Demand Gen Daily – Ep 38: Amazon – Part 6 – How Not to Compete on Price

It’s often said that Amazon is a race to the bottom where there is no profit etc. It’s a common concern raised amongst our clients because they may have a premium product. But guess what! Premium products can do really well on Amazon, you don’t always have to compete on price.

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Amazon has a referral bracket charge that changes depending on how premium your product is, the referral fee is higher than for cheaper products. 

Let’s take a double-wall thermal insulated coffee cup as an example – it’s the most expensive in the category but it’s also the top recommended seller. You want to be able to adjust the pricing according to your short-term and long-term goals. When you’re launching a new product, it may be helpful to launch the product at a lower price at the launch date to make it easier for your product to have a chance. That’s going to signal to the algorithm that there’s a new seller on the market within the category and if the product is selling well and it’s cheap, it’s more likely going to get a boost from the algorithm. 

But you don’t have to do this forever! Could be 48 hours, a week, or even 6 months to aggressively push out your competitors. 

Pricing strategy is a long-term strategy, not a short-term strategy.

There are many nuances within Amazon, working its algorithm and trying to launch a product that will get lots of positive reviews and be able to compete with a price to have your product show up in the top ranking spot for your desired keywords.

If you maintain strong brand loyalty, the less drop off you’ll see when you increase prices marginally over time. 

You’re always going to be polishing the fundamentals of your Amazon setup and strategy and know those well because in reality there is no magic bullet to shortcut or move faster. To move fast is to build the foundations first.

Stay tuned for the other Amazon podcasts within our next series of episodes for more advanced discussions!

Check out Part 1 | Part 2 | Part 3 | Part 4 | Part 5

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