How I outsourced my Amazon FBA repricing to a virtual assistant

My formula for paying $7 an hour to do the boring but necessary job of repricing FBA inventory.

You have many tasks as a Fulfillment by Amazon (FBA) seller. And there is one that has the worst ratio of “boring” to “profitable“: Repricing.

When an item has a price that is not optimized (note: That doesn’t mean “lowest”), it may as well not be for sale at all. And when you multiply this times thousands of items, there’s a lot of money at stake.

Why Fulfillment by Amazon (FBA) repricing software is not the answer

For FBA sellers, repricing software is unusable, and I abandoned it awhile ago. I’ll be doing a whole post on this soon, but the gist of the issue is:

FBA repricing software can’t see most FBA offers, making it functionally unusable for people who sell media with FBA.

(I single out media specifically for a reason that I’ll explain in a moment.)

(And if this FBA blindspot with software is news to you, see my article “Sorry, but your scanning app isn’t showing you FBA data anymore.” The reasons that scanning apps aren’t showing FBA data also apply to repricing software. It’s not the developer’s fault, Amazon just won’t allow it.)

So I stopped using FBA repricing software. And I started doing something a lot more powerful and precise.

What is a virtual assistant?

You may or may not be aware of virtual assistants, often overseas, who can perform just about any business task in the world that you’d rather not do yourself. If you can teach it, you can pay someone to do it for you.

Sites like Upwork.com (formerly Odesk, recently merged with Elance) are an endless supply of talent, who can do tasks from the mundane to the specialized.

For $3 an hour and on up (depending on the country and skill level required), you can have just about anything done, allowing you to dedicate your time only to parts of your business (or life) where you are truly indispensable.

How does this apply to an FBA / Amazon business?

I recently handed over what I believe is the second most sensitive facet of a Fulfillment by Amazon business – repricing.

(What’s the first? Listing.)

My journey into outsourced labor

I first hired someone on Upwork earlier in the year to do basic internet research for 5 hours a week.

I had a thousand “to do” lists laying around, most of them filled with various ideas I had that I just didn’t have time to pursue. Many of these were directly related to my FBA business (emailing sources to arrange bulk buys, researching unpublicized book sales, etc). Many were about miscellaneous other things I didn’t have time for (the best software to record music on a PC, planning my travels, etc).

I had no idea what I was doing, I just knew I had a lot more plans than time. So I got a book called Virtual Freedom by Chris Ducker that broke down all the ins and outs of outsourcing various facets of your life and business.

I went on Upwork and hired someone to handle basic internet research. I started at 5 hours a week and $7 an hour.

This isn’t meant to be an exhaustive look at how to hire a VA, but the basics were pretty simple: I emailed him (his name is Martin) what I wanted and when I needed it by, and if it was something mildly complex, I would make a quick Camtasia video (screen capture software) showing him how to do what I was asking. Pretty simple.

I was amazed at what I could get done for $35 a week. This small investment was yielding massive returns.

So I began to ask: How much more of my Fulfillment by Amazon (FBA) business could I outsource?

I had heard of people outsourcing their Amazon sourcing. And I was open to it, but I wasn’t there (and still am not) just yet.

I had also heard of people outsourcing their Amazon listing, but I was even more resistant to this. Listing is where the rubber meets the road, and it freaked me out for two reasons: 1) Grading improperly could get you banned from Amazon, and 2) Pricing is where the money is made. And my pricing formula was so dynamic, fluid, and complex that I didn’t think it could be taught.

Then I decided repricers were toxic for FBA sellers

I’d always done most of my repricing manually, but some bad experiences (and deceptive claims from repricing software companies) led me to pull out from all FBA repricing software. Like I said, it’s a subject for another article.

So I went back to the caveman approach: Doing it manually.

Manual repricing isn’t practical for many Amazon sellers. FBA is a lifestyle business for me (vs. a full time job), and it’s a rare week where I’m working more than 25 hours. So I’m nowhere on the level of many sellers (including a lot of you reading this).

Yet even at my level, it’s not practical. But with the limitations of the existing software, there really was no choice. Or was there?

My old approach to repricing

With the low price I pay for most of my Amazon inventory, and the high FBA prices I set, it’s easy to neglect repricing. I’m almost always tripling my investment very quickly, and letting Amazon inventory that doesn’t sell in the first 30 days just sit back and bide it’s time, waiting for a sale.

So I never gave repricing much thought. I get to it when I get to it. That includes periods where I’m consistently repricing the majority of my Amazon inventory every week, and (longer) periods where I’m repricing every month or two.

As I say about a lot of things: “High margins = the luxury of not caring.”

My main obstacle to outsouricng Amazon repricing

When considering outsourcing, I went back to my original sticking point: I didn’t think my FBA pricing formula could be taught. There are so many variables and scenarios that factor into my pricing decisions that I’d never consciously broken it down into a formula.

Variables such as sales rank, sales rank history, the type of book, existing FBA offers, and several more all factor into the price I set. Even if I make these decisions in a split second, there’s a lot that goes into them.

Merchant fulfilled sellers have it easy. They just match the lowest offer and they’re done. Bottom-feeder Fulfillment by Amazon sellers have it just as easy. They price $3.99 higher than the lowest MF offer and they’re done. And less aggressive FBA sellers who simply match the lowest FBA offer also have it easy.

I’m none of the above.

I’m not into high turnover. I’m into high profits.

Creating an air-tight FBA pricing formula

This is where it gets complicated. The trick to working with virtual assistants is being very, very clear and precise about what you need done and how, down to the smallest detail.

So I sat down to do the impossible: Take my FBA pricing formula and put it to paper. Make it so clear, it could be taught to a robot.

It was hard. There is so much to pricing FBA offers, I almost gave up many times.

I decided there were six variables that factored into FBA pricing, and an additional six different ways to price (way too much to go into here, but I’ll be going into detail on this in the near future).

This created a virtually unlimited number of scenarios, each of which must be handled differently.

Even if there was no “right way” to price, I knew I made a lot more off my FBA inventory than other Amazon sellers with inventory 3x as large as mine. So while there was no such thing as a “perfect” FBA pricing formula, I felt mine was pretty close.

I had a pretty good rapport going with Martin (he was in the Philippines), so I decided to test the outsourcing of my repricing. There was a lot of money on the line if he handled this poorly, so I had to leave no uncertainty as to how to price in every possible scenario.

How I taught a virtual assistant my FBA repricing formula

I created a Power Point presentation where I explained virtually everything imaginable relevant to pricing. I explained sales rank, sales rank history, how to tell if a book was a textbook or not, and literally dozens of other details.

Then I filmed myself pricing 100 books and narrated the entire thing. This extracted a lot of things in my head that had been subconscious up to that point. I added about 10 more slides to my Power Point presentation.

My presentation was literally 2 hours.

Then I created a 7-step process to go through with every single item.

“Is the sales rank better than 1.2 million? Make sure it’s not a textbook, and click over the Amazon. Then look at the sales rank history. Has it ever been ranked worse than 2 million? Reprice to $3.99 higher. If it’s a textbook, look at the average rank during late-August and early-January….”

And on and on and on….

Then I filmed myself (using Camtasia) manually repricing using the 7 steps. How to login, go to the Preferences page in the All Inventory view, and what boxes to check. How to go through my inventory and in what order to look at the variables (type of item, sales rank, etc etc). Then how to set the right price and save the changes.

To give you an example of how complex my formula got, I instructed that just among books, there were six different books types to consider, and each must be repriced slightly differently.

1. New books.
2. Textbooks.
3. New-textbooks.
4. Audiobooks.
5. Books slated to become obsolete quickly (directories with a year in the title, travel books)
6. Everything else.

And I probably missed a few. That’s just one example of the six data points I instructed the VA to consider when determining a price.

And did I mention all the miscellaneous rules to consider before even looking at those data points? “Don’t reprice anything that hasn’t been in inventory at least 90 days.” That was one. (I include the date in the SKU so it was simple to determine).

And did I mention the 3 PDF tutorials I put together?

I couldn’t even begin to go into all the details I put into my video + instructions here. When I was done, all I could think was that I had no idea I had this much to say about Fulfillment by Amazon pricing.

It was brutal. But if I could effectively teach someone how to reprice my FBA inventory, this would be huge.

Putting it to the test

I sent over all my videos, and asked Martin to reprice one page of FBA listings. He recorded the entire process for me to review.

I watched the recording, pointed out where I would have priced differently, added a few things to my training materials (I was preparing for the possibility of another VA handling this at some point), and had him repeat the process with another 50 items.

After 7 to 10 tests, we had pretty much weeded out the possibility of any serious errors. I knew I had to be comfortable with no one every getting it perfect, but I knew the huge benefits of having my FBA inventory consistently “price optimized” more than offset the errors.

Six weeks into my FBA repricing experiment

Martin has been doing awesome, and I’m getting a return of way, way more than the $7 an hour I’m paying him.

He’s great about sending me an email any time he is uncertain how to price something, and I immediately correct whatever ambiguity there was to my instructions that caused the confusion, so my tutorials are consistently being refined.

I set up a priority scale for my FBA inventory – some tiers of items I want repriced weekly (poorly ranked items), and others I’m fine being left alone for weeks at a time (high-demand items for which the pricing is volatile).

And being able to sit back and watch the results has been amazing.

A word of caution: FBA pricing is extremely delicate

If you have an FBA pricing formula that can be explained in one paragraph, its not nearly nuanced enough, and  you’re leaving a ton of money on the table.

And if you’re trusting your media items to a repricer, you’re taking a flamethrower to your profits. (I mention media because its a unique category, with a huge number of cheap used offers for most items, and huge price gaps between merchant fulfilled offers and FBA. Trusting other categories to repricing software can be totally fine.)

The Outsourced Repricing Experiment: A Success

The good news is when your items are repriced both properly and consistently (remember: in a way that no repricing software can offer), you’ll see a huge spike in your revenue.

I’m fond of saying “the money is in the pricing.” And it is.

But since handing off my repricing to a third party, I’ve gotten to focus on where the money really is: Sourcing.

PS: If you have any questions about how to implement this yourself, leave a comment below.

Endnote

I just put my book Amazon Altitude through an extensive update. I updated everything: From changes to Amazon‘s feedback policies to new info on equipment. It’s everything I know about launching a books & media empire with Fulfillment by Amazon. Check it out here.

 

Also, claim your free book:

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