In this article, let’s learn from Scott Needham as he shares his knowledge in Amazon repricing.
Scott Needham, the smartest Amazon seller, accompanies us with his presence today. He is going to share all secrets around Amazon repricing and the top tips that he’s learned from setting over nearly half a billion dollars on Amazon.
He is a seller that I’ve been following for a long time; watching his journey and all the gems he’s been sharing within the community.
Topic Rundown:
Who is Scott Needham?
He has been selling on Amazon for almost 10 years and it’s been his full-time focus. Scoot Needham scaled a reselling business, wholesale working distributors to do over 65 million. He’s always been on the back end of the operations and software.
He also built more software tools and some of which he now offers as a service. Looking back to the last 10 years and sharing more of what moved his business. Also, mentioning Amazon repricing, which immediately had an impact on his margins.
Scott Needham’s history to Amazon
He had a brother doing Amazon online arbitrage, and he scaled about 3 million by himself while he watched. Later on, they talked about Scott Needham jumping in because from 2012 to 2013, there was one software category that repricers had done stuff with. Most of the original software came from booksellers, the first to enter the marketplace.
Scott Needham jumped in to help build out automation and made a hard business easier.
It’s a tough world to think commerce is technical; dealing with computers and, hopefully, things you scale.
What is a repricer and what do repricers do?
Repricers make quick decisions for you all the time. You can be a good repricer for yourself for a dozen products, but if you start to have 100 to 1,000 different products, the conditions will change throughout the day. In a lot of ways, a repricer is just taking advantage of the market.
It could be an intellectual debate about a perfect market where prices can change at any minute, and they do. It’s important how you react to the current market conditions and you can change how you react at any point of the day or month. If you want to bake in hundreds of decisions done for you, almost millions of decisions done for you with a repricer.
Using a repricer is massive, and that’s valuable hours that you can invest back into the business.
What is gross margin and what it contributes?
People think that gross margin is taking your cost of the products, what it costs to fulfill that product and your margin is how much profit you have on top of that. Decades ago, before the internet, they pushed prices down by 50% in gross margin.
They bought a product for $5 and they want to sell it for $10. Gross margin isn’t always apples to apple conversation because for Scott Needham; they include prep price and some shipping expenses into their gross margin. The thing that matters is to hear someone grow their margin, and that’s worth listening to.
Amazon teachings from Scott Needham
Scott Needham said that you should set your mind first; know your goals and what are the latest trends. For him, the price is as high as possible while getting a sale. Look for reasons to raise prices. Obviously, you want to capture the sale and not lose the sale.
Take note that you’re fighting between a few different things and with Amazon, you should also know about winning the buy box. Your most profitable sales of a product are in the first 30 days.
When you find an arbitrage opportunity, it’s hot. The chances that it’s a good arbitrage in a year are less likely than in the next 30 days and so.
Scott Needham started to think about more and more things that he could do in the first 30 days, they thought that they are most profitable on their products in the first 30 days and they haven’t.
Look for products that the market is running out and you can rise up a few dollars and that work really well with seasonal products.
For Scott Needham, the first 30-day strategy is the biggest key, for it will make the biggest difference. For his team, it wasn’t something that they did for the first year.
Put a floor price and ceiling price
When you use a repricer, put in a floor price and a ceiling price. Basically, you’re telling a price repricer the amount you’re willing to sell it down to and the maximum value. At the lowest price, for a long time, Scott Needham would just put their break-even price. That’s a 0% growth margin, and that’s where the market condition is now, then they will sell it there. After that, they will re-use the money for other things and he thinks that was their mistake. If you can, don’t always go to the break-even price for your products.
If they achieve sales, they leave it. If they don’t, after 5 days they will go down to 15% gross margin, then tell the repricer. As days go on, they slowly decay down the break-even price.
There are a lot of things that can happen on a single Amazon offer that aren’t always obvious. Maybe the people pricing below you don’t have the Prime badge so it’s okay to lose the buy box to other people that don’t have the Prime badge because customers will select you on the official list, they just want that guaranteed shipping in two days.
Why Scott Needham likes repricers
That’s why Scott Needham likes repricers, sometimes can get a little overeager to be aggressive to win the buy box. And they found that the best input was to tell their repricer. If it works, keep going. And if it doesn’t, slowly have a discount schedule.
It’s odd why the repricer sometimes gets it wrong and it could be very simple things like a Prime offer coming, but it’s actually still being received. There’s another situation where you’ve seen some things in the buy box that aren’t actually what the customer wants. What they’ll do is say something more expensive and they’ll select it. It’s not particularly intuitive to be a higher-priced product, but it goes back to that original idea of capturing the most margin which you try in the first 30 days.
You’ve got to figure out what’s best for you. Know your extensive catalog. If you have 100 products, optimize every single one in the perfect situation.
8 Things I Learnt About Reselling On Amazon from Scott Needham
Selling over $400 million on Amazon is not easy.
Learn directly from Scott Needham: BuyBoxer, TheSmartestSeller and SmartScout, about what he's learned from 10 years selling on Amazon and how to reprice his products.
What repricer did Scott Needham use before?
It’s one of the most configurable that Scott Needham has come across and there are a lot of bells and whistles to jump and understand. He hasn’t had too many problems with it.
Top Tips about repricers by Scott Needham
One strategy that Scott Needham has is that their repricer lets them do the day part, which means they can take a certain time of day and do a different strategy. In the middle of the night, they price up, which is good if you’re competing against 1 or two other sellers wherein they’re also using repricers.
Not a lot of people are buying at night, so might as try to start because a lot of times, these repricers will pinch by a penny or dime. Start the day high and watch it go down during the day and for a lot of products. This does work and it’s effective if you’re on a competitive product with more than 3 sellers. Scott Needham actually does it once or twice during the day just for 30 minutes.
Yo-Yo strategy
The next strategy specifically is about selling against Amazon retail, and they have a core strategy for it. What Scott Needham does is to avoid them at all costs. It works, but on average it doesn’t. If you do find yourself stuck against Amazon, some repricers can do what’s called a “Yo-Yo”. That’s where you price down, then you price back up and maybe capture a minute or 10 minutes of the buy box without them coming and undercutting you.
The Yo-Yo strategy can work. It’s a way to capture the buy box and not completely destroy the price. It works if a product is really competitive, meaning several units an hour than can work.
Coupons
Another strategy works well if you are by yourself on a listing because it doesn’t affect the buy box rate. It’s by using coupons. Coupons are those little green badges that could be 5% off. It really increases the conversion rate significantly. Scott Needham looked at all of their stale products and they had a lot. They threw a minimum coupon on all products, and those sales doubled. And there’s nothing stopping you from raising your prices. Also, put on a coupon if you have a private-label product, even when they’re trying to liquidate them. Scott Needham doesn’t reduce their price, they just increase the coupon.
It’s a core thing for you to know these little tricks that you can apply in certain situations when you’re selling on Amazon.
In the liquidation scenario, selling is the best. Everything else gets harder and uglier. If you have to sell it at a discount, do it.
Do coupons affect when you’re competing on the buy box?
They don’t. Customers, however, can see if they’ve got a list of sellers. If you’ve got a situation in which you want to consider using a coupon and maybe those shoppers look through and they see it, that’s good.
One Scoot Needham noticed that about half of the people buying on Amazon don’t click on the coupon.
Scott Needham's sourcing software
The final one leads into the software tool that Scott Needham built. It’s another mentality to make your profit when you buy the right product. Knowing what else can you do that lead to more profitable situations is by finding the best products.
Almost similar to how they talk about the stock market, you make money when you buy, not when you sell. Scott Needham built a lot of tools around it, a lot of internal ones.
Really interesting. In 2017, not a lot of people were using it. The FBA fee was an entire dollar lower and so he built something that just analyzed all of Amazon looking for this specific type of product and what Scott Needham ended up doing was building a map of Amazon.
Basically, every single brand, how many products, is Amazon retail on the brand. Then just filter and sort. What became the core of the tool was that he built Smart Scout, where you throw everything from a brand and every brand on Amazon which you can filter out to find the characteristics that you’re looking for.
That’s really been the last of years of what Scott Needham worked on.
Time to make use of what you've learned from Scott Needham!
One way that Scott Needham likes to think about is that product research tools have been around for a while. His tool takes a step back, and it’s more of a market research tool, looking at the entire market at once. You can specialize in a category and show all the brands that are selling and know the one you can peel apart and see different data points.
If you want to contact Scott Needham, you can reach him on Instagram, Facebook, Twitter. You can also check his YouTube channel to learn more. For him, the best way to reach him is to send an email to scott@smartscout.com which he checks on a daily basis.
Now that you’ve learned from the smartest Amazon seller, might as well learn from the journey of Romer the Roamer, Gravy Train and Raiken Profit.