the Buy Box on Amazon. However, there are a number of factors that have been shown to impact which offer is shown, and BigCommerce even put together a cheat sheet ranking metrics by their impact on the Buy Box: eBay eBay has its own search engine called Cassini, which prioritises showing products with the highest conversion rates. To convert more searches and win higher placement, keyword choice is crucial, and sellers can use Cassini’s internal keyword research tool to find the right primary and secondary keywords. These should be used in every field in the product listing for best results. Bol.com Bol refers to their Buy Box as the “Buying Block”. Industry experts at Omnia have found that the battle for the Buying Block is won by the seller that has the best offer in terms of price, delivery time, inventory levels and customer service. Service and ratings are used more as a threshold, meaning that if a seller reaches a certain level, their other factors like price determine the Buying Block win. Zalando Omnia ran a pricing analysis on Zalando before, during and after Black Friday 2022. The results indicated that, historically, price was likely not the main driver for winning the Zalando Buy Box; however, during the Black Friday period, pricing became a top factor, sparking lower prices and tougher competition. With Omnia’s data, a price-change ratio of 0% means the price never changes. A ratio of 100% means the price always changed at every 15-minute observation time stamp. A ratio of 1.5% would indicate a price change once per day. As you can see in the chart above, the price-change ratio on Zalando grew to an average of 7% during the Black Friday period, indicating that the price would change once every five hours. Outside of competition scenarios like Black Friday, Omnia found two other factors that influenced the Buy Box: Shipping speed: Omnia data suggests that to win the Buy Box, a seller must have a maximum delivery period of four days; but this goes even lower if there is more vendor competition for a specific product. Stock availability: As the chart below indicates, the Buy Box changes at a rate of 2.1% when all products are available. When products are unavailable for up to 24 hours, however, the rate doubles to 4.09%, indicating the importance of stock availability as a seller on Zalando. Conclusion While much of the industry conversation around Buy Boxes often focuses on price, Omnia data and the other studies quoted above show that product listings and other convenience factors like stock availability, delivery times and even customer response times can also impact who wins the Buy Box. Especially during times of high competition like Black Friday, or when selling products with many competing vendors, each marketplace seller must craft high-quality and compelling product listings, and find the right competitive pricing strategy to set their offers apart.

Optimise Your Listings to Win the Amazon Buy Box

Amazon European Expansion Accelerator: What does it mean for sellers?

Amazon Europe is experiencing a shake-up designed to increase the e-commerce giant’s profits and market share, opening its European sellers to nine new markets across the region. On April 18th, Amazon announced a new...

Amazon Europe is experiencing a shake-up designed to increase the e-commerce giant’s profits and market share, opening its European sellers to nine new markets across the region. On April 18th, Amazon announced a new offering called the European Expansion Accelerator (EEA) which is meant to enable sellers to expand to a list of additional EU and UK stores in just “two clicks and in less than three business days”, the announcement said. Amazon European Expansion Accelerator will affect a range of stakeholders Impact on Amazon sellers According to Amazon, businesses must be registered as a professional Selling Partner with at least one active Amazon Europe account in order to use the EEA. They can then choose which market(s) they want to expand into. According to the company, benefits of the program are: Time and resource savings Expanding business reach Automated scalability Diversified revenue streams It’s clear from the announcement that this new solution is aimed especially at small-to-medium businesses (SMBs), as it discusses being able to expand business with little money or effort. However, some key points were left unmentioned and there are definite concerns sellers should be aware of before using the EEA. First, if sellers are going to be able to cover additional costs like storage, shipping, or potential customs charges, they will have to sell sufficient product volume via the marketplace. Although Amazon makes it sound like internationalisation will be simple and sellers will make quick money, it’s important not to underestimate the advertising budget that may be required. Running ads on Amazon can get expensive, especially in the more crowded verticals, with an average cost-per-click (CPC) of €0,75 ($0.81) while the average for advertising elsewhere falls between $0.05 and $10 (€0,04 and €9,24). Additionally, Amazon only mentioned legal provisions like sales tax very briefly in the announcement, while other major areas like customs were not mentioned at all. For sellers who are considering UK expansion, however, customs will be a significant factor. With the changes brought on by Brexit, the “red-tape curtain" has become very expensive, costing businesses an average of 8 - 9% for both exports and imports of goods and services. Other factors like language translation should be considered as well, as the EEA doesn’t include search engine optimisation for translated texts. There are both benefits and challenges presented by the EEA offering, and sellers should consider both sides before making a decision about whether to participate. Impact on consumers There are currently hundreds of millions of monthly visitors across Amazon Europe stores, and the EEA has the potential to show them more shops, vendors and products than ever before. According to Amazon, there were more than 86,000 third-party sellers with Amazon EU marketplace sales of at least $100K in 2020. This number has likely risen and will continue to significantly grow going forward. How this will affect shopping choices and pricing remains to be seen as the program ramps up. We can assume the range of products available will increase, and pricing may become more competitive for sellers, and attractive for shoppers, as vendors from different regions enter EU stores. Impact on other marketplaces Amazon is likely to see an increase in EU sales with the EEA as new sellers gain access to these markets and consumers have access to more product and vendor choices. However, other existing marketplaces with a European presence, such as Zalando or Bol.com, may see a small decline in investment as sellers expand to the Amazon platform. Leon Curling-Hope, Omnia Retail’s Head of Marketing and Insights, says this of the EEA’s impact on other marketplaces: “I believe that this will be short-lived due to the long-term nature of the Amazon business. We need to take a step back and see Amazon as a marketing platform like Google Shopping, where it forms part of the ‘marketing mix’, but not a silver bullet.” As for how those other sites may react to the changes at Amazon, Curling-Hope observed the challenge for local marketplaces to compete with the retail giant. “Local marketplaces face the challenge of competing with Amazon's vast product selection, efficient logistics, and aggressive pricing strategies. We could see them become or attempt to become more efficient here in one or more of these verticals.” Talk to one of our consultants about dynamic pricing. Contact us What does this mean for pricing on Amazon? From the seller’s point of view, the EEA has some intriguing potential for better pricing strategies across EU markets. Sellers who use dynamic pricing software will be able to remain competitive in local markets and automatically adjust pricing based on local competition and market signals. We can expect to see more offers on the local market due to the opening of the EEA and the opportunity for more sellers to sell across borders. On Amazon’s side, the EEA is likely to increase the company’s power in the EU and the UK. By analysing their vast amount of data on local demand and competitor pricing, Amazon can adjust its prices to offer the best possible value to customers while maximising profits on their own product offerings. With dynamic pricing software, sellers will remain competitive and quickly spot when new entrants join the market, automatically adjusting pricing strategies accordingly. For example, if a new market entrant from another country has a better product offer in terms of price, this doesn't mean that you need to compete with him on price; you will first want to check on a variety of factors: whether this is a relevant competitor or not, vendor reviews, shipping costs, delivery time, stock levels and more. The pricing rules set by the seller in their dynamic pricing software ensures that every relevant factor will be executed automatically. See how Dynamic Pricing from Omnia can help you automate your pricing strategy across Amazon, across countries and all other e-commerce channels.

Amazon European Expansion Accelerator: What does it mean for sellers?

Amazon moves to cut distributors to improve profits

In a bid to increase annual profits, Amazon is actively severing its relationships with third-party sellers. From 15 January 2024, as an email from Amazon to third-party sellers suggests, the e-commerce authoritarian...

In a bid to increase annual profits, Amazon is actively severing its relationships with third-party sellers. From 15 January 2024, as an email from Amazon to third-party sellers suggests, the e-commerce authoritarian will be pursuing partnerships with brands directly, squeezing brand owners out of their relationship with distributors if they want to remain on the online marketplace. Source: Consulterce - LinkedIn Amazon has experienced a downturn in sales and ad revenue from merchants in 2022, compared to the pandemic years of 2020 and 2021. “Amazon is trying to increase profit margins in its retail division at all costs right now,” says Martin Heubal, a strategy consultant who used to work for the tech giant and who helps Amazon vendors achieve growth on the platform. Bloomberg News reports that the platform’s advertising sales growth was shaky all throughout 2022, which affected its profit margins. In addition, Amazon’s sales growth was at its slowest over this period, resulting in new strategies to increase profits. Other game plans to boost profits include the recent layoffs of 18,000 employees, which is the largest in the company’s history. In addition, it was announced in early January that three warehouses in the UK would be closed down as a part of their downsizing procedures. What’s the impact on brands and distributors? Amazon suggests this new procurement strategy is to cut out the middleman and lower costs for consumers, however, this strategy suggests a broadening of the monopoly they have within online retail to force brands to choose between growth and profit with the marketplace or moving with their distributor who is being cut out. In the US, 40% of all online shopping is done on Amazon, which means 40 cents of every dollar a consumer spends is shopped on Amazon. Many brands may find that because of this grasp on consumer spending power, they may have to choose to do business directly with them, leaving their partnerships with distributors null and void. To add salt to an open wound, their business models and distribution strategies will be turned on their heads, while third-party sellers struggle to stay buoyant. In the same email, Amazon said distributors can still sell these products directly to customers on Marketplace, however, this will require price changes that will affect both the distributor and the consumer. Typically, distributors sell in bulk at a lower price, which benefits all parties. By having to move from B2B to D2C, a distributor will have to factor in new costs and strategies. Talk to one of our consultants about dynamic pricing. Contact us As 15 January 2024 approaches, brands have tough decisions to make As we know, 1P (first-party) brands lose many commercial freedoms when selling on the marketplace such as price setting. As we have seen in the past, once Amazon gains market share within a vertical and control of the client, they can dictate a price. So, is this a good move, long-term, for consumers and brands? Alternatively, if brands have other D2C channels, are they enough to maintain the same profit margins? Omnia’s Founder and CEO, Sander Roose, shared that the larger problem is this decision by Amazon will create many complexities for brands. “All of a sudden, brands will have new things to learn and new decisions to make. For example, how will the working relationship play out with Amazon after years of having longstanding relationships with their distributors? Should they sell 1P or 3P? How, and to what extent, should they use Amazon ads to fuel sales? What will the process be when Amazon starts making changes or demands about prices or inventory? This, I believe, is the main setback for those brands.”

Amazon moves to cut distributors to improve profits

Complete Guide to Selling on Amazon in 2022

With a massive reach (to the tune of 47% market share in the US and UK and 31% market share in Germany), it’s an incredible outlet to showcase products, earn more sales, and build brand awareness. But Amazon is also an...

With a massive reach (to the tune of 47% market share in the US and UK and 31% market share in Germany), it’s an incredible outlet to showcase products, earn more sales, and build brand awareness. But Amazon is also an overwhelming online platform for Sellers and consumers alike. With so many options for how to shop, sell, advertise, and win on Amazon, it’s no wonder there are lots of questions. In this guide we’ll answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform.

Complete Guide to Selling on Amazon in 2022

How does Amazing Pricing work? A Guide for Retailers & Brands

It’s no secret that pricing on Amazon is complex, and Sellers get lost quickly in the world of Amazon pricing. To help, we created a short guide that has all the essential information about pricing on Amazon. In this...

It’s no secret that pricing on Amazon is complex, and Sellers get lost quickly in the world of Amazon pricing. To help, we created a short guide that has all the essential information about pricing on Amazon. In this post, we’ll explain how pricing on Amazon works and give some tips on how to get the most out of the platform. How does Amazon pricing work? Amazon pricing is tricky on all fronts, from how it charges Sellers to how product pricing works on the platform. Amazon Seller pricing There is an Amazon pricing structure for any Seller, regardless of how many products you have in your shop. Whether big or small, you can find an affordable way to sell items through the marketplace. Amazon pricing structure There are two ways to sell on Amazon: as a Professional or as an Individual. The Professional plan lets you sell an unlimited number of products for a $39.99 monthly fee. Individuals can sell on Amazon for $0.99 per item sold. If you plan to sell more than 40 items each month, it makes more sense to purchase the Professional Seller plan. The Professional plan also makes sense if your items have low price points; $1 per product sold is an outrageous fee if you sell a product for $3. The Professional plan also unlocks new categories for sales and has additional features that help you sell more products. Amazon seller fees If you think the costs of different selling plans on Amazon sound inexpensive, you’re not alone. Unfortunately, besides a monthly payment for your store (or payment per product for Individual Sellers), Amazon charges fees per product sold. There are several fees that individuals and professionals must pay per item sold. These include: Referral fees on each item sold: a percentage of the final price of a product sold Shipping fees (which apply regardless of fulfillment method) Closing fees Amazon’s fee structure can get complicated, so it’s worth examining the Selling on Amazon Fee Schedule. If you are an FBA Seller, Amazon will charge you additional storage and fulfillment fees. Amazon also has a calculator that can help you estimate your revenue, even with fees. Just enter the product name, UPC, ASIN, ISBN, or ASIN number and product details and you’ll get an estimate of how much revenue you can expect to earn. Amazon price changes Besides having a complicated pricing structure, Amazon also has a complicated pricing model. The company is a pioneer in dynamic pricing and makes over 250 million price changes every day. The average product’s price will change once every 10 minutes, making it difficult for Sellers and consumers to keep up. Amazon price match Amazon doesn’t have any price-match guarantee. If consumers find a product they’ve bought for a cheaper price online, there’s no way for them to ask Amazon to pay the difference in price. This is mostly for practical reasons. Amazon used to have a policy like this, but as the market became more fluid, the policy became impossible to honor. Amazon recognized that a dynamic market meant price match policies would become obsolete. With this knowledge, the company eliminated the policy in 2016. Amazon price protection 2020 Amazon also doesn’t have any price protection policy. Consumers just have to trust that the company offers the lowest price on the market. Amazon’s reputation for offering lowest prices isn’t unfounded though, and a 2018 study by Profitero found that Amazon was 13% cheaper than other major online retailers in the US. So even without this policy, consumers likely do receive some of the best deals on the platform. Amazon Repricing Software Regardless of whether you’re a Seller or a consumer, Amazon becomes overwhelming fast. Luckily, technology can help both Sellers and consumers get a better understanding of Amazon and reap the best benefits of the marketplace. Whether you want to find the best deals or prices, or understand the landscape of Amazon, there’s a tool out there for you. Amazon best Seller tools If you’re a Professional Seller on Amazon, there are several types of tools that will make your job easier. In this section we’ll cover a few of the more important tools to have. Amazon Repricer Tools Repricing tools are for Amazon Sellers who want their products’ selling prices to update with the flow of the market. In other words, repricer tools are dynamic pricing tools built specifically for Amazon. Request a free demo for our Amazon Repricing Software here. Since Amazon updates prices so frequently, this tool helps Sellers keep products relevant. A repricer will also help keep products in the Buy Box — the coveted space on any Amazon product listing page that’s responsible for an estimated 82% of Amazon sales. Increase your revenues with Amazon Repricer Software Read more Amazon's Free Repricer tool - the Pros and Cons Amazon doesn’t change prices for third-party sellers, but it has a free proprietary repricer that can adjust prices for you. This tool is called “Automate Pricing.” You can find it under the Pricing tab in your Seller Central account. Automate Pricing is easy to set up in just four steps. All you need to do is define the parameters of a rule, choose the SKUs where the rule applies, set minimum and maximum prices, then start repricing. Amazon’s repricer has both pros and cons. Some pros include: Free as long as you’re a professional seller Helps increase sales (but at the expense of profits) Does a great job of lowering prices, but not the best job at raising prices Easy to use and set up The cons of the repricer far outweigh the benefits, though. According to users, Amazon’s repricer tool is frustrating to use and limited in its capabilities. Some major cons are: Only allows you to set up repricing rules on active SKUs Limited customization on rules Doesn’t account for fees and doesn’t help you calculate for fees Doesn’t increase your price Once you get the Buy Box, it stops repricing The Automate Pricing tool of Amazon is notoriously fickle. The video below is an honest review of Automate Pricing, and the overall sentiment is that Automate Pricing is more trouble than it’s worth. Considering a stable and revenue-boosting Repricer Tool? Request a free demo for our Amazon Repricing Software here. Amazon competitive intelligence tools: How to find price drops on Amazon Competitive intelligence is the backbone of any repricing tool because without intelligence your prices have no basis on the market. Competitive intelligence tools gather the prices of your competitors on Amazon, showing you where there are dramatic price drops in the market. It should then deliver this information directly to you. With this information, you can make more thoughtful, data-driven decisions when you choose prices for your products in the store. How to hack Amazon pricing For Sellers, creating an Amazon pricing strategy and hacking your way into the Buy Box is no easy feat. But with hard work and effort, you can get your product into the Buy Box and keep it there. There are tons of different strategies you can adopt to reprice on Amazon. One popular one is the high runner strategy, and it’s the approach that Amazon uses itself. In this strategy, you focus your efforts on the products that drive the most traffic (which are usually highly elastic), and offer a competitive price on those items to pull people to your page. Once a consumer is on your product listing, as long as the product is legitimate and matches their need, they will probably purchase it. Additionally, once someone arrives on your listing, you can engage another pricing hack: bundling. Bundling helps increase the perceived value of your products, makes consumers more likely to purchase them, and helps move items through your store faster. If you’re just starting as a Seller though and want to get into the Buy Box, the best strategy is to start small and slowly raise your prices by small increments. The goal is to attract buyers to your listing through a competitive price, earn reviews and good credit in the eyes of Amazon, then raise your price. This is a key part of the pricing-marketing mix. Amazon repricing strategy Developing a strategy comes down to your company goals and the following steps: Define your commercial objective Build a pricing strategy Choose your pricing method Establish pricing rules with Amazon Pricing Sofware Implement, test, and evaluate the strategy Besides thinking of your own store’s strategy, consider Amazon’s strategy. The company strives to be the world’s most customer-centric company, and this philosophy dictates every strategic move the marketplace makes. If you factor this philosophy into your overall Amazon strategy, it will pay off. So in addition to offering a competitive price, you should also work for quality products, fast shipment, and excellent customer service. You should also build a marketing strategy that sets you up for success and optimize your listing for Amazon's search algorithm. Final thoughts Pricing on Amazon is important, but it’s not the end-all-be-all. Prices on Amazon constantly change, and it’s better to think of a product’s price as temporary rather than a fixed feature. For Sellers, this means price is an important part of your overall strategy. It’s not the only thing Amazon considers when determining the winner of the Buy Box, but it’s a good way to tip the scales in your favor.

How does Amazing Pricing work? A Guide for Retailers & Brands

Business Guide to Predatory Pricing

In 2010, Diapers.com gained momentum with its combination of e-commerce and pricing. Rumours report that Amazon previously tried to buy the diaper supplier but was denied. Afterward, Amazon aggressively lowered prices...

In 2010, Diapers.com gained momentum with its combination of e-commerce and pricing. Rumours report that Amazon previously tried to buy the diaper supplier but was denied. Afterward, Amazon aggressively lowered prices on diapers and related products. Such tales are related to predatory pricing, a pricing strategy waged by suppliers to gain an edge on competitors. In this guide, you’ll learn: What’s predatory pricing? Is predatory pricing illegal? What are the advantages and disadvantages of predatory pricing? Ways to compete against predatory pricing and gain e-commerce sales What Is Predatory Pricing? Predatory pricing seeks to undercut the competition as part of a larger pricing strategy. While the pricing decision creates short-term losses, the main agenda is to debilitate the competition. Ultimately, a brand introducing predatory pricing makes rivals economically vulnerable, so it gets increasingly difficult for smaller businesses to compete and ultimately exist. A newfound market share makes the initiator of predatory pricing in an economic position to recoup the losses sacrificed. So, predatory pricing is recognised as a two-part process, beginning with a predation phase then leads to a period of economic recovery and eventual dominance. Predation Economic scholars recognise predatory pricing’s first stage of predation as when a brand initially offers a good or service at a below-cost rate. A small-scale strategy by a startup will not influence market price. However, a big supplier can effectively influence market costs with its pricing strategy. Predatory pricing works for large firms because such suppliers can sustain the losses long enough to change the market price (and behaviour of consumers), ultimately depressing the competition’s ability to keep-up or compete at all. Recoupment In the second stage, the dominant brand reaches a state of equilibrium, readjusting prices now that a larger share of the market is taken or a rival is no longer able to compete. The recoupment phase is where economists make the distinction between predatory pricing and competitive pricing. Predatory Pricing vs Competitive Pricing Regardless of intention, all brands seek profits, but predatory pricing differs from competitive pricing. Predatory pricing does not reach equilibrium once market share is gained and the competition defeated. While competitive pricing can benefit the consumer, in the long run predatory pricing only serves to benefit the perpetrator. Once dominance is reached, predatory pricing takes effect and a monopoly becomes a reality. Predatory pricing only benefits the seller - the reason why it is illegal under many laws. However, in practice, it’s somewhat opaque to distinguish competitive from predatory pricing - even in courts of law. Examples of Predatory Pricing In 2010, Amazon, a growing giant of ecommerce, engaged in a price war with Diapers.com, a niche competitor that quickly gained popularity and revenue. Rumours circulate that Amazon tried to acquire Diapers.com but was denied. Afterward, Amazon aggressively lowered prices on diapers and related products. Furthermore, Amazon introduced more ways for customers to save on related products; it launched Amazon Mom, featuring cashback, free shipping, and more discounts. However, predatory tactics do not always prove successful. In a bromine price war, American-based Dow Chemical gained presence within the European market. An established Euro-brand sought to “punish” Dow by offering bromine at below-cost prices to Americans, hoping to ruin Dow’s chances of making profits within its home market. Unfortunately for the European brand, Dow took advantage of that lower cost, bought low, then sold it back to the European market at a profit. Another tale of predatory pricing gone awry involves the New York Central Railroad. In an attempt to outdo Erie Railroad, the NYCR charged a mere dollar per car for cattle transportation. However, the newfangled trend benefitted the Erie Railroad too, for it also began hauling cattle. Is Predatory Pricing Illegal? True predatory pricing is seen as a means to a monopoly. The United States has a history of recognising and punishing predatory pricing. Antitrust laws seek to foster healthy competition while thwarting opportunity for monopolistic business practices. According to American antitrust laws, most “forms” of predatory pricing are illegal. Predatory practices are recognised as instruments of corruption and greed. However, where does greed stop and the need for competition begin within a system that ultimately seeks profits? The Federal Trade Commission seeks to fully analyse any claims of predatory pricing. Moreover, the US Department of Justice recognises predatory pricing as a problem, growing increasingly aware of the unscrupulous pricing strategy. It can be difficult for plaintiffs to make objective claims that hold in court. Successful antitrust suits are based on a plaintiff clearly establishing that a competitor’s pricing will condemn rivals as well as cause a direct and negative impact throughout the market as a whole. Furthermore, US courts define predatory pricing as that “set below a seller’s cost.” However, it is not against the law for a seller to set prices in such a manner if the reason is justifiable and not perpetrated to directly eliminate competition or ultimately monopolise the market. If pricing is set below cost for legitimate purposes, such as to attract a larger portion of the market, it is not predatory pricing. “Catching” a brand waging a potentially unscrupulous pricing strategy is delicate practice. For example, penetration pricing could look and feel like predatory pricing to a rival. However, if the pricing strategy is short-lived and not a long-term plan, it is not illegal and deemed “fair play” within the world of business. The Effects of Predatory Pricing While unlawful conduct is a black-and-white issue, pricing strategy remains somewhat of a murky area. One’s interpretation of “predatory” could be another’s version of “smart business.” Economic theories see possible advantages to predatory pricing. For one, predatory pricing may become a “survival of the fittest” regarding the brands within a given market. While buyers may initially be interested in price points, some argue that price alone will not condemn inferior products and services. Therefore, predatory pricing is merely a speedier means to an end of greater selection for consumers. Furthermore, some see the exit of particular brands as an invite for new and innovative brands to enter the marketplace, challenging behemoth competitors in new ways that ultimately serve the greater good of the market and consumers. Lastly, in regards to seasonal items or perishable goods, predatory pricing may help a brand in a short-term predicament of needing to clear shelves for more stock or to sell items before selling them at all is no longer an option. On the other hand, taking competitive pricing too far becomes illegal depending on government jurisdiction. Therefore, any brand willing to wager a predatory pricing strategy runs the risk of legal repercussions and attracting legal suit. Furthermore, predatory pricing does not escape the perception of consumers. In some cases, aligning your brand with “cheap” prices could have a negative effect. An overall impression of frugality may turn some consumers away. In worse scenarios, consumers view your brand as a selfish, predatory entity, ultimately existing to gain the most profit regardless of what’s best for the market or its consumers. Advantages of Predatory Pricing Provides an opportunity to overcome barriers in entering a new market. For those already with market share, it may prevent rivals from entering a market. It exposes rivals to economic vulnerabilities. A competitor that is unevenly regarding economic risk, invites the possibility of greater devastation if they cannot amass market share. Predatory pricing invites the potential for total market dominance once it effectively changes consumer perception and behaviour. Disadvantages of Predatory Pricing It attracts potential lawsuits or deemed illegal, depending on jurisdiction Brands using predatory pricing run the risk of ultimately losing money if the minds of consumers are not affected or monies lost in the initial phase are not compensated in the recoupment stage. In some cases, a predatory pricing brand may be sowing the seeds for a rival’s eventual return to market, for at times, defunct resources can be renewed. For example, the Washington Post went bankrupt in 1933 only to later become the biggest newspaper in Washington. Predatory Pricing in the Present - A Look at Amazon It’s difficult to pinpoint how dominant Amazon is regarding ecommerce, but it’s estimated that it accounts for 40% of US retail sales (Some believe the market share is somewhere closer to 50%.) Many smaller brands find it undeniably necessary to access Amazon’s Marketplace, with some estimating the marketplace is the sole source of income for a whopping 37% of its third-party suppliers. Moreover, Amazon’s marketplace is not the only place the company reaps profit. Amazon Web Services, offering cloud resources, also adds to its coffer. Amazon’s share within the infrastructure market amounted to 33% for the second quarter of 2020. That’s equal to the combined share of three of its largest competitors. As with goods purchased on the Web, the pandemic has not had a negative impact on Amazon’s ability to sell. Cloud infrastructure service revenues eclipsed $30 billion in the second quarter of 2020. There’s no debating that Amazon can easily afford to cut prices in the short-term in exchange for ultimate dominance. Amazon can influence prices, consumer behaviour, and the existence of the competition. Many businesses understand that you don’t beat Amazon. You join them. However, a number of strategies help smaller brands compete in niches and make headway in particular ecommerce markets. Here’s how they are keeping up with ‘the Amazons’ of the business world. Ways Businesses Compete with Predatory Pricing Many entrepreneurs and small business owners want to make money, but they want to do it by building a reputable and longstanding business model. While no brand is going to be sad about debilitating the competition, most find legitimate and law-abiding ways to success. Branding Starbucks coffee isn’t cheap but that doesn’t stop its penetration of the coffee market, reaching a net revenue of $26.5 billion in 2019. It sees year-over-year increases for the last decade. There was once a time when consumers would certainly balk at Starbucks price point. Now, they can’t seem to resist taking out their wallets regardless of the attached price. Retention What’s the economic benefit of retaining existing customers versus taking the marketing risk at attracting new ones? According to research, 58% of customers switch brands. For many, retaining customers is less costly than acquiring new ones. Do what you can to express appreciation to existing customers, for there’s a 70% chance of selling to a repeat customer. However, those odds drop as low as 5% when attempting to sell to a new one. Ecomm SEO Search engine optimisation is no secret weapon. It’s an undeniable component of digital marketing strategy. Ensure your site’s pages are optimised for targeted keywords. This requires strategic keyword research, effective product descriptions, as well as paying attention to user experience and site architecture. The first organic result aligned with a Google search has an average click-through rate of 28.5%. And, the average CTR falls dramatically after position one. A study found the second result to get a 15% CTR, and the third, 11%. By the time a user gets to the tenth result or estimated bottom of the first page of results, the CTR drops to 2.5%. Sales Funnel How are your website visitors behaving? An analysis of analytics can reveal insights related to the sales funnel. A study finds that about half of ecommerce visitors look at product pages but only about 15% add items to site shopping carts. However, a mere 3% actually go ahead with the finalisation of purchase. Target troublesome areas of the sales funnel, identifying needs for improvement and finding why some consumers are not buying from you. As mentioned, only 3% buy what’s loaded in their cart. What’s the reason for your shopping cart abandonment? Shipping We live in a world of online shopping and online shoppers don’t like added costs. Therefore, added costs, such as cost of shipping, remains a top reason for shopping cart abandonment. An additional percentage of customers abandon carts after finding the delivery will take too long. 9 out of 10 customers agree that free shipping is a premier incentive. 93% of online buyers will buy more if free shipping is an option. Moreover, 58% add more items to a cart to qualify for free shipping. Pricing A consumer survey reveals that 82% identify price as a very important reason for making a purchase. Low shipping costs come in second as 70% of respondents find it important. Therefore, there is no denying that pricing is a main concern for smaller ecommerce brands that compete with online competitors like Amazon as well as need to combat the ROPO effect (researching online but purchasing offline). Yes, there is no denying the importance of pricing. However, implementing a pricing strategy proves difficult for many suppliers who lack the resources and time for proper devotion. Yet, some have adopted dynamic pricing software, an automated way to set prices and stay competitive. Predatory Pricing vs Dynamic Pricing Automated pricing software allows for a dynamic way to go about cost strategy. What if a business could apply a dynamic pricing strategy at scale, regardless of offered goods and services? Agile Pricing Dynamic pricing’s algorithm provides an agile way to implement pricing. Gather data and enjoy the freedom of setting prices at a rate that works best for your company’s short and long-term goals. Set Rules Automated pricing software allows for your company to set pricing standards. Implement your own “pricing rules” and get as general or as granular as you would like regarding every product or service offered. Price Sensitivity Automated pricing software accounts for each product and service offered, so the price of each item appropriately compensates for sales volume, number of items, time of day, etc. Every product is considered and automatically assorted according to optimal price. Total Automation Total automation allows for complete pricing analysis of the market, including competitor pricing. Dynamic pricing software gathers competitor data, internal metrics, market prices, consumer behaviours, and then provides optimised price suggestions. Market Awareness Dynamic pricing software does not work in isolation, making pricing suggestions based on mysterious precedents. The software provides reasoning for price suggestions, so users can grow market awareness as well as manually override when they see fit. Conclusion Predatory pricing is an illegal practice but it would be naive for smaller and burgeoning ecommerce businesses to deny predatory-like behaviours exist. Given the growing popularity of ecommerce and its explosion over the last decade, established and new brands need the knowledge and tools to compete with Amazon, Target, and Walmart as well as local vendors. In the short-term, predatory practices and giant competitors, like Amazon, are not going away. If you’re not going to beat them, then you must find a way to join-in and “match” competitors. Solutions such as dynamic pricing software level the field of competition and help small ecommerce brands succeed regardless of the size of rivals and aligned pricing strategies. Other Pricing Articles: What is Value Based Pricing? What Is Penetration Pricing? What Is Cost Based Pricing? What Is Odd Even Pricing? What Is Charm Pricing? What Is Psychological Pricing? What Is Bundle Pricing?

Business Guide to Predatory Pricing

What 3 Months of Amazon NL can Teach Us About Dutch E-Commerce

In the beginning of 2020, we at Omnia believed the news story of the year would be the arrival of Amazon NL. We couldn’t have been more wrong about the biggest story of the year, but that doesn’t mean that Amazon NL...

In the beginning of 2020, we at Omnia believed the news story of the year would be the arrival of Amazon NL. We couldn’t have been more wrong about the biggest story of the year, but that doesn’t mean that Amazon NL isn’t an important player we should ignore or forget about. Three months after Amazon NL’s debut, what has happened to the market? We did a short analysis to see how Amazon compares against other major Dutch retailers and what that means for its market position. Amazon is dominating out-clicks In a monthly report we receive, Omnia’s CEO Sander Roose noticed that Amazon NL was dominating the out-click shares from a major local comparison shopping engine in May and June. In fact, the number of out-clicks was double the out-click share of the second retailer, bol.com. Amazon’s pricing strategy is notoriously dynamic. The company is well-known for extremely frequent price changes and an ethos of providing the best customer experience in the world — which often coincides with rock-bottom prices. We were curious what was driving this high number of out-clicks. So, we did what we do best — dove into the data to see what was happening in the market. We used the top 2000 products on Amazon as a baseline, then looked at a couple of key factors in comparison to the rest of the market. High frequency price changes The first thing our consultant analyzed was the frequency of price changes on Amazon.nl, and what he found was not altogether surprising. Amazon’s top sellers change prices frequently — in line with Amazon’s pricing strategy. In the graphic above, you see the number of price changes from Amazon compared to other major market competitors like Coolblue, Mediamarkt, BCC, and more. The blue columns represent the number of price changes on Amazon.nl, while the green columns represent the average number of price changes from the rest of the market. From March to June, the percentage of Amazon’s assortment that experienced a daily price change was more than double the percentage of the rest of the market. You can see the full figures in the table below. However, what’s particularly interesting to look at is the month of April, where 77% of the products in the sample of Amazon’s assortment experienced a daily price change. There are two likely contributing factors to this. The first is that April was the first full month that Amazon was a full webshop in the Netherlands, and the company had likely set a more aggressive pricing strategy during this time. It’s impossible to say for certain though that the company’s strategy was the reason behind this increased frequency of price changes. April was also the first month of a strict lockdown against the coronavirus in the Netherlands, which drove a huge increase in e-commerce. Lowest price on the market Amazon NL doesn’t only change its prices more frequently than other Dutch online retailers. It also has the lowest price consistently, according to our data. At Omnia, one of the metrics we look at when evaluating price position on the market is called price ratio. It’s a measurement of how the price of a product varies from one seller to the next. Say, for example, you sell headphones online for €90, but your competitor sells the same headphones for €100. While you know that you have the better price, it may be useful to know how much better your price is. That’s where the price ratio comes in: it shows the relationship between two prices. To calculate price ratio in the above example, all you need to do is divide 90 by 100, giving you a price ratio of 0.90. In other words, as long as your price ratio is below 1.0, your products will be cheaper than the competitor you’re comparing yourself to. We took this calculation and applied it to Amazon’s top 2000 products, as seen in the graphic below. We compared the price for these products to the market average price of other relevant retailers in the Netherlands. This average market price was calculated as the average price of several of the largest retailers and e-commerce stores in the Netherlands, including Bol, MediaMarkt, Coolblue, BCC, and others. What we found wasn’t altogether shocking: Amazon has a lower price ratio, ranging from 0.92-0.94 across the last few months.This means that Amazon’s product prices were, on average, 6%-8% lower than the market average price. What does this mean for Dutch retailers? When Amazon made its debut in the Netherlands, we made a couple of predictions: Amazon would price aggressively in the Netherlands and drive market prices down Amazon would make the market more dynamic with its extreme number of price changes Amazon would drive brand loyalty with the Prime program Our data shows that the first two predictions have come true. Amazon is, on average, the lowest price on the market, and the number of price changes every day has skyrocketed. There’s also good reason to believe that Amazon’s Prime initiative is also working. Even though Amazon doesn’t publicly disclose the number of Prime members, Emerce reported that Amazon Prime Video had one million viewers in the Netherlands in April. The data also shows that Amazon is sticking to its localization strategy. The company is keeping prices close enough to Dutch retailers to be seen as the cheaper alternative to the existing e-commerce space, but isn’t going for rock-bottom prices or trying to match its German webshop prices. Instead, Amazon appears to be hovering just below other Dutch retailers. “Amazon is not holding back when it comes to its pricing, and I wouldn’t be surprised if they’ve already passed two million Prime members,” commented Sander Roose, CEO of Omnia Retail. “Now, more than ever, Dutch retailers and brands need to adopt technology to help them follow market prices.” The reality is that Amazon will always price lower than you, so resist the urge to drop your prices further. Amazon will simply follow the market, and you could trigger a race to the bottom. Instead of dropping your prices, it’s important to look at your commercial strategy. You can expect Amazon to have a lower price than you, but what can you offer your customers that Amazon simply can’t? Now is a great time to revisit your commercial strategy and pricing promises and evaluate how you can best serve your customers.

What 3 Months of Amazon NL can Teach Us About Dutch E-Commerce

Amazon NL's Launch and Corona: How COVID influences the Marketplace

A few weeks ago we released a complete data analysis of what happened when Amazon entered the Dutch market. It made quite some news, but as the coronavirus reached the Netherlands, the coverage of the topic was quickly...

A few weeks ago we released a complete data analysis of what happened when Amazon entered the Dutch market. It made quite some news, but as the coronavirus reached the Netherlands, the coverage of the topic was quickly overshadowed by the virus. Coverage of the coronavirus obviously comes first. But Amazon’s entry into the Dutch market is not something to ignore, especially if you look at how Amazon is responding to the pandemic. Below we’ve linked several articles about Amazon’s launch in the Netherlands so you can get the full picture of how it is changing the market. Amazon NL launch Amazon’s initial launch in the Netherlands was disappointing. Omnia’s analysis found that products were 7% more expensive on Amazon.nl than they were on Amazon.de, and on launch day Amazon.de’s assortment was at least ⅓ larger than Amazon.nl. Our CEO Sander Roose spoke with several news outlets about the analysis. Below are links to the news articles. Please note that these articles are in Dutch, unless specified. Amazon in the Netherlands: great for consumers, but supply is disappointing (RTLZ) Amazon.nl is more expensive than Amazon.de (Retail News) Amazon.de is 7% less expensive than Amazon.nl (Emerce) Amazon suffers from startup problems: many products are missing (BNR) Amazon.nl offers are disappointing after start up (BNR) You can also see Sander's commentary on RTL news (beginning at 17 minutes). Amazon and the coronavirus For the last few weeks, the coronavirus has dominated the news cycle. As the world’s largest webshop, Amazon was forced to respond. The story began as a success. To accommodate for the high volume of online orders that came as a result of the coronavirus, Amazon announced it would hire nearly 100,000 temporary workers to fill orders. Amazon NL also extended its return policy to reduce pressure on the already overburdened postal system. In recent days though, Amazon has gained bad press in the United States as workers stage walkouts in protest of the company’s worker health protection policies. The protests in the US mirror earlier protests in Spain and Italy, and even the US government has written to the company to express concerns over employee safety. Amazon has a responsibility to protect its employees (and the broader world, as a result) from the coronavirus. But like every other e-commerce company in the world, Amazon is under intense pressure at the moment. The Wall Street Journal reported that Amazon is receiving anywhere from 10%-40% more product orders now than it did at this time last year, and Amazon is under high pressure to deliver quality service. The future of Amazon and the coronavirus The coronavirus will change retail permanently, and no company — not even Amazon — is immune to its effects. The virus has opened up a completely new set of problems, and every company is struggling to navigate its way through the uncharted territory. It's unclear how the virus will affect Amazon NL's performance, but it will certainly be a unique business opportunity across the world.

Amazon NL's Launch and Corona: How COVID influences the Marketplace

26 Stats About Amazon Prime Day 2019

It’s no surprise that Prime Day 2019 was another record-breaking event. Sales this year surpassed Black Friday 2018 and Cyber Monday 2018 sales combined, and the number of Prime members exploded. More and more stores...

It’s no surprise that Prime Day 2019 was another record-breaking event. Sales this year surpassed Black Friday 2018 and Cyber Monday 2018 sales combined, and the number of Prime members exploded. More and more stores are now offering their own major sales on July 15th and 16th as a response to Prime, and the sales holiday is quickly cementing itself within the retail cycle. To see how Prime Day 2019 played out, we’ve rounded up 26 statistics to get an overview of the holiday. Amazon Prime Amazon Prime is Amazon's wildly successful membership program. Members pay $119 per year for access to free two-day shipping, photo storage, video streaming, and more. More than 100 million US shoppers have an Amazon Prime subscription (that’s 62% of Amazon’s customer base in the United States) (CIRP) Prime Members spend an average of $1,400 per year on Amazon. Non-members spend an average of $600 per year (CIRP) Prime Day began in 2015 to celebrate the company’s 20th anniversary and bring more people into the membership program Prime Day 2018 Prime Day 2018 was a record-breaking year, and sales surpassed Black Friday and Cyber Monday 2017 sales. Prime Day 2018 was a 36-hour event Amazon sold over 100 million products on Prime Day 2018, surpassing sales on Cyber Monday, Black Friday, and the previous Prime Day (Amazon) Estimates suggest that shoppers spent over $4 billion on Prime Day 2018 (Bloomberg) 17 countries participated in Prime Day 2018 (Amazon) The most popular categories for Prime Day 2018 were Toys, Beauty products, PCs and computer accessories, Apparel, and Kitchen products. (Amazon) Prime Day 2019 Prime Day 2019 was a full 12 hours longer than last year, but sales never lagged. While Amazon didn't release any information about how much the company made, Prime Day once again surpassed Black Friday and Cyber Monday in sales. Prime Day 2019 lasted a full 48 hours Amazon sold over 175 million products this year and consumers saved over $1 billion USD (Amazon) Prime members in 18 different countries participated in Prime Day: the United States, the United Kingdom, the United Arab Emirates, Spain, Singapore, the Netherlands, Mexico, Luxembourg, Japan, Italy, India, Germany, France, China, Canada, Belgium, Austria, and Australia. (Amazon) Amazon spent $8.1 trillion (USD) on television ads marketing Prime Day (Broadcasting Cable) $1.6 trillion of that $8.1 trillion went to Spanish-language advertising (Broadcasting Cable) US shoppers also saved at Whole Foods Market on Prime Day, hinting at Amazon’s omnichannel strategy. Strawberries, red cherries, and blueberries were the most popular Prime Day products at the grocery chain (Amazon) Popular Products The product trends on Prime Day 2019 were fascinating, and reflect changing cultures and demographics. "We saw a huge surge in 'smart' products this year, but that wasn't unexpected," comments Hidde Roeloffs Valk, Solution Consultant at Omnia. "This category is growing rapidly at all our customers across the board, so it's no surprise these were popular products on Prime Day." Hidde also believes that the popular products are reflective of new demographics. "In the Netherlands, diapers were among the top sellers. This is because more millennials are having children." Smart home and IoT products were particularly popular this year. Top sellers included robotic vacuums, smart garage door openers, and smart plugs. (Amazon) The Instant Pot continued its reign as one of the top sellers in the US (Amazon) The most popular products by country include (Amazon): United States: LifeStraw Personal Water Filters, Instant Pot DUO60, and 23andMe Health + Ancestry kits United Kingdom: Sony PlayStation Classic Console, Oral-B SmartSeries Electric Toothbrush, and Shark Vacuum Cleaner United Arab Emirates: Al Ain Bottled Water, Ariel Laundry Detergent, and Fine Towel Tissue Roll Spain: yobola Wireless Bluetooth Headphones, Philips Multigroom Series 7000 All-in-One Trimmer, and DoDot Diapers Singapore: Meiji Fresh Milk, Coca-Cola Zero Sugar Soft Drink, and Kleenex Clean Care Bath Tissue Netherlands: Mama Bear Diapers, SanDisk 128 GB Memory Card, and Philips Hue White and Color Ambiance Light Mexico: Nintendo Switch, HP Monitor 22w Borderless, and Nautica Travel Sport Eau de Toilette Spray Luxembourg: JBL Charge 3 Stealth Edition Bluetooth Portable Boombox, Tefal Jamie Oliver Stainless Steel Pan, and iRobot Roomba 671 Japan: Happy Belly Water, Anker PowerCore 10,000 Mobile Battery, and Pampers Premium Protection Diapers Italy: NESCAFÉ Dolce Gusto Barista Caffè Espresso, Dash 3-in-1 Detergent Pods, and AUKEY Powerbank Portable Charger India: Syska 9-Watt Smart LED Bulb Compatible with Amazon Alexa, boAt Rockerz Sports Bluetooth Wireless Earphones, and Godrej Aer Pocket Bathroom Fragrance Germany and Austria: JBL Bluetooth Speaker, Tefal Jamie Oliver Stainless Steel Pan, and OSRAM Smart+ Plug Zigbee Switchable Light Socket France: iRobot Roomba 671, Lunii Story Telling Factory, and Oral-B SmartSeries Electric Toothbrush China: Dove Exfoliating Scrub, L’Oreal Rejuvenating Eye Cream, and Silk’n Permanent Hair Removal Device Canada: PlayStation 4 Slim with Spiderman and Horizon Zero Dawn, LifeStraw Personal Water Filter, and 23andMe Health + Ancestry kits Belgium: OSRAM Smart+ Plug Zigbee Switchable Light Socket, SanDisk 128GB Memory Card, and Brita Water Filter Australia: Mario Kart 8 Deluxe, Finish Powerball All-in-1 Max Dishwasher Tablets, and Huggies Ultra Dry Nappies Amazon’s proprietary devices also did well, including Kindles, Echo, Alexa, Blink and Ring devices, and more. (Amazon) Prime Membership Prime membership skyrocketed this year, with both days of the retail holiday bringing in thousands of new members. But what is the average life cycle of these new members? July 15th brought in more Prime members than any previous day in the company history. (Amazon) July 16th brought in almost as many subscribers as the 15th. (Amazon) Searches for “Canceling Amazon Prime” increased 18x on the 15th of July, compared to the 14th, suggesting that consumers were signing up for the trial membership, browsing the deals, then canceling immediately. (Business Insider) Prime Day response Prime Day has officially moved beyond the domain of the Amazon company. Many other companies offered their own widespread sales during the same time period to capitalize on consumer readiness-to-spend. Prime Day 2019 was also met with protest from consumers globally, who worry about worker welfare. Online retail traffic surged on Prime Day. In the United States... (Emarketer) Amazon’s search index increased 184% in the first 24 hours of Prime Day Walmart’s search index increased by 130% Searches on eBay increased by 72% Best Buy’s searches soared by 255% Prime Day 2019 was met with public protests against the retail giant. Within Europe there were protests in Spain, the United Kingdom, Germany, and Poland (CNET) Delivery days marred consumer experience on Prime Day, with many shoppers complaining about 3-4 day shipping (Atlanta Journal Constitution) The number of companies giving major discounts during Prime Day has exploded, indicating that Prime Day is quickly becoming a full-blown summertime retail holiday as big as Black Friday. (Business Insider) This prime day record is expected to hold until Black Friday and Cyber Monday 2019. Final thoughts In just four years, Amazon has managed to create an entirely new retail holiday that only continues to grow in importance each year. We can expect even more retailers and brands to launch their own sales next year on July 15th, and might even see the holiday spill over into the physical retail realm as well. Curious to read more Amazon related content? Check out some of our other articles below The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible.

26 Stats About Amazon Prime Day 2019

What does Amazon’s Increased Focus on the Netherlands Mean for Pricing in the Dutch Market?

After launching amazon.nl with an assortment of Dutch Kindle e-books by the end of 2014, Amazon recently made a second step in entering the Dutch market. Last week it added the Dutch language to their German website,...

After launching amazon.nl with an assortment of Dutch Kindle e-books by the end of 2014, Amazon recently made a second step in entering the Dutch market. Last week it added the Dutch language to their German website, amazon.de. While parts of the website have not yet been translated and there is no iDeal payment option yet, this is a clear sign that Amazon is starting to focus more on the Dutch market. It is becoming clear from comments on articles in the trade press about this move by Amazon that opinions vary wildly as to what this impact will be on pricing of products in the Netherlands. Some claim that “all margins will shrink to zero”, while others claim that Amazon is not priced aggressively at all. What does the data show? Of course, Omnia has access to pricing data of amazon.de. Amazon.de advertises on a major Dutch comparison site, so it is included in the Dutch Omnia Pricewatch data. However, this mainly covers electronics. It is also possible to source pricing data from all major German comparison shopping engines via Omnia's Pricewatch Module. This will expand insights into Amazon pricing in categories beyond electronics. For this analysis we looked at a large set of electronics products, found on amazon.de and 5 large Dutch electronic retailers, bcc.nl, bol.com, coolblue.nl, mediamarkt.nl and wehkamp.nl - all 6 of which were advertising on this major Dutch comparison shopping engine. In Omnia Pricewatch and Omnia Dynamic Pricing, price ratio and price position are key performance indicators reflecting your price position versus key competitors. The chart below shows the price-ratio and price position of amazon.de and the 5 key Dutch retailers mentioned above, both against the average of these six retailers in total. Looking at price ratio, amazon.de indeed has the lowest prices. However, the difference compared to mediamarkt.nl is small. Looking at price position, is seems that amazon.de is not pricing efficiently, because - although it has the lowest price ratio - its price position is one of the worst. This seems counterintuitive, as Amazon is known as one of the most advanced retailers in terms of dynamic pricing capability. The logical explanation for this is that Amazon does not have localized pricing for the Netherlands. The amazon.de pricing advertised in the Netherlands are simply their German price points and these price points are fully based on the German market. This may lead one to conclude that amazon.de only has a minor impact on pricing the Dutch market. However, this – unfortunately for Dutch retailers – is not the case. It’s precisely these German prices that cause amazon.de to undercut the lowest priced Dutch retailers by a very large margin in many cases. Except maybe in promotions, a Dutch retailer would never undercut its lowest priced Dutch rival by such a large margin. The chart below shows the price ratio of amazon.de versus the 5 key Dutch retailers. Each bar represents the price ratio on a single product. This data shows that amazon.de is undercutting Dutch retailers by a very large margin (up to 50% below the average of the 5 key Dutch retailers) on a significant portion of the product assortment used in this analysis. Conclusion Our expectation is that the greater focus of Amazon on the Dutch market will lead to further margin pressure in this market. The key reason for this, however, is not Amazon’s aggressive pricing in general, but the fact that it does not localize its pricing. Amazon is operating in the Dutch market with German pricing. And because Omnia as of right now has pricing data in 32 markets, including Germany, we know that - in general - pricing in the German market is more competitive that in the Dutch market. Omnia is a supplier of competitor pricing data and software to automate your pricing strategy in the most optimal way. Of course, Omnia is a software supplier and the choice of pricing strategy is always up to the retailer. Below are some suggestions in terms of pricing data and the use of Omnia software, considering the increased focus of the world’s number 1 retailer on the Dutch market. 1. It all starts with data. To decide about competitive pricing compared to amazon.de, it is crucial that you have access to amazon.de’s pricing data. With regards to electronics assortment, the pricing data of the Dutch comparison shopping engines will probably suffice. If you need data coverage on products outside of electronics, then you will need data of major German comparison shopping engines and/or data from the German Amazon Marketplace itself. If you’re interested in this, please contact Omnia. 2. Determine the impact of amazon.de on your product categories. The lack of iDeal payment option, and the longer delivery times make Amazon’s offers less attractive in the Netherlands. However, if the price differential is sufficient we see that many Dutch consumers will choose amazon.de over its higher priced Dutch competitors. The click-out reports of major Dutch comparison shopping engines may provide an indication of the impact of amazon.de on your product categories. 3. Determine whether you want to adjust according to amazon.de pricing. The answer on the previous point should, of course, be an important input to this decision. If you don’t want Omnia’s core algorithm to adjust to amazon.de, you can set the competitor weight to zero. 4. Omnia strongly advises always using a margin protection. Based on the dynamics of your business this protection can be set at zero percent, or at some percentage above or below zero. This has always been our advice, but considering a retailer is now offering goods at a 50% discount versus key retailers in the market, this has become much more important. 5. Use intelligent pricing methods. If the increased focus of amazon.de indeed leads to further pressure on margins in the Netherlands, then it becomes even more risky to apply a dynamic pricing strategy as “position X in the market”. The urgency to move to a more intelligent dynamic pricing strategy based on price elasticity product becomes even greater.

What does Amazon’s Increased Focus on the Netherlands Mean for Pricing in the Dutch Market?

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