In our last couple of posts, we talked a lot about automated repricing software packages for online retail arbitrage with Amazon. We discussed general strategic approaches for repricing, and we also talked about overcoming the complexities of repricing software packages.
In today’s post, we want to share with you about 3 mistakes you can avoid – many of which we have made ourselves – in handling automated repricing. And believe me, there is a lot to learn. So, why not learn from our mistakes, rather than making them on your own?
Mistake #1 – Not Relying on your Repricing Software
As I mentioned before, it can take a lot to hand over control of something so important as your pricing strategy to a robot. But it really is practical and necessary. Think of it this way: If you’re going on Amazon to check and adjust your prices every day, your making price changes. And yes, changing your price is what we’re going for here. But if you go to your software’s dashboard instead, you’re making strategy changes. That’s because your software package has the capacity to work a million times more efficiently than you can, and it can catch details you may never notice. Remember that strategy changes go far beyond the moment and the immediate sale. They’re what make your business viable and more profitable in the long run.
Mistake #2 – Not Establishing an Acceptable Profit Amount
If you’re buying products for resale, you should already have an idea how much money you expect to make on the flip side. But you should probably set a slightly lower minimum standard just to allow some “wiggle room.” In any case, you need to make sure to input your minimum price into your software in order to ensure your robot isn’t giving your product away. Once you’ve established your price range, you need to step back and let your software do its job. That’s what it exists for. Think of it like a skilled employee. You give them guidance and direction, and they carry out the tasks. You don’t stand over their shoulder and tell them what to do every step of the way.
Mistake #3 – Not Being Flexible
This is the big one. It can really be hard to hear somebody tell you that your profit expectations are unrealistic. It’s even harder when that someone is a robot. But your software is a valuable – and sometimes expensive – tool. And you purchased it for a reason.
When you’re browsing the shelves at the local Walmart, dreaming of the profit you’ll make on an item, it can be very difficult to accept less than your expectations. But it’s rare that we really get the full amount that we want to get for an item. Remember that a sale at a lower profit is better than holding an item in inventory until the fees eat all of the potential profit. And stock sitting in a warehouse represents money that could be invested elsewhere. Flexibility means taking what you can get in order to move your business forward. And doing that can result in a faster turn-around on your inventory so you can give it another go with something else.
Remember that your repricing software is designed to get you the best profit per item that it possibly can. The way it does this is complex, and it takes into account a great many factors. And it does so very quickly. If the return on your item is less than expected, you can bet that there are good reasons for that. And that’s why you established an acceptable profit amount, as we mentioned in Item #2, above.
Online retail arbitrage is a fast-paced game, and unchecked emotion can kill your sales. If you try too hard to out-do your software, there’s a strong possibility of losing sales, and slowing your turnover. That means lost opportunities to make more sales, later on. Let your software take the emotion out of your repricing. If you let it, it’ll save you a lot of headaches – and improve overall profitability in the long run. So, stop trying to squeeze profit out of individual products on Amazon.
That’s not to say there’s never a time when you intervene and raise a price manually. There are specific circumstances where it’s practical to do. For example, if you have a very hot product, and you see that all your competitors’ stocks are running out – that might be a time when you can squeeze it for a little bit more. But, for the most part, let it be. In the vast majority of cases, if you’re just not seeing the kind of profits you want from a product, the best solution is to drop it and replace it with something that has a better margin.