Amazon.com has been moving towards making UPC/EAN numbers on all products mandatory for the last several years. Within the last month, one of it’s biggest departments: Home & Garden now requires these codes. Because of these changes, Amazon.com Merchants are more frequently confronted with competition appearing on their product listings that they thought they controlled outright. Inevitably pricing issues can ensue and in some cases and out-and-out pricing war can take place over the the most innocuous of items.

What do you do in these cases?

• Understand that in most cases you don’t ‘own’ a listing for anything. You may be the originator of a product listing, but anyone can ‘co-list’ on your product listing as long as they are selling the exact same item.
• Amazon.com encourages this ‘co-listing’. Their philosophy is simple: They want to offer the best value possible which includes such things as superior shipping times, low priced shipping and low prices.
• ‘Co-listers’ are looking to make a living selling just as you are.

What to beware of:

• ’Co-listers’ that use automated pricing updaters.
• Merchants who try to make shipping charges a profit center.
• Merchants who want to control the ‘Buy Box’ and will lower their prices to the point where no one can sell a particular item and make a profit.
• Merchants who are actually selling ‘gray market’ or knockoff products.
• Merchants who are selling a lower grade product at a lower price. Such as, you are selling a product in ‘new’ condition and the co-lister is selling the same product in ‘used-like new’ condition.

There are several strategies that can work to retain sales under these circumstances.

Price lower than the competition. The downside of this is that more likely the other Merchant will ‘in kind’ lower his price as well. This can lead to a downward spiral in pricing inevitably leading to a product that no one is making a profit on. With this strategy, establish early on how much you are willing to lower your price and go no further.

Match the competition’s pricing. This is an effective strategy where everyone will get at least part of the sales. You will yield some sales to the competition, but retain the overall profitability of the product listing.

Investigate the competition’s product. In some cases you may find that the competing listing is not the exact same product. In these cases, you are well within your right to bring this to the attention of Amazon.com and they will either deal with it accordingly, or they will direct you to someone who can deal with for you. Be careful with this approach though.  If you claim that a product being listed is materially different than what the listing was promoting originally, be prepared to defend that position.

Lower your shipping charges. I would not recommend lowering your shipping charges to the point where you are paying for the privilege to ship an item, but don’t expect to make a profit off of shipping. Shipping charges should include the actual cost of shipping the package, any handling charges incurred in processing the shipment, material costs for envelopes, boxes or whatever you are shipping in and Amazon.com’s percentage they take off the top of shipping. Customers will detect fair shipping charges and will order with that Merchant. They will not order from a Merchant they feel is taking advantage of them.

Do nothing. Sometimes this is the best strategy because it takes into account several intangibles:

• Some people buy for price
• Some buy based on shipper’s location and/or how quickly they want the item
• Some buy based on feedback rating
• Some based on ‘condition notes’

Don’t let competition drive your business into unprofitably. Remember: There are plenty of idiots out there who somehow got approval to sell on Amazon.com. These people will drive the price down and down just to claim ‘their right’ to the ‘Buy Box’. These types of Merchants will drag you right down with them. If you follow the suggestions made here, you should be able to price fairly, continue to make sales and outlive the competition.

Leave a Reply