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.
(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?
- 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 by Amazon, 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 read Amazon‘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 while Amazoncan 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.
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.
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: