The “FBA Blindspot”: The data coverup ruining apps & repricers

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The first article to expose “the FBA blindspot” in depth: The data Amazon hides from scanning apps and repricers, and how it’s costing sellers thousands.

Video: EXPOSED: The FBA data coverup ruining apps & Amazon repricers

There are two blindspots with repricers and scanning apps

Both blindspots are serious. Both are impacting your profits. Both are virtually unknown.

This is data the Amazon is hiding from your scanning apps and repricers, causing you to miss out on profitable items, and causing your repricer to misprice inventory.

Here are the two blindspots:

1. Blindspot #1: The FBA blindspot (covered in this article)
2. Blindspot #2: The Bundle Blindspot (full article here)
   

In this article, we’re only going to cover Blindspot #1: “The FBA Blindspot.”

How do we define a “blindspot”?

When I say “blindspot,” here’s what I mean: I’m referring to crucial data that Amazon will not share with repricers or scanning apps. Data you need to make buying or repricing decisions that are literally hidden from 3rd party software.

You think when you scan an item, you’re seeing all the pricing data. You’re not.

And you would never know the data you were seeing was wrong unless you compared it side-by-side with the Amazon page.

If your repricer can’t “see” crucial data, it will reprice your inventory wrong. If your scanning app can’t “see'” crucial data, your triggers (and buying decisions) will be wrong.

This impacts almost every FBA seller.

The “FBA Blindspot” defined (short version)

 

Any item that is not priced among the lowest 20 offers is invisible to your current repricing software.

Since FBA prices are usually priced higher than non-FBA (and often outside the lowest 20), this means a HUGE number of FBA offers are invisible to all repricing tools and scanning apps.

This isn’t a conspiracy theory. Here is this exact limitation spelled out deep in the fine print of Amazon’s docs:

 

There’s a lot more to say about this. But I just want to get a short explanation out of the way (I’ll elaborate a lot more in a minute).

Why this is personal for me

There’s a personal story behind why I’m talking openly about the FBA blindspot.

I’ve been an Amazon seller since 2007. I admit, I waited way too long to use repricing software. It was July 2012 to be specific. My inventory hit 5,000 books, it was too much to reprice manually, and I took the leap to automation.

The difference was incredible. With my repricing now automated, my sales more than doubled. Things were good.

Two months later, everything changed.

The lights went dark on unfiltered FBA data on September 1st, 2012

That was the day Amazon quietly instituted the FBA blindspot (I’ll explain that in a second). Amazon stopped sharing a huge percentage of FBA data. I watched the “FBA offers” column of my scanning app go blank for a double-digit-percentage of books overnight.

This same blindspot also meant I was simply unable to reprice a huge amount of my Amazon inventory.

So I had to go back to repricing manually. It was painful, but had one upside: repricing manually gave me a HUGE edge over my competition – who were unable or unwilling to put the work in. I was able to reprice with extreme precision while they were forced to accept the FBA blindspot (which cost them sales).

Still, the work was brutal.

Fast forward 2.5 years, to 2015. Another bookseller told me he was talking to an automated Amazon repricing software company who swore they had no FBA blindspots. I was suspicious, but after a bunch of emails I was able to talk to their programmer who assured me – emphatically – they truly could “see” every FBA offer, no matter what, with zero exceptions.

I took his word for it and turned over my inventory to this repricer.

This was among the most costly mistakes of my Amazon career (but I didn’t know that yet)

(I won’t name the repricer here, since all Amazon repricers are guilty of the same thing).

So I was back to using a repricer. And again, my sales exploded.

Keep in mind I had somewhere around 8,000 books in my inventory at this point, with an average selling price of just under $20 (we’ll say $18 since I don’t know the exact number). That’s approx. $144,000 in inventory.

After a few weeks of huge sales, I was right in the peak of “textbook season” sales, and I thought I should do an audit of this new repricer. I looked at the price changes made to my inventory before committing to the changes.

Something was off. Seriously off. It was not repricing according to the rules I set.

After tearing through my recently sold inventory (that I was so grateful to the new repricer for converting into sales), I almost literally had heart palpitations. Bottom line: I had hundreds of books that had sold for well below what they should, and many more that were being ignored by the repricer altogether (they had competing offers in the blindspot).

I estimated my losses in the thousands

I would like to say I leapt to action and immediately executed my revenge. But other than warning other sellers one-on-one, an indirect blog post, and a few mentions in videos, I never “went public” with my findings.

Almost a decade later, with so many more repricers and apps on the market, with all of them impacted by the FBA blindspot (and my bitterness having yet to fade), I set out to do a more “professional” expose of this issue, in three parts:

1. Exposing the FBA Blindspot (this)
2. Exposing the ______ Blindspot (next article)
3. Exposing major Amazon repricing tools lying about both (also coming next – this will be good)

Nearly 10 years in the making, this series of articles is the product of personally losing money to the FBA blindspot.

What is the FBA blindspot?

The FBA Blindspot is the biggest secret repricing software companies and scanning apps are keeping from you.

The FBA Blindspot is a massive limitation of repricing tools and scanning apps don’t want you to know about.

The The FBA lindspot simply means this: Any item that is not priced among the lowest 20 offers is invisible to your current repricer or scanning app software.

This is a big deal. I’ll repeat:

Any item that is not priced among the lowest 20 offers is invisible to your current scanning app or repricing software.

Getting to specifics: What does this mean for Amazon sellers?

The ways the FBA blindspot can (and does) cost you money come in two categories: sourcing inventory, and repricing.

The impact of the blindspot on your repricing

Consider this scenario: Let’s say you’re using an automated repricing tool. And let’s say you have a it set to match the lowest FBA price for all your inventory.

Then let’s say you have a book (or anything), where a competitor currently has the lowest priced FBA offer. And lets say its priced higher than the merchant fulfilled offer (this is almost always the case).

Then let’s say its priced just outside the bottom 20. There are 40 sellers total, and there are 22 merchant fulfilled offers priced below your lowest priced FBA competitor. Pretty common scenario. This happens all the time and you would have no reason to even notice.

Your repricer would be unable to reprice that item.

Wait, what?!

Here’s why: Your repricer is making a request to Amazon “give me all competing prices for this item.” And Amazon is only responding with the lowest 20. (I’ll explain the technical details in a minute).

Since the offer your competing against (the lowest FBA offer) is 22nd in line, that listing is invisible to your repricing tool. The repricer thinks there is no competing FBA offer.

So what happens at that point? The answer is: nothing good. Your repricer is either going to:

1. Not reprice that item at all (costing you money because you won’t get sales).
2. Use a “fallback” rule, and price your item lower than it should (costing you money because your book will sell cheaper than it should).

Both of these are bad.

The compounding effect of this happening thousands of times a year is insane.

If you couldn’t follow all that, I’ll reduce it to bullet-points

1. Let’s say you’re an FBA seller, and you have a simple pricing rule to reprice your inventory to match the lowest FBA price.
2. Let’s say you have an item that has 40 other sellers.
3. Let’s say that the lowest 20-priced offers range from $5 to $10.
4. And let’s say the lowest price FBA offer is higher (as often happens), at $11.

It would be impossible for any repricing tool to reprice that item. 

That $11 FBA offer is invisible to your repricing tool.

The magnitude of this should be clear.

The impact of the blindspot on your sourcing

Now let’s talk about how the FBA blindspot causes you to miss out on profitable inventory (a lot of it).

Consider this scenario: You’re out at garage sales sourcing inventory.You’re using a scanning app to look up products. Let’s say books.

You have your “profit triggers” set to alert you when you scan a profitable book, using the lowest FBA price. Or, you glance at the FBA column to make a buying decision. Either way.

You come across a box of textbooks at a professor’s house. You scan your first book and your “triggers” setting tells you to BUY. You look at the FBA column and confirm: No competing FBA offers! You can price as high as you want, and you plan to list for $50. Maybe $100. What does it matter? You have zero FBA competition.

Then you get home and start listing your books

You go to list and set a price for that book, and find the lowest FBA price is $14. It’s a huge, heavy book; so your payout is almost zero. And you paid $2 for it, so you’re losing money. You ask yourself: “Why did I buy this?!”

Hours have passed, you scanned hundreds of books that day, and you can’t remember the app data you saw when you bought it. But you’re puzzled. Why did you think this book was profitable? You wonder again: “Why did I buy this?!”

You dismiss it as a fluke and move on. But it wasn’t your fault. You got hit by the FBA blindspot.

This scenario is relatable to most sellers. And you probably had no idea what had happened – until now.

Alternately: You could have your triggers set differently. Or you have different buying criteria. And having some FBA offers invisible to your scanning app causes you to pass on otherwise profitable inventory.

Again: The compounding effect of this happening thousands of times a year is insane.

Two examples of the FBA blindspot in scanning apps

When it comes to repricers, it’s pretty challenging to get a visual representation of the blindspot (repricing software does its work in the background). So let’s look at two examples from Amazon scouting apps:

FBA blindspot example #1

 

FBA blindspot example #2

And here’s an example of a related problem: You see the lowest FBA offer, but the rest are in the blindspot. This highlights why Amazon repricing software is unable to price against the 2nd & 3rd lowest competing offers – it can’t guarantee it can see them.

Why is the FBA Blindspot almost totally unknown by sellers?

The companies who sell these tools are highly incentivized to prevent you from ever learning about their blindspots. (Remember, this article only covers one of them. There’s another one I’ll talk about next article).

But some tools are upfront about it. Here’s a screenshot from Scoutly’s (Amazon sourcing app) FAQ:

 

This is how all tools should handle this: Just be upfront and honest. Most are not.

By the way: They’re not wrong in that last sentence when they say “it is usually the lowest FBA price.” It usually is. But getting prices “mostly” right means it’s “sometimes” wrong. And those “sometimes” add up to huge money month after month, year after year.

ScoutIQ (another app) sort of admits the blindspot here, but only in the (confusing) context of how they have some undisclosed “logic” to mitigate the damage:

Nothing comforting here.

So, is this a real coverup?

What’s happening here? Is there a literal cover up, or is something more benign at work?

It should be obvious by now that software tools actually admitting to the FBA Blindspot would have a big impact on their credibility. They have an intense financial interest in covering this up.

In a future article, I’ll be exposing the exact coverup I’m alluding to: Software tools not just leaving the blindspot out of their advertising, but actively denying the blindspots exist.

Going deeper: The technical cause of the blindspot

To understand what creates this blindspot, I have to get slightly technical (not too much).

Amazon has what’s called an “API.” This is how they share data with 3rd party software (scanning apps, tools that display pricing or rank data like Keepa, and repricers). Think of an API being like a hose of data that Amazon let’s you hook up to your software.

Amazon is in control of the hose, and what data passes through it. Amazon doesn’t just say “here, take any data you want. It’s all yours.” Instead, they have limitations around what data they share, and how often you can get it.

Among those rules is this “lowest 20 offers only” limitations. Anything outside of the top 20 simply doesn’t come through the API “hose.”

So, let’s say you scan a book. In a microsecond, the app goes to Amazon and says “show me the lowest prices for every seller selling this book.”

Amazon simply will not send anything through the “hose” that’s not in the bottom 20. And there’s nothing any software tool can do about it.

Not a conspiracy theory. Again, Amazon admits it:

Running the numbers: What is the impact of the FBA Blindspot on your inventory?

Quantifying the losses is very challenging. There’s no formula you can use to say “the impact of the FBA Blindspot on the average Amazon seller is $____.”

Remember that items with FBA blindspots don’t announce themselves. And an item can be affected by the blindspot one minute, and not the next (prices go up and down on Amazon like crazy). It’s an ephemeral, fluid thing.

So let’s take an extremely conservative estimate and run the numbers on what the impact on your profits might look like…

Scenario: Let’s say you have 1,000 items in your inventory

Then, let’s say 300 of those items has over 20 other sellers selling the same item (this could be a very conservative figure depending on what kind of inventory you’re selling. For me, it’s well over 50%). Remember, only inventory with at least 20 sellers is at risk.

Then let’s say 5% of these have their lowest FBA offer outside the lowest 20, i.e in the blindspot.

That’s 15 items. (I think this number is ridiculously conservative and unrealistic. Just playing with lowball numbers here.)

That’s 15 items that either:

• Won’t sell out all because they can’t be repriced, or-

• Get priced lower than they should (because the repricer has to default to a lower price when the FBA price can’t be “seen.”)

Depending on the size of your inventory, this is hundreds or thousands of dollars a month you’re losing to the repricer blindspot.

Doing the math: How much is this repricer blindspot costing you?

Let’s say your inventory is turning over at 30% per month. That means of those 15 items, 5 would have sold this month (on average).

Lets say those 5 items would have had an average payout of $20.

And let’s say the blindspot caused 3 of those items not to sell this month (because they couldn’t be repriced). And 2 of them to sell this month for an average of $5 less than what they could have.

The blindspot just cost you $70.

It gets worse: That’s $70 you’re losing every month. That’s $840 a year. And that’s only if you only have 1,000 units (and if you accept my ridiculously conservative estimates).

Doing $5,000 a month? These numbers get a lot worse.

And those losses keep compounding month after month, year after year.

The compounded effect the Repricer Blindspot may be having on your business is massive.

This is currently impacting the profits of tens (hundreds?) of thousands of Amazon sellers who use repricing software (and scanning apps), who have been totally kept in the dark by software companies.

Is there a type of seller most affected by the FBA blindspot?

Yes. Two main categories of Amazon sellers are impacted.

First, only FBA sellers are affected. If you’re a Merchant Fulfilled seller, you’re in the clear when it comes to this bindspot (but not the other blindspot, covered in the next article).

Second, sellers in “high risk” categories. The product categories you sell is the biggest factor in how heavily you’re impacted. Specifically, used media (books, CDs, etc) are most impacted.

Why? Because recall that only items with 20+ listings are at risk. And used media (especially books) are the categories that have the highest number of sellers on average. For the majority of categories it is actually rare for more than 20 sellers to be selling a product.

For example, browse through Grocery or Home & Garden. It’s actually pretty uncommon for more than 20 sellers for any item. So if you sell primarily Grocery or Home & Garden (and many other categories), you’re not likely to be affected.

But media categories, particularly media items like Books (what I sell) are severely affected. Music, Books, and DVD/VHS all consistently have more than 20 sellers per item. Same for Video Games (to a lesser extent).

Other categories – like Toys – are somewhere in the middle. Even if there’s more than 20 sellers, there’s usually an FBA offer in that 20. But not always, and small dings to your revenue really add up at the end of the year.

How can you tell which products in your inventory are affected?

You can’t pinpoint an exact number of what items in your inventory are a victim of the blindspot (and that number can change from minute to minute as priced fluctuate). But you can identify which items are exposed to the risk.

First thing to do to know how seriously you’re impacted is to browse your inventory. 

Check the product pages on Amazon. How many products have than 20 other competing offers?

If the answer is greater than zero, that item is at risk.

How to beat the blindspot with your Amazon repricer

Let’s end on an empowering note. You don’t have to be a victim to FBA Blindspot. There are ways to beat it.

There are two ways to beat the blindspot when repricing:

Reprice manually: The only prices you can trust are the ones directly on the Amazon page. If you’re repricing manually, you can review competing offers for each item on the Amazon product page, and reprice accordingly. This can be time consuming, and very challenging once you have over 100 or so items.

Use NeuroPrice: I built NeuroPrice to be the only Amazon repricer with no FBA Blindspots. It leverages the data inside your Amazon account, and works directly on your Manage Pricing page (inside Amazon) so it does not rely on Amazon’s API. See a demo of NeuroPrice in action.

 

How to beat the blindspot with your scanning app

Stop using triggers: If you’re using a scanning app that has a feature which tells you if you should “buy” or “reject” an item – shut it off. This feature can’t detect competitors in the blindspot.

Click over to Amazon when the FBA column is blank: This requires manual labor, but you should click outside your app to review prices when these conditions apply:

1. The FBA column is blank.
2. There are more than 20 listings for the product.

These solutions aren’t always elegant, but they will insure you don’t lose money to the FBA Blindspot.

Recap: What did we learn?

• Amazon limits what data 3rd party software can “see.”
• This limitation prevents any listing not priced in the lowest 20 from being shared.
• This has a high impact on other Amazon categories (such as Books).
• Amazon software companies have a strong financial interest in covering up this Blindspot.
• The blindspot can be beaten, with a little extra work.

This concludes the biggest piece of citizen journalism I’ve ever written.

-Peter Valley

PS: Read an in-depth article exposing the other blindspot (the “bundle blindspot) here.

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