The 2017 Amazon Virtual Summit: Day 2

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THE 2017

AmazonVIRTUAL SUMMIT

Presented BY:

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AMAZON SUMMIT LOGISTICS

11am PST / 2pm EST EACH DAY

3-DAY EVENT | 2/28, 3/1 & 3/2

ALL 3 DAYS ARE BEING RECORDED & SENT OUT

HAVE A QUESTION? SUBMIT IN CHAT BOX

MORE RESOURCES IN ‘HANDOUTS’ SECTION

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AMAZON SUMMIT LOGISTICS

Maximizing Your Amazon Product Discoverability via Content Optimization

Price Wars: Overtaking Your Competitors On Amazon

Finding More Traffic, Finding More SalesDAY 3

DAY 2

DAY 1

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AGENDA

• Key Buy Box variables

• Busting Buy Box myths

• Defining price wars

• Why price wars occur on Amazon

• Avoiding price wars

• How to handle price wars the smart way

HOW DOES THE BUY BOX ALGORITHM WORK?

THE BUY BOX Key Questions to Consider

• Is your Product Prime Eligible?

• What is your Landed Price?

• Are you exceeding Amazon’s target for Seller performance?

• How fast are your hipping times relative to your customer base?

• Are your products consistently in stock and in quantities that ensure demand will be met?

WHY SELLERS SHOULD CARE ABOUT THE BUY BOX

82% of Amazon website sales today go through the Buy Box, and this number greatly increases with Amazon mobile sales

LOWEST PRICE ALWAYS WINS THE BUY BOX: NOT TRUE

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DOES AMAZON ALWAYS WIN THE BUY BOX?

RULE-BASED VS.

ALGORITHMIC REPRICERS

AMAZON PRICE WARS

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DEFINITION OF PRICE WARS

A commercial competition characterized by the repeated cutting of prices below

those of competitors

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FAMOUS EXAMPLES

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FAMOUS EXAMPLES

VS VS

VS

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WHY PRICE WARS OCCUR

Price wars are becoming more common because managers tend to view a price change as an

easy, quick, and reversible action

AMAZON PRICE WARS

EXAMPLES

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PRICE WARS: EXAMPLE 1Short price war, low impact

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PRICE WARS: EXAMPLE 2Short price war, high impact

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PRICE WARS: EXAMPLE 3Multiple competitors, Multiple methods

AMAZON PRICE WARS: STATISTICS

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PRICE WAR DURATION

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NUMBER OF COMPETITORS IN PRICE WARS

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PERCENTAGE OF FBA AND FBM PRODUCTS

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WHY DO PRICE WARS HAPPEN ON AMAZON?

Rule-based repricing• Competing for the same

product• Lack of understanding

MANAGING PRICE WARS ON AMAZON

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THE PRISONER’S DILEMMA

• You and another person were both arrested for something you did

• Each one is in solitary confinement with no means of communicating with the other

• The prosecutors offer each one of you a bargain. Each prisoner is given the opportunity

either to: betray and testify that the other committed the crime, or to cooperate with the

other by remaining silent.

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THE PRISONER’S DILEMMA

• If both you and the other person remain silent, you each get 1 year in prison

YOU

OTHER PERSON

Silent

Silent 1 year, 1 year

Betray

Betray

5 years, Free

Free , 5 years

• If the other person betray you and you don’t, he goes free and you spend five years in prison

• If you betray and the other person doesn’t, you go free and he spends five years in prison

3 year , 3 year• If both of you betray, each one will get 3 years in prison

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THE AMAZON SELLER’S DILEMMA

• You and another Amazon seller are selling a profitable product

• You have no way to communicate with the other sellers

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THE AMAZON SELLER’S DILEMMA

• If you both cooperate and keep prices high, you each make $10 million in profit

YOU

COMPETITOR

Keep price high

Keep price high

$10M , $10M

Cut price

Cut price

$2M , $13M

$13M , $2M

• If you lower prices and your competitor doesn’t, you make $13 million in profit and your competitor only makes $2 million

• If your competitor lowers prices and you don’t, your competitor makes $13 million and you make $2 million

$5M , $5M• If you both compete and lower prices, you each make $5 million in profit

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HOW TO AVOID PRICE WARS?

1. Be patient

2. Know your competitors

3. Be a market leader

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What is their repricing method?KNOW YOUR COMPETITORS

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How low can they go?KNOW YOUR COMPETITORS

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What goes down must come upKNOW YOUR COMPETITORS

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Day 3 | March 2nd | 11am PST/2pm EST

Finding More Traffic, Finding More SalesTopics Discussed:

• Amazon Marketing Services – The New Frontier

• Optimizing Your Sponsored Product Ads

• Leveraging Other People’s Traffic

• Creating Promotions that Convert

• Live Walk-Through and Open Q&A

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THANK YOU