WINNING PRICING STRATEGIES FOR PRIVATE LABEL SELLERSPeter Kearns, Director Customer Success, West Coast | March 16, 2016

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HOW DO YOU GROW A SUCCESSFUL BUSINESS

ON AMAZON?

LET’S TAKE THE SCIENTIFIC APPROACH

Market EquilibriumA situation in a market when the price is such that the quantity demanded by buyers is correctly balanced by the quantity that sellers wish to supply.

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Markets always navigate toward the equilibriumThe equilibrium point constantly changes in response to changes in the market demand or supply

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HOW CAN WE APPLY THIS TO THE AMAZON MARKETPLACE?

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THE 4 STATES OF THE MARKET

Slow movinghighly competitive

products

Fast movinghighly competitive

products

Slow movingprivate label

products

Fast movingprivate label

products

Your sales velocity

Competition

Optimizing yourReplenishment

Strategy

Winning the Buy Box at the

optimal price

Fast Moving Highly Completive Products

Winning Buy Box at the Optimal PriceThe optimal price is the price point where your profit is optimized

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Order

s Buy Box vs Price

Profit

PriceOptima

lPrice

Diminishing profits due to decline in the Buy Box

share

Money on the table

Winning Buy Box at the Optimal Price

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Order

s Buy Box vs Price

Profit

PriceOptima

lPrice

Diminishing profits due to decline in the Buy Box

share

Money on the table

ORDERS & INVENTORY DATA

MARKET DATA

COMPETITION DATA

Orders Inventory Levels Cost Structure

Sales Rank History

Buy Box Price History

Price Bids by Sellers

Seller Metrics

Buy Box Winner

Optimizing your Replenishment StrategyReplenish when the demand is high and your stock is low?

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Buy Box Price - very high

Demand - high

Competition - low

Replenish or Liquidate?

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Demand

Competitio

n

Buy Box Price

Opportunity Zone

Cost

Replenish or Liquidate?

Replenish when the demand is high and your stock is low?

Optimizing your Replenishment Strategy

Buy Box Price - very high

Demand - high

Competition - low

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COMPETITIVE MARKETS

ADVANTAGE Buy Box reflects market

dynamicsDISADVANTAGE

Intense competition erodes profit margins

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THE 4 STATES OF THE MARKET

Slow movinghighly competitive

products

Fast movinghighly competitive

products

Slow movingprivate label

products

Fast movingprivate label

products

Slow movinghighly competitive

products

Slow movingprivate label

products

Your sales velocity

Competition

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IN ABSENCE OF DIRECT COMPETITION PRIVATE LABEL

PRODUCTS NEED TO BE PRICED ACCORDING TO THE DEMAND

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THE 4 STATES OF THE MARKET

Slow movinghighly competitive

products

Fast movinghighly competitive

products

Slow movingprivate label

products

Fast movingprivate label

products

Slow movinghighly competitive

products

Slow movingprivate label

products

Your sales velocity

Competition

Optimizing your Replenishment

Strategy

Building a Demand Model to find the

optimal price

Fast Moving Private Label Products

Building Demand Model to find Optimal PriceThe optimal price is the price point where your profit is optimized

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Building Demand Model to find Optimal PriceThe optimal price is the price point where your profit is optimized

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COSTS & INVENTORY DATA

ORDERS DATA

Inventory Levels Cost Structure

Orders Sale Price

History

Building Demand Model to find Optimal Price

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COSTS & INVENTORY DATA

ORDERS DATA

Inventory Levels Cost Structure

Orders Sale Price History

Building Demand Model to find Optimal Price

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THE 4 STATES OF THE MARKET

Slow movinghighly competitive

products

Fast movinghighly competitive

products

Slow movingprivate label

products

Fast movingprivate label

products

Your sales velocity

Competition

Mitigating Stale Inventory

Risks

Reviewing Your Product

Catalog

Slow Moving Private Label Products

Attracting TrafficBuilding

Demand Model to find the

optimal price

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FBA Long Storage FeesCharges from Amazon or

other warehousing companies for storing unsold

stock

Tied up cashCash is tied to stale

inventory instead of being used for other opportunities

STALE INVENTORY RISKS

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Utilizing Demand Model to control Sales VelocityPrice impacts demand

Velocity (Pace of Sales) can be controlled by changing the price

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Utilizing Demand Model to control Sales VelocityPrice impacts demand

Velocity (Pace of Sales) can be controlled by changing the price

ALGO-COMMERCEMarket

Pricing

Demand

Competition

GrowthTrends

Decisions

Algorithms

Big Data

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