Lessons on repricing your FBA inventory for the holidays.
Repricing Fulfillment by Amazon (FBA) offers for the holidays is a little different than the rest of the year. In this article, I’m going to explain how, what FBA sellers should be doing, and what you should not be doing.
I admit it, this subject sounds boring.
There are a ton of articles out in the last month, telling you to double down on your sourcing and “stock up for Q4.” I’m not going to do that.
I’m really not a fan of this. For those practicing the “single sourcing” model (assessing items & purchasing them individually, vs. wholesale sourcing), I can’t see the sense in launching a tornado-style Amazon sourcing operation to prepare for Christmas.
If there is inventory to be had, you should be out there getting your hands on it always – no matter the season. It’s no different than saying: “It’s November, so run outside and pick up bags of money in the street at twice the normal rate”. You can spend money all year round, so you should be out there getting getting it all year round.
Naturally, if you’re selling new inventory on Amazon that you purchase wholesale, are doing retail or online arbitrage, or any model that involves selling multiple quantities of the same SKU, then by all means double down on your inventory purchases before Christmas.
Most of my sourcing is done with a different approach. As such, I do very little myself to prepare my Amazon inventory for Christmas. In fact, I change just one thing: My pricing.
What are people buying on Amazon during the holidays?
If you think the answer is “everything,” you’re (mostly) wrong.
While it’s true that everything sees a spike in Amazon sales, one category sees a spike far and above the rest: New items. People on Amazon are buying just about anything new.
I don’t have an exact figure, but by far the majority of my FBA inventory is used. And as such, I’m very aware that I will not be experiencing an Amazon feeding-frenzy on the majority of my inventory. People want the new stuff. That’s pretty much it. People give new items as gift, not tattered textbooks.
Think about it: Have you ever purchased a used book on Amazon as a gift? Or DVD? Possibly, but you probably didn’t like that person very much. Giving someone a used item is generally considered bad form, and few people do it.
The exceptions are out of print collectible items for which there is either no “new” option, or when the new offers are priced outrageously high on Amazon. In these instances, it is socially acceptable to give a used item as a gift. This will not be a significant driver of Amazon sales this month, and your attention should go to the rest.
My Holiday Amazon repricing formula
You guessed it.
The day before cyber-Monday, when sales really start to surge, I go through my entire FBA inventory and reprice the new items. Only the new items. I ignore the rest.
If you have a ton of new inventory that hasn’t moved for you up to this point, there’s a good chance it’s going to sell on Amazon in the next 3 weeks. And you have to optimize your FBA pricing to ensure two things:
- The item sells.
- You get the most money you can for it.
Why FBA sellers cash-in during the holidays
Remember a major reason your Fulfillment by Amazon offers can command a much higher price than non-FBA offers: The free second-day shipping. And never is this more of a selling point than during the holidays.
There is a frantic, unreasonable demand for Amazon Prime offers this month. There’s two things at work here.
The first is that people need the guarantee an item will arrive when it’s supposed to, even if they order on Amazon well in advance of Christmas. Ordering from Amazon’s “Merchant Fulfilled” sellers is a wildcard. There are no promises they will ship on time, and media mail (if they’re ordering a media item) is brutally slow and unpredictable.
The second force at work is that people order presents on Amazon last-minute. The second-day shipping isn’t just urgently needed for people ordering on the 22nd. A lot of presents are exchanged early, everywhere from Christmas parties to outside-the-family gatherings. And a lot of people have presents shipped to them, then re-ship them to the giftee. So people need their order, fast.
Don’t feel bad about capitalizing on people’s desperation. Just price accordingly and reap the rewards.
All of this means you can command – and receive – exorbitant prices for your FBA offers right now. Far and above that of other sellers. And far and above what you can receive the rest of the year.
But you can’t receive prices on Amazon that you don’t ask for. That’s why you have to reprice. Like, right now.
The intuitive formula for pricing “slightly unreasonably high”
“Slightly unreasonably high” is a price point arrived at intuitively, vs. via a hard formula. It’s above what you’d price your FBA offer at the rest of the year, as you attempt to hit the highest point someone might pay when they really need the benefits of FBA. Such as when there’s a Christmas present riding on it. Sales Rank is the largest factor in knowing how much higher to price. Like I said, this is not a science. I just know the price when I see it after years of trial-and-error.
(Of course, you will never want to go over Amazon’s price. Amazon’s price is always the ceiling.)
One way you learn this type of pricing – and all pricing – is observation and experimentation. Specifically, you want to set your FBA prices when you ship inventory in to Amazon, then watch and see what sells, and how much higher it is than the lowest merchant fulfilled price. Then increasing your FBA pricing until you find you’re sitting on items for six months or more. Then decreasing slightly. You’ll learn this balance over time.
Now, you don’t have time to experiment in the four weeks before Christmas. But it is my belief that any missed sales from pricing too high are more than offset by the increased revenue from your highly-priced offers that do sell.
If you’re not a believer in this pricing formula
…then I have two things to tell you.
First is: Try it.
The second is: You can always lower a price later. But you can’t go back and retrieve lost revenue from a customer later when you realize I’m right.
The important points, revisited
- Identify all new FBA items in your inventory.
- Reprice them “slightly unreasonably high.”
Good thoughts, but I must say that buyers should also beware! My granddaughter wants the Frozen 11 inch dolls. I bought them online at Target for $12.97 each with free shipping. I see that a four-pack of these dolls is going for $143 on Amazon! There is no way I would pay that much even if it is her heart’s desire!
Peter Valley says
I think you just gave the world of Amazon sellers a very profitable opportunity.
sold out at target lol. i wish i saw this sooner!!
Be aware that Frozen toys require an extra sales authorization this year, above and beyond what holiday toy sellers require. Way to many counterfeits, i guess.
Great article, Peter, thanks. I always wonder what I should be doing this time of year, since i can’t go run out and pick up bags of money any faster at the thrift store, either.
True on the new stuff – even books. I am flipping 2 books from BN, one was $25/30 range, now lowest is $54. Other was also in 25/30 range, now $88! BN flipping best during holidays too I guess.
Bob Keller says
Just sold a book for $99 I picked up for $1.00 I like that.
One of the best ways to make the big bucks…watch vigilantly for items to go out of stock. My brother bought some collectibles at $50 each for resale. Now THAT there is no more fresh inventory in the country, they are going for over $300.
Peter, thanks for this, very sharp analysis as usual. One thing I take into consideration is the ‘Amazon price’. I generally place an upper limit on the price of my new books at 10% lower than the price Amazon are asking for their own new copies. My assumption is buyers trust Amazon more than 3rd party sellers, and you have to price lower than Amazon to get sales. Would you agree?
Peter Valley says
Definitely. I’ll include something to clarify that now. Should have made that more clear.
Barney why placing lower than Amazon? Wouldnt that be trying to compete with them? If amazon is the ceiling why not just match their price?
Peter Valley says
I would not recommend matching Amazon’s price. Buyers will go with Amazon every time.
“slightly unreasonably high.” i’m not sure about it but let me test. Thank you
Peter, its a good point but assuming a buyer will go with amazon everytime for new items if as an FBA seller your book is new as well wouldnt it be right to think that a buyer who choses an FBA Purchase over amazon because its 10% below amazon price is looking for a bargain? If so wouldnt they just go for the cheapest seller who offers the same item as new.
i think amazon knowing you have matched their price wil put you in the buy box from time to time because of your FBA STATUS.
Peter Valley says
Amazon will always take the buy box if your price matches theirs. And all other things being equal, a customer looking for Prime benefits will likely go with the least expensive offer. In fact in my experience they will usually favor Amazon’s offer when it’s within 25 cents (or more).
Rob Selwitz says
When I scan a new book using my AmazonSeller App on my IPhone, there is a price for “New” as well as prices for “FBA Offers” and “Amazon”.
The “FBA Offers” price is usually higher than the “New” price, but less than the “Amazon price”.
When I list an item (Add A Product), the screen only shows the “New” price, so I would have to find the “FBA Offers” price by scanning the item again.
My biggest concern is maintaining inventory pricing. As far as I know, when changing the price of an item, I cannot access the “FBA Offers” price at that time. It seems to me (I’m sure I’m just ignorant about this) that I would have to keep a separate list of items I am pricing according to “FBA Offers” and scan the item to see what the current lowest “FBA Offers”.
Please help me! I want to buy items according to their “FBA Offers” price, but I am mystified as to how to process them and maintain them.
Thanks for your help!
– Rob Selwitz
Peter Valley says
You’ll want to ditch the Amazon Seller app altogether and pay for one that will display your FBA competition. And likewise with the listing process. Use a listing service like ScanPower that will show your FBA competition when listing.