Over 500 books. A penny each. Free shipping. Go to town.
This is a real-time cautionary tale on why you shouldn’t use repricing software to manage your entire Fulfillment by
Right now, the
If you’re still having a hard time with this math, that means you can get 500 books for $5. Right now.
This is the link to the 500+ once-cent books.
(These are likely to be gone within the hour)
Publicizing this person’s colossal blunder is bound to be controversial. I’ll get to the ethical issues here in a moment.
Before that, let’s cover a couple things…
- The article you’re reading gets posted and mailed out to thousands of people at 6am Pacific Time. I expect every 1 cent book will be gobbled up by 6:15. Early birds get the worm here, but if you’re late to the game… Still worth a look. You never know.
- About 2/3 of the 800+ items in the storefront are FBA books for 1 cent. The other 1/3 are books priced more than 1 cent (but many of those are still absurdly low, in the 50 cents to $1 range).
Why am I not keeping this to myself?
Three reasons:
- I bought a few choice items over the last hour, but by and large I’m not interested in adding 500 books to my cart, one at a time, in a process that could take hours with an uncertain return. Its late and I’m tired.
- It’s technically against
Amazon ‘s policies to purchase books via Fulfillment byAmazon , and then resell FBA. I don’t shy from bending rules when the situation calls for it, but doing it 500 times might be courting a little trouble. (If you readAmazon ‘s policy on this, they politely threaten the loss of your Prime account for buying FBA/reselling FBA too often – though they don’t tell you how many times you have to do this before you get in trouble. Its worth noting that whileAmazon can do whatever they want, they do not threaten the loss of selling privileges – just your Prime account. - It’s way more fun to just make a public spectacle of this.
What is this guy thinking, listing hundreds of FBA offers for a penny?
For each one of these books, “Computech411” is losing somewhere in range of $3.50. For those that don’t know, this means for each sale
One of two things is happening here:
- This seller is ignorant about FBA fees. Maybe he switched over from merchant fulfilled (MF), where you can still make 50 cents (or whatever it is) off postage selling books for a penny. Maybe he never bothered to look up FBA fees, and doesn’t think its possible to actually lose several dollars on a sale (his feedback score indicates s/he is a new seller).
- He let his repricer run wild, and drop his prices to a penny. This is the most likely scenario. And precisely why I didn’t hesitate to make this public. Lowball sellers with overactive repricers who drive prices down have cost the rest of us ungodly amounts of money over the years, so we can call this poetic justice.
Number two is far, far more likely.
Just how unethical is it to post this?
Consider these two things, and you’re likely to come out against posting this:
Fact #1: This seller (probably) either doesn’t know most of his inventory is priced at a penny, or doesn’t know he suffers a big net loss for each sale.
Fact #2: This will cost him a lot of money (500 books x $3.50 = $1,750. Round numbers).
Despite those facts, I didn’t hesitate to publicize this.
This is a public service announcement on why you shouldn’t turn over all your inventory to a repricer
This incident highlights a point I’ve been making for awhile: Trusting all your FBA offers to repricing software is a fools game. Which makes this incident one very effective public service announcement.
Reckless, lowball, desperate-for-the-next-sale pricing practices combined with repricing software is gasoline poured on fire.
There are great uses for repricing software for certain strata of inventory. But turning over your entire FBA inventory to a repricer costs every seller money. It costs the instigator money – chasing the next sale, no matter how cheaply it comes. And costs the rest of us money – forced to follow them in the decent to penny-book status.
The argument against over-reliance on repricers deserves its own article (and it’s not this one), but I could sum it up in one main point. Since
Repricing software can be great in many categories, where there aren’t huge price gaps between merchant fulfilled offers and FBA (and the software can thusly “see” relevant FBA offers), but this does not apply to books.
See the mindlessness of megaseller repricers at work
If there’s any one cent books left by the time you read this, take a look at how the repricing software of mega-sellers instantly followed suit and dropped their prices. I just gave a cursory look at a few books, and quickly found one seller’s repricer had also dropped their offer to a penny.
Totally insane.
And this is the work of software that is supposed to serve you.
Of course prices falling to a penny are not an inevitable result of using repricing software. But for those of us who see automated
I didn’t intend for this article to be an indictment of repricing software (and I have to mention none of my criticisms are of the people making the software – they work with the limitations
And I’ve spent years trying to do the right (and smart) thing and match other FBA offers instead of underpricing them, often to see my offer (pointlessly) underpriced by 1, 2, or 5 cents within an hour. So instead of everyone making money; overzealous, hairtrigger repricers force prices of everything down, everyone loses money, and the only people winning are the people getting paid the monthly software fees.
So in the rare instance a repricer runs wild, drops prices to the floor, and other sellers swoop in to eat up the penny offers (like what is happening at this very moment with Computech411); I can only call this poetic justice.
That’s why I didn’t hesitate to publicize this seller’s costly blunder.
In closing
You cannot on one hand engage in practices that accelerate a pricing race to the bottom – a game in which no seller wins and everyone loses – and assume a victim stance when your prices actually hit the bottom. It’s exactly what you’ve created, taken to its extreme.
It’s like playing with fire, and complaining when you get burned.
PS: Have fun shopping (here’s the link again). Or freaking out in righteous indignation in the comments below. I suspect everyone reading this will fall into one of those two categories.
PPS: Some relevant background to support the points made in this article:
Why you shouldn’t underprice other FBA sellers.
Why scanning and repricing software can’t see most FBA offers.
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IMO the seller has it coming. Not trying to be mean but if you live by the sword you die by the sword.
I get most of my inventory by doing Amazon to Amazon flips. Recently I got an email from one of the hundreds of notifications I have activated. There were two sellers that had let their repricers drive a book down to a penny (merchant fulfilled ). This particular book floats between $20 or so all the way up to over $100. Of course, they both cancelled the orders. Really irritates me that people can cancel orders just because the repricers went wild. I dont think they can cancel these FBA orders can they? No sympathy at all for the sellers.
If they repeatedly cancel their own orders, that’s going to hurt their metrics with Amazon and could lead to them getting bounced.
I’m a fairly new FBA seller (started Oct ’15) and it seems like I’m seeing WAY more $3.50 – $4.00 FBA offers than I did when I started. Is this a real trend (either due to ignorance, misuse of repricers, etc.)? I realize it could be that I’m just noticing because my inventory is getting larger and I’m spending more time looking at competitors.
I’ve seen this too and it’s a bad trend. FBM penny merchants with warehouses (or homes that are packed like a hoarder’s warehouse) do penny book sales, buy books from recyclers and landfills cheaply or use donation boxes in parking lots to get books almost for free. They use bulk mailing rates to keep their overhead low enough to score about a 25 cent profit per book, and make a profit by selling in high volumes.
Now you have the rise of Amazon FBA sellers who seem to be doing the same thing, but pricing Amazon books at $3.99 so they are making maybe 50 cents per sale. They’re the FBA equivalent of penny book sellers. They have to be flooding the Amazon fulfillment centers with their inventory. We could say that they have just found a business model that works for them, but they are driving everyone else’s business down and making it less profitable. Some of the sellers you consistently see doing this on all their inventory have to be savvy enough to know how to use a repricer, so I don’t think it’s a mistake. It drives me crazy.
$3.99 minus fees and inbound shipping costs is a loss or break even at best. No way you can make $0.50. unless i’s basically a pamphlet.
Yeah, I’m at a loss to explain it too. Unless they’re modeling on the penny seller market, are making 10 cents or so in profit and churning out thousands of sales at that price. Based on the volume I see and the amount of feedback some of these get, they may be doing that. It’s hard to believe they are losing money, month after month, and haven’t noticed it yet.
And then there’s monthly and long term storage fees.
Thank you for posting this. Sellers like this deserve whatever they get in my opinion.
interesting…but either he fixed it or I am missing something. I have had errors in pricing (on the very low side) immediately flagged by Amazon and temporarily frozen to allow me to correct them. I am guessing that has happened here.
I didn’t even see 100 books listed when I went, so either they all sold or they were all deactivated. I was thinking something similar.
I just looked. He still has a bunch of books priced at $1 – and many prices below $4. They are mostly very high ranked books that I’d pass on when sourcing. He ain’t gonna make much money doing it this way.
As is to be expected, readers of this article gobbled them up within the hour.
What I find shocking as I look over this sellers inventory using the Keepa mousover, is how many 8 million, 10 million, and even higher books are in his inventory. Wow.
Looks like computers are his core business, and he doesn’t understand the book category.
Isn’t it against Amazon’s policy to resell Prime offers?
Didn’t he say just that in the article?
It is illegal to use your prime account benefits to purchase items to resell. We have another account, under my wife’s name without prime that we use to purchase FBA listed items for resell. As long as we order $35, we still get free shipping.
It’s not illegal. Just against Amazon’s rules.
Also: Note that Amazon links accounts by both IP address and Mac address, which makes keeping accounts truly unlinkable very tricky.
I understand why you published this information, but because I’m also a newer FBAer like Computech, I know that it would destroy my entire business effort to lose all my stock to a post like this. I’m leaning towards it being because he’s a newbie and doesn’t realize yet that his costs are higher with FBA, so his prices have to be as well. I, personally, have no idea how to make use of a repricer, although I’ve seen them mentioned numerous times by those in the know like you. My guess is he’s not up on it either. I’d rather be asked if I know my prices are way too low than have hundreds of people take advantage of my mistake and cause my failure. As I see it, we’re all in this together. Yes, we’re competitors, but if we don’t want it done to us, we shouldn’t do it to others.
I agree
I believe that per Amazon’s policy, you are not allowed to contact other sellers – especially regarding pricing. They consider that “price fixing”.
I would extend your point that “if you don’t want it done to you, don’t do it to others” to lowball sellers as well. This person (and thousands like them) have no issue eroding our profits, so it shouldn’t arouse any great ethical debate when we eat up their profits as well.
Well said, Peter!
Damn right, Pete
Conversely, he might be baiting FBA Sellers that they’ll buy penny FBA offers and that they’ll flip into FBA sales…
except it costs him $4 or so for each book sold. Ouch!
I don’t believe this was done on purpose if done at all. If it was done as suggested, thanks for the teaching moment.
That was the main point of the article: It was done by way of carelessness, which is just as bad.
Just wondering how you happened upon this? I’m very interested in Amazon to Amazon arbitrage, and have wanted to watch over of your webinars on it, but every time you have one, I’m working. I’d be willing to pay to see a rebroadcast of it, since I can never manage to see one. It might cover some of the tools you used to spot this.
I stumbled upon it randomly. But the tool I use (and made) for Amazon-to-Amazon inventory is this: https://www.fbamastery.com/zen-arbitrage/
Peter. You are a genius. This was probably a mini goldmine. But seriously though you need to do more paid webinars. I’ll be the first paid customer. Lots of golden information
Never a genius. I just point out the obvious. .
I cannot find any Amazon rule stating that they may cancel your Prime account if you use Prime to buy and resell “too often.”: Can you provide a link for to this information? What I do find under Amazon Prime Terms & Conditions (sub-heading Other Limitations) is the following:
“Prime members are not permitted to purchase products for the purpose of resale, rental, or to ship to their customers or potential customers using Prime benefits.”
I’ve seen communications from Amazon directly where they state that buying FBA / reslling FBA could result in the loss of your Prime account. No mention of losing one’s seller’s account, but I wouldn’t be surprised if Amazon did this to some repeat offenders.
I read a post in the Amazon forum of someone who’s buyer account was closed and so also was his seller account. This is not unusual. Multiple accounts have been shut down just because the same ISP was used, think nanny using your computer or employee using your computer to access their account, etc. Just use a non-prime buyers account if you are going to resell.
Amazon seller forums are 80% misinformation. When you look into stories like this deeper, there’s almost always a more to the story. No one is getting kicked off for sharing a computer.
Excellent article, Peter. Thank you for bringing up the issues regarding using repricers. Just the other day, I matched the Buy Box price on a particular item, and an hour later, their price had dropped by 75 cents (on a $12 item). I matched them again, and the same thing happened. I was thinking perhaps I should just keep doing that until their price tanked, and then raise mine back up. Their inventory would quickly sell out at their ridiculously low price, and then they would be out of my way–giving me the Buy Box at the price I originally wanted. Do you think this scenario could work?
I think this would be hilarious and awesome, and something I would love to do an article on if it works. I don’t see why it wouldn’t.
I’ve done this and it only works to the extent that the re-pricer doesn’t pay attention to the next lowest price above it. Plus you risk selling your own product at those low prices as you drive the re-pricer down. Worth a try, though.
Great article Peter and something we all have to consider as our inventories grow. How do you deal with pricing and staying competitive once you’ve got 500 – 1,000 + unique sku’s in stock if you’re not using a repricer? I don’t see how without devoting hours a week manually checking.
Thanks for your insights, This website is a real resource for re-sellers like me.
I dealt with this for years, and finally figured out a way to outsource my repricing to a virtual assistant. It took a lot of work, but I go there. I definitely recommend this.