TrackStreet Blog

Why Price Monitoring on Amazon is So Important — and How to Do it

Posted by Andrew Schydlowsky (TrackStreet) on Jul 6, 2017 11:03:48 AM

If you do not yet have a price monitoring process in place for your products on Amazon, you should prioritize implementing one as soon as possible. Here’s why.

Price Monitoring

Whether or not you sell your product line on Amazon directly, you can be almost certain that resellers are or will eventually be selling at least some of your products through the Amazon marketplace — which has grown into one of the 10 largest retailers in the US. When these resellers are part of your authorized channel and adhere to your Minimum Advertised Price policy, the Amazon presence they create for your products can be great for your business and your brand.

But it is important to keep in mind that Amazon is a customer-centric company, and one of their primary value propositions to buyers — which Amazon candidly explains to sellers — is that they encourage multiple sellers to offer the same product and compete for the sale.

Amazon further explains that when a product is available from several businesses, and a shopper clicks the “Add to Cart” button, Amazon uses an algorithm to evaluate each seller — and then awards the sale to the company that performs best on a series of metrics. This is Amazon’s “Buy Box” algorithm.


WHAT THE AMAZON BUY BOX ALGORITHM MEANS FOR YOUR BRAND

As you can learn from Amazon’s “Increase Your Chances of Winning the Buy Box” page, this algorithm for selecting the winning seller is based on several metrics. Product availability, shipping options and customer service are among the criteria. But the primary data point — the one Amazon cites first on this page in its list of “seller performance metrics” — is price.

That means if you have multiple companies reselling your products on Amazon, even though those resellers are technically competing on multiple metrics, what they are really competing on first and foremost is price. So they all have an incentive to push their prices as low as possible to win the Buy Box slot.

The risk to your brand, of course, is that some of these resellers will respond to this pressure by dropping their advertised prices of your products below those you’ve published in your MAP policy.

This can harm your business in several ways — from negatively affecting your customers’ perception of your brand, to jeopardizing your relationships with all of the online resellers not violating your pricing policy, to threatening your vital brick-and-mortar retail relationships.


HOW TO PROTECT YOUR BRAND AND RETAILER RELATIONSHIPS AGAINST THE RISKS OF THE BUY BOX

  • Establish and Enforce an Authorized Dealer Program

Before you can begin price monitoring on Amazon, you should first make sure you have a program in place that sets the rules for which resellers your company will allow to sell your products in which channels.

You will then be able to use this program — an Authorized Dealer Program — as the mechanism by which a brand protection expert can help you to remove those resellers who have no authority from you to represent your products on Amazon or in other marketplaces.

If you are looking for more details about an Authorized Dealer Program, you can read our blog discussing the distinctions among MAP, UPP and Authorized Dealer Programs.


  • Deploy a Proactive Price Monitoring Solution for Your Products on Amazon

Even if you have deployed and are actively enforcing an Authorized Dealer Program, which will make it easier to spot unauthorized listings of your products on Amazon, price monitoring can still be a time-consuming task if your company has to do it manually by frequently visiting Amazon and reviewing all listings for every one of your products.

A better way to handle this would be to outsource the function to a MAP and brand-protection expert that can deploy an automated solution to scour the marketplace for your product listings, and to automatically and immediately respond to violations.

With the right MAP monitoring software, you can more quickly identify and address problem listings, which will also help you better preserve your relationships with the authorized retailers who are honoring your MAP and other reseller policies.


  • Sign Up for the Amazon Brand Registry

We have written in detail about how a brand or manufacturer can benefit from the Amazon Brand Registry, so we won’t go into detail here. The bottom line, though, is that by becoming your product line’s “brand owner,” the designation you earn when you complete the Amazon Brand Registry process, you gain greater control over how your products are represented in the Amazon marketplace, even by resellers.

And although this will not prevent or solve all problems your products might face in the marketplace, including unauthorized resellers violating your MAP policy, the Amazon Brand Registry is an important step in the right direction.


  • Do Not Rely on Amazon to Protect Your Pricing Policies or Your Brand’s Integrity — Because They Won’t

Your first step in protecting your products’ pricing should always be to develop and publish a Minimum Advertised Price policy, if you haven’t done so already. (Here is a helpful introduction to crafting an effective MAP policy.)

But it’s also vital to understand that Amazon assumes no responsibility for helping you enforce your MAP policy. Remember, Amazon lets its sellers know upfront that it wants products available from more than one source at the same time — because this fosters completion and brings down prices for customers.

This means Amazon is unlikely to pull down a listing of your product just because you tell them the listing violates a company policy you’ve put in place. And remember that a MAP policy is not even a two-way agreement between you and your resellers. If it were, it might violate antitrust laws.

So you can’t assume Amazon will act as your support team to preserve the minimum prices you want advertised or to protect your brand’s reputation against rapidly dropping prices.

Your best strategy against the price- and brand-erosion risks of the Amazon Buy Box is to deploy a comprehensive Internet brand-protection platform — and allow it to keep a watchful eye on all of your product listings, 24/7/365, and automatically address problems for you as soon as they appear.


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Topics: Amazon