It goes like this. Seller A prices a book at $25.00. Seller B prices the same book at $24.99. Now Seller A's automatic repricing tool doesn't like being undercut so it reprices the book at $24.98.
This triggers Seller B's repricer to respond in kind by repricing the book to $24.97 -- and the race is on! And you'll race all the way down to a profit destroying penny when a used book seller operates this way.
Don't Follow The Crowd
Your Amazon pricing strategy must be smarter. The way to avoid the dreaded race to the bottom and keep your cash in hand is to avoid pricing wars altogether. Inexperienced booksellers think they always have to have the very next sale -- even if it means lowering prices to unprofitable levels.
Typically, they train their repricer to meet or beat the lowest price in the same or better condition. For example, if a competitor is selling a book in "Good" condition for $10.00, novice booksellers either sell it for $10.00 (to meet the price), or for $9.99 (to beat the price).
No one does book research any more. They just follow the crowd like mindless lemmings incorrectly thinking they're going to make money being online.
That's dangerous thinking, because an equally inexperienced seller will do the same thing. Again -- the race is on! Online bookselling was never meant to be a money loser.
If you're going to sell books for a penny you might as well donate used books to charity and take a tax deduction. You'll be ahead of the game if you did.
Avoid the race to the bottom by pricing your book two cents above the lowest price in the same or better condition! How does this help? Consider this…
If your competition is bound and determined to meet or beat your lowest price by a penny using an automatic repricer, when you price your book at $10.02 vs. your competitor's $10.00 price, a new dynamic occurs with your Amazon pricing.
Stop The Repricing Insanity
Your competitors will now raise their price to either $10.02 (to match you) or $10.01 (to undercut you by a penny.)
Now your repricer doesn't like being matched or beaten by a penny, so it raises your price again to either $10.04 or $10.03 to stay two cents higher. Get it? This is a great way to increase bookstore sales with your repricer.
Of course, as an online bookstore owner you can to too far in the other direction as well and price yourself right out of the market.
That's why truly sophisticated Internet booksellers have an upper limit over which their repricers will not exceed, for example $200. In addition, they have a lower limit under which their repricers will not go, like $5.
Truly professional Amazon pricing algorithms won't allow the lower limit fall below a certain percentage of the original listing price, like 75%.
So if an expensive book gets attacked by an unscrupulous seller the maximum loss won't exceed 25%. In other words, a $100 book won't fall below $75 before hitting the floor.
There are many repricing strategies for home-based businesses and this is just one. For maximum protection against market forces and fraud you should used a combination of Amazon pricing strategies to protect your business. That's how you make money from the Internet.
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