WINNING PRICING
STRATEGIES FOR PRIVATE
LABEL SELLERS
Victor Rosenman, Feedvisor CEO | January 2016
HOW DO YOU GROW A SUCCESSFUL BUSINESS
ON AMAZON?
LET’S TAKE THE SCIENTIFIC APPROACH
2
Market Equilibrium
A situation in a market when the price is such that the
quantity demanded by buyers is correctly balanced
by the quantity that sellers wish to supply.
3
Markets always
navigate toward the
equilibrium
The equilibrium point constantly changes in response to
changes in the market demand or supply
4
HOW CAN WE APPLY THIS TO THE
AMAZON MARKETPLACE?
THE 4 STATES OF THE MARKET
Competition
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Your sales velocity
Slow moving
private label
products
Fast moving
private label
products
6
Fast Moving Highly Completive Products
Winning the Buy Box at
the optimal price
Optimizing your
Replenishment Strategy
Orders
Buy Box
vs Price
Winning Buy Box
at the Optimal Price
Profit
The optimal price is the price point where
your profit is optimized
Price
Optimal
Price
Money on the table
Diminishing profits due to
decline in the Buy Box share
8
Winning Buy Box
at the Optimal Price
Orders
Buy Box
vs Price
Profit
ORDERS &
INVENTORY DATA
MARKET
DATA
COMPETITION
DATA

Orders


Price Bids by Sellers

Sales Rank
History
Inventory Levels

Seller Metrics
Cost Structure
Buy Box Price
History



Buy Box Winner
Price
Optimal
Price
Money on the table
Diminishing profits due to
decline in the Buy Box share
9
Fast Moving Highly Completive Products
Winning the Buy Box at
the optimal price
Optimizing your
Replenishment Strategy
Optimizing your
Replenishment Strategy
Replenish when the demand is high and your stock is low?
 Buy Box Price - very high
 Demand - high
 Competition - low
Replenish or Liquidate?
11
Optimizing your
Replenishment Strategy
Cost
Replenish when the demand is high and your stock is low?
 Buy Box Price - very high
 Demand - high
 Competition - low
Opportunity Zone
Replenish or Liquidate?
12
COMPETITIVE MARKETS
ADVANTAGE
Buy Box reflects market dynamics
DISADVANTAGE
Intense competition erodes profit margins
13
THE 4 STATES OF THE MARKET
Competition
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Your sales velocity
Slow moving
private label
products
Fast moving
private label
products
14
IN ABSENCE OF DIRECT COMPETITION
PRIVATE LABEL PRODUCTS NEED TO BE
PRICED ACCORDING TO THE DEMAND
1
5
THE 4 STATES OF THE MARKET
Competition
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Your sales velocity
Slow moving
private label
products
Fast moving
private label
products
16
Fast Moving Private Label Products
Building a Demand Model to
find the optimal price
Optimizing your Replenishment
Strategy
Building Demand Model
to find Optimal Price
The optimal price is the price point where
your profit is optimized
18
Building Demand Model
to find Optimal Price
The optimal price is the price point where
your profit is optimized
19
Building Demand Model
to find Optimal Price
COSTS &
INVENTORY DATA
ORDERS
DATA

Inventory Levels

Orders

Cost Structure

Sale Price History
20
Building Demand Model
to find Optimal Price
COSTS &
INVENTORY DATA
ORDERS
DATA

Inventory Levels

Orders

Cost Structure

Sale Price History
21
THE 4 STATES OF THE MARKET
Competition
Slow moving
highly competitive
products
Fast moving
highly competitive
products
Your sales velocity
Slow moving
private label
products
Fast moving
private label
products
22
Slow Moving Private Label Products
Reviewing Your
Product Catalog
Building Demand
Model to find the
optimal price
Mitigating Stale
Inventory Risks
Attracting Traffic
STALE INVENTORY RISKS
FBA Long Storage Fees
Charges from Amazon or other
warehousing companies for
storing unsold stock
Tied up cash
Cash is tied to stale inventory
instead of being used for other
opportunities
24
Utilizing Demand Model
to control Sales Velocity
Price impacts demand
Velocity (Pace of Sales) can be controlled by changing the
price
25
Utilizing Demand Model
to control Sales Velocity
Price impacts demand
Velocity (Pace of Sales) can be controlled by changing the
price
26
“Proprietary algorithms that analyze Big Data and translate it into
actions will be the secret sauce of the successful organizations”
PETER SONDERGAARD, GLOBAL HEAD OF RESEARCH, GARTNER
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7
ALGO-COMMERCE
Market
Pricing
Demand
Competition
Big Data
Algorithms
Trends
Decisions
Growth
Feedvisor launches
ALGORITHMIC REPRICING FOR PRIVATE LABEL
PRODUCTS
Visit us at Booth 15 to learn more
THANK YOU