This article has been contributed by Erik Mathes of Informed.co (formerly Appeagle).
You may think you have total flexibility in how you price your products online, but there are plenty of pricing do’s and don’ts on Amazon and Walmart Marketplace you should be practicing.
That’s because the way you set your prices is directly tied to how often you’ll win the Buy Box— or if you’ll even qualify to be in the Buy Box at all.
On the flipside, you can find yourself in hot water with the marketplace overlords if you don’t pay attention to the specific pricing policies that dictate how sellers must operate on each respective platform.
Depending on whether you’re selling on Amazon or Walmart Marketplace, the best practices for pricing — as well as the constraints — will be different due to each marketplace’s unique Buy Box algorithm.
There are several pricing do’s and don’ts that apply to Amazon and Walmart, and these limitations will have a direct impact on how you set prices on any platforms outside of these two major marketplaces.
Let’s dive into the details.
✅ Do: Account for every possible cost that affects your bottom line when pricing on Amazon and Walmart
All online sellers have to approach pricing in their own way due to a unique combination of factors, both within and outside their control, that affect their overall and per-listing profitability, including:
- Cost of goods sold
- Shipping fees
- Marketplaces fees (fulfillment fees for FBA, access fees for Seller Fulfilled Prime, etc.)
- Labor cost
- Customer service
- Cost of returns
- Overhead (warehouse rent, power and water bills, efficiency tools, etc.)
Some sellers even need to cover the cost of inspectors to ensure quality control across their product lines. This should be factored into their bottom lines, as well.
That means sellers have a lot to think about when it comes to setting their prices.
The two most important things for you to consider when setting your prices are:
- Complying with the pricing policies of each marketplace (to avoid having your listings removed or, worse, your account suspended)
- Ensuring that you’re making a minimum profit per sale that works for you
No one ever said that doing this delicate dance would be easy. But, if you’re able to at least identify every cost that factors into your profitability and understand how to maintain the general pricing requirements of both Amazon and Walmart, you’ll already be ahead of the competition.
🚫 Don’t: Charge lower prices on other sites than you do on Walmart for the same products
If you try to game the system by charging lower prices on your personal eCommerce website than you do on Walmart Marketplace, you’re playing with fire.
That’s because Walmart is constantly scouring the interwebs to verify that the products sold on its online marketplace are at the lowest prices compared to the other marketplaces where you sell the same things.
“Walmart Marketplace Sellers are responsible for setting and maintaining their price on Walmart Marketplace. At Walmart, we are committed to helping people save money so that they can live better.
As part of our effort to deliver on that promise, we have enacted automated rules that identify and remove items with highly uncompetitive prices from Walmart Marketplace.”
Here’s how Walmart breaks down its pricing rules on the same page in Seller Central.
There are two pricing rules:
1. Price parity rule
- This rule will automatically unpublish items from Walmart Marketplace if a customer would save by purchasing the same item from the same Seller on a competing website, including the cost of shipping.
2. Price leadership rule / reasonable price not satisfied
- This rule will automatically unpublish items from Walmart Marketplace if a customer would save drastically by purchasing the item on a competing website, regardless of the Seller. This calculation also considers the cost of shipping.
If Walmart’s automated price monitoring system catches a pricing discrepancy it deems to be in violation of these policies, your listing will automatically get unpublished.
If that happens, you’ll get a notification in the Manage Items Report section in Walmart Seller Central, where you can take action to fix the issue.
So, pay attention to how you price products across every marketplace you sell on if you plan on listing the same products on Walmart Marketplace, and make sure your Walmart prices are the lowest ones you offer.
✅ Do: Consider your non-price metrics when setting prices on Amazon
The complexity of Amazon’s Buy Box algorithm has been well documented, with experts believing that it factors in about a dozen variables, each weighted differently, when determining which sellers win the Buy Box for each listing at any given time.
While “landed price,” or your selling price plus shipping price, is one of the most heavily weighted factors, it’s far from the only ingredient you should consider when trying to set your prices for winning the Buy Box.
Other important metrics for winning the Buy Box on Amazon include:
- Fulfillment type
- Shipping time
- Handling days
- Seller rating
- On-time delivery rate
- Order defect rate
- Feedback score
- Inventory depth
- Cancellation rate
- Late shipment rate
- Sales volume
That means you don’t have to list at the lowest price to win Amazon’s Buy Box.
In fact, if you offer superior shipping and handling times and have a higher Seller Rating than a lower-priced competitor, you can still win the Buy Box while charging a premium price relative to your competitors.
Say that a consumer wants a certain product fast. If you offer Prime shipping and charge $25 for the product in question, and your competitor charges $23 for it but has a slower shipping time, chances are you could still make the sale even though you’re charging a higher price.
Same goes for Seller Rating and the level of feedback you’ve received. Consumers may be more inclined to pay a few cents more to a seller with a 99% rating and/or lots of positive feedback versus a competitor with a 94% rating and/or mixed feedback.
That’s why it’s vital to consider non-price factors when setting your prices on Amazon; you may be able to boost your profit margins by focusing on an improved overall user experience instead of just focusing on having a low price.
🚫 Don’t: Charge more than you do on Amazon on your other sales channels
Much like Walmart’s price parity requirement, Amazon forces sellers to price similarly on its marketplaces.
According to Section S-4 in the Amazon Services Business Solutions Agreement:
“You will maintain parity between the products you offer through Your Sales Channels and the products you list on any Amazon Site by ensuring that…the purchase price and every other term of sale…is at least as favorable to Amazon Site users as the most favorable terms via Your Sales Channels (excluding consideration of Excluded Offers).”
- Shipping and handling charges
- “Low price” guarantees, rebates, or discounts
- Free or discounted products
- Other benefits from purchases (bundle or BOGO discounts, for example)
- Cancellation, return, and refund policies
Sellers who don’t abide by this policy may face the wrath of Amazon in the form of:
- Your listings being removed
- Your account being suspended
So, when you list products on Amazon that you also list on other eCommerce sites, make sure you’re listing them on Amazon at the lowest price (or equal to the lowest price) you offer across all the sites you sell on.
Otherwise, if you get caught, Amazon won’t hold back from enforcing penalties or suspensions.
✅ Do: Aim for the lowest total price on Walmart Marketplace to win the Buy Box
While there are no clear stats on the percentage of Walmart Marketplace sales derived from its Buy Box, experts suggest that over 80% of Amazon’s sales are made through its Buy Box. So, we fully expect the Walmart Buy Box to be a major driver of sales for its third-party sellers as well.
As opposed to Amazon’s Buy Box algorithm, experts believe that Walmart’s Buy Box algorithm consists of two simple rules at this early point in its existence (based on the following key line in Walmart Seller Center):
“Making sure your items remain in stock and offering competitive pricing will improve your chances of winning the Buy Box.”
“Competitive pricing” on Walmart refers to the total price, including the sales price plus the shipping price, so you must ensure that your shipping fees on Walmart are as good as they are elsewhere, or better.
Otherwise, say goodbye to any chance of winning the most prestigious placement on Walmart Marketplace — and, perhaps, to any chance of making significant sales on this upstart sales platform.
Walmart’s Buy Box Report can help you determine which of your listings are in the Buy Box and who your top competitors are for each listing.
The bottom line on price management on the biggest online marketplaces
Clearly, smart sellers have a long list of things to consider when it comes to how they price their products on the two major online marketplaces.
Whether it’s factoring in every possible cost of doing business so you can understand your true profit, considering how your non-price metrics on Amazon affect your ability to price at a premium, or making sure that your prices for the same items aren’t lower on other marketplaces (like your Shopify store, for example), pricing can present plenty of problems if you don’t have a surplus of time.
That’s why strategic price automation software is one of the best investments you can make in your online business.
Sellers have a wealth of options when it comes to these tools, collectively known as “automated repricers,” “automated repricing software,” or, sometimes, simply “repricers.”
An intelligent automated repricer can help you put your prices on autopilot, strategically and automatically changing them based on how your competitors prices fluctuate.
Some repricers, such as Appeagle, come equipped with algorithmic repricing settings and the ability to create custom strategies using different rules, so you can be super selective about the competitors you wish to reprice against.
For example, sellers who have FBA listings can choose to have their prices change relative to other FBA sellers only, so they don’t cut into their margins by pricing as low as the MFN merchants on the listing.
In addition to fulfillment type, repricers like Appeagle also let sellers narrow down the competitors they reprice against based on factors like:
- Seller rating
- Shipping time
- Handling days
- Backordered status
If you’re interested in experiencing the power of automated repricing software for yourself, Appeagle is inviting readers of WorldFirst’s newsletter and blog to test our repricer out with a free 14-day trial and, for new customers, 50% off your first month of Appeagle.
Just use this link to sign up after you complete your trial and enter the promo code WF50 when entering your billing information. This offer is valid until December 31, 2018.
Erik Mathes is a journalist, eCommerce expert, and former chef based in NYC. He holds degrees from Tulane University’s A.B. Freeman School of Business and Le Cordon Bleu College of Culinary Arts, and has had his work published in dozens of outlets, including BuzzFeed, Yahoo, and The Huffington Post. Erik has also written for Amazon, MasterCard, LivingSocial, and Vitamix, and he’s currently the Content Marketing Manager at Appeagle.